How Might Healthcare Reform Impact Me

Some aspects of the healthcare reform have taken effect, and others are being phased in over several years. Nevertheless, the majority of Americans will be impacted by the changes.

Today, we will review several of the changes that are on the horizon. Each household should consider how these changes may impact them so that they can plan ahead against any potential negative result.

Extended coverage for children

Insurance providers must continue to cover children to age 26. They also cannot be denied coverage due to preexisting conditions.

For some families, keeping their older children as part of the family plan may be more cost effective than having the child obtain coverage on their own. On the other hand, single parents with only children may find that separate individual policies are cheaper than a family plan.

Limits on deductibles

Many of us choose health care packages with high deductibles to reduce the monthly premium cost. This can work well for individuals and families who don't have a huge need for medical care. However, the reform plans to place a cap on deductibles.

If we are already in a plan with a high deductible, the plan will be grandfathered. It will have to accept some of the new required provisions, but it may no longer be available for new enrollees.

Higher premiums

Since the reform is designed to make sure everyone has coverage, the insurance pool will now contain many more individuals who are more likely to have costly claims. This will result in everyone sharing the cost, and premiums may be higher for everyone.

Higher taxes

Single taxpayers making more than $200,000 per year and couple making more than $250,000 per year will see an increase in Medicare payroll taxes. There will also be a new Medicare tax on dividends and capital gains, in addition to an increase in the tax rates on these unearned income sources.

New taxes and penalties

As the current healthcare plan stands, every American will be required to have healthcare insurance, whether they want it or not. Beginning in 2016, there will be a fine for not being insured. This will amount to the greater of $695 or 2.5% of income.

Higher interest rates

If the government is unable to control costs as they expect, it is possible that there may be more federal debt to pay the costs. More debt will increase the likelihood of higher interest rates all around.

We should monitor our variable rate loans and be prepared to seek a fixed rate alternative that will reduce the possibility of a sudden dramatic increase in our monthly payments.

Higher employer expenses

Beginning in 2014, any company with 50 or more employees will be required to offer healthcare insurance. There will be a $2,000 per employee penalty for choosing not to comply.

Companies with less than 25 employees and average annual wages under $50,000 per employee are exempt from penalty and may get a tax credit for providing insurance coverage.

While the healthcare reform was designed to help the country overall, many of the changes will result in higher expenses that will be passed on to many "average" Americans. If we don't carefully plan how we will combat these changes in advance, we may find ourselves struggling financially much more so than we are right now.