How Healthcare Reform Will Impact Your Wallet
Most of the healthcare reform – otherwise known as, “Obamacare” – changes we’ve all heard about go into effect in January 2014. So, what does this mean for you and your family budget? How can you be preparing yourself now?
Here are 4 ways Obamacare will impact your family’s budget:
1. If You Don’t Already Have Insurance, You’ll Need It Starting Jan. 1
Everyone (with a few exceptions*) will be required to have health insurance or pay a penalty to the IRS. This means, if you aren’t paying for a healthcare premium now, you will be starting next year. How will you budget for those extra dollars each month?
Where do you buy insurance? Starting Oct. 1, 2013, you will be able to purchase health insurance for you and your family on either a federal or private exchange (also called a health insurance marketplace). There will be a variety of plans available depending on how much money you want to spend, and the level of coverage you need.
2. If You Don’t Have Coverage, You’ll Pay a Penalty
If you decide not buy health insurance in 2014, you’ll have to pay a penalty to the IRS. The penalty will be $95 for individuals/$285 for families or 1% of your annual income, whichever is higher.
Each year the penalty goes up. In 2016, it’ll be as much as $695!
3. Your Family of 4 Will Spend about $20,000 Total Per Year
The research we’ve seen says premiums will range anywhere from $6,000 to $12,000 per year for a family of 4. Your TOTAL healthcare cost (premiums plus copayments, coinsurance, over the counter medications, etc.) for a family of 4 looks like it’s going to be around $22,000/year.
A big chunk of this amount may come from a deductible. Many plans these days are high deductible health plans, meaning you have to pay a large deductible up front before your insurance kicks in. We talked more about this last week. If you have a plan like this, try to set that money aside now so you have it when you need care.
4. Tax Credits May Not be Ready in Time
Some people will qualify for a tax credit to use towards their healthcare premiums. The problem is, healthcare reform implementation isn’t going as smoothly or as quickly as planned. The IRS and Department of Health & Human Services haven’t been hooked up to the exchanges yet.
What does this mean? It means that you’ll go online to purchase coverage, but the system won’t be linked so you’ll have to pay the full price up front.
Learn more about how these tax credits are supposed to work.
Healthcare reform will likely impact your budget in one way or another. Start preparing now! Also, check out this list of 7 Things You Can Do To Get Ready Now from HealthCare.gov.
Source: *According to Health Reform Source from the Henry J. Kaiser Family Foundation, include:
People of certain religious beliefs
Members of Native American tribes
Individuals with an income below $9,350
Families with a collective income below $18,700
Anyone who must pay more than 8 percent of annual income toward insurance after employer contributions