To summarize the chaos in the health insurance arena would take more column-inches than I devote to this space. But let me touch on two lesser known consequences of the Affordable Care Act (Obamacare) that – regardless of your politics – will have you shaking your head…again.
Itemized Deductions – prior to 2014, the Jones’ could deduct medical expenses that exceeded 7.5% of their adjusted gross income. So when Mom had foot surgery and ran up a $15,000 bill – she’d get a tax deduction of $7,500 if the family AGI was $100,000 (100,000 x 7.5% = $7,500. $15,000 less $7,500 = a deduction of $7,500). If the Jones’ were in the 30% tax bracket – that deduction would decrease their tax bill by $2,250.
But in 2014, the exemption threshold goes to 10% of AGI – reducing the Jones’ deduction, and adding $750 to the family income tax bill. And this in a year when more than 80% of Americans (and certainly the Jones’ because of their income) are facing huge health insurance premium increases under the ACA.
Short Term Health Insurance – While short term health insurance has been around for decades, it’s been given new life under the ACA – and sales are through the roof. Insurers will sell you an inexpensive, “short-term” (less than one year – often 364 days) health insurance plan to those who are healthy.
Get sick while on the plan, forget about renewal – and forget about them paying expenses past the policy term. No worry though – because the ACA will take you with pre-existing conditions and start paying right away.
Call it a loophole – but the ACA has given rise to an industry that insures the healthy – because the government plan will accept the sick. But think of the long-term consequences. Imagine how inexpensive car insurance would be if the insurer could cancel coverage the minute you wrecked the car. Then – imagine how expensive the government plan would be if you could insure your wrecked car immediately – and get it fixed under the new – government plan? It’s called “adverse selection” – and our government geniuses have just institutionalized it forever.
And to think – these are just two of the more mundane consequences of the ACA. Eat your vegetables and stay healthy, my friend!