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New Taxes and Fees: How You’ll Pay for Obamacare in 2014
By
Alyene Senger
January
2, 2014
Obamacare
contains 18 specific tax hikes, mandates, or penalties that cost
Americans money, and three new ones take effect in 2014. This is only
the beginning—watch how two of these taxes get worse in the years
to come.
1.
Individual Mandate Tax. The individual mandate is designed to
strong-arm individuals into purchasing government-approved health
insurance or facing a tax penalty. In 2014, the penalty for not
purchasing insurance will be either $95 or 1 percent of annual income
(whichever is greater). Very few, if any, people will end up paying
just $95, because individuals with an annual income of only $9,500 or
less would likely qualify for Medicaid or a hardship exemption from
the mandate. The mandate increases drastically in coming years,
rising to $325 or 2 percent of income in 2015, and $695 or 2.5
percent of income in 2016—whichever is greater.
2.
Health Insurer Tax. One of the largest tax increases in the law is an
annual fee imposed on health insurers based on their share of the
market. It is estimated to raise $8 billion in 2014 alone. The tax
will more than likely be passed on to consumers through premium
increases. An actuarial analysis by the consulting firm Oliver Wyman
projects that in 2014, this tax will increase premiums by 1.9 percent
to 2.3 percent. And the impact will be greater in later years as the
tax increases.
3.
Reinsurance Fee. This fee isn’t included in the list of 18 tax
hikes, but it’s another one that will impact the cost of insurance.
Health insurers will have to pay the temporary fee on group health
plans to help spread the cost of the covering those in the individual
market, inside and outside Obamacare’s exchanges. The fee begins in
2014, costing $63 per covered person and decreasing in 2015 and 2016.
Like most taxes and fees, the result will likely be higher insurance
premiums.
Sneak
Peek at 2015: Employer Mandate. By law, the employer mandate was
supposed to begin in 2014, but the Obama Administration delayed
enforcing it until 2015. The employer mandate forces employers with
50 or more full-time employees (defined as those working 30 hours per
week) to offer government-approved health coverage or pay a penalty.
The penalty varies—either $2,000 per employee after the first 30
workers, or $3,000 per employee receiving subsidized coverage in the
exchange, whichever is less.
Regardless
of the delay, many businesses have already adapted by reducing hours
for their employees—falling under the threshold to avoid both the
cost of coverage and the penalty.
We
need health reform that works for Americans—not against them.
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