Federal Health Care Law Springs Big Surprise

Mar 19, 2013 by


Federal Health Care Law Springs Big Surprise




To say federal health care law springs big surprise is an understatement. The 2010 Affordable Care Act, commonly called Obamacare, has a provision employers say they either overlooked or didn’t realize it was hidden in the fine print.

Obamacare’s big surprise is a little number. That number is $63 and by itself it is relatively small. However when it is multiplied by the number of people this law covers in 2014 you get a huge number. That huge number is $25 billion.

$25 billion is the estimated amount of money the federal government will collect because employers will be paying the federal government $63 for each person they insure. That is on top of the premium for the health insurance plan and other fees.

When Boeing and a union health plan covering retirees of General Motors, Ford Motor Co. and Chrysler, among other groups, have asked federal regulators to exclude or shield their insurance recipients from the fee, you can bet it is a heck of a cost. Federal health care law springs big surprise really shouldn’t be any surprise for anyone. When people run to the government for anything, they may get it but the cost is usually steep.

As you might expect, insurance companies, which helped put the fee in the law, say the fee is essential to prevent rates from skyrocketing when insurers get an influx of unhealthy customers next year. The fee is part of a new insurance landscape created by the health law that will forbid insurers from denying coverage to people with pre-existing conditions.

To find a way to pay this fee, employers have considered lowering the benefits their health insurance plans will offer. That means that $63 fee is still being indirectly paid by the workers the law was supposed to help.

Employers have also mentioned passing along that $63 fee directly to the covered employees. Instead of the employer reducing benefits or taking it out of the coffers, it’ll come directly from the workers.

As employers and government bureaucrats dig deeper into the law, some of them are saying this so called affordable health insurance bill isn’t so affordable after all. To boot, other provisions of this bill have socked lower-income workers square in the pocket book.

For example, the new limitations on flexible spending arrangements will hit taxpayers of all income levels. It does so by limiting the amount a person can set aside tax-free in a flex plan to $2,500 per year.

Before the Affordable Care Act became law, there was no technical upper limit established by any law. It was employers who imposed a $5,000 maximum.

The Affordable Care Act was supposed to help those people with predictable medical expenses and those without health insurance. However if you are a person with high levels of predictable medical expenses, the forced reduction in flex-plan use could cost you hundreds of dollars in extra income, Social Security withholding, and Medicare withholding taxes.




Now that the law is passed and being implemented, politicians have quit extolling the virtues of this law. They realize the consumer can do math and when they finish adding up the out of pocket costs because of new taxes and fees and reduced tax deductions they may be out of a job.

One other kick in the pants for the consumer is the medical expense deduction. Prior to Obamacare, the floor on itemized medical deductions was 7.5%. Now thanks to Obamacare the floor on itemized medical deductions is 10%.

The potential is obvious. It can reduce your deductions by thousands of dollars thereby costing big dollars via a substantial tax hike. Federal health care law springs big surprise maybe should read federal health care law springs big surprises.


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