As the Affordable Care Act known as Obamacare soon takes affect, like many Americans you're probably waiting to see how this expansive overhaul of the healthcare system will affect you. Though all of the financial effects of the insurance reform won't be evident immediately, several consequences of the subsidized mandatory healthcare program will soon become evident.
Understanding the following changes in the mandated healthcare system will help you make the right decisions when it comes to seeking debt solutions.
Your current health insurance plan may change or disappear
Whether you're comfortable financially with your current health insurance or feel you're overpaying, your plan as you know it may change. In order to abide by new standards and avoid certain taxes, companies are likely to phase out some insurance plans and offer less desirable coverage that requires more financial outlay from you. In such cases, it may be more economical for you to leave your insurance and purchase coverage with government subsidies on the Obamacare state health exchange.
Your taxes may be affected
Obamacare will result in two tax changes that may affect you. The first is the amount you can contribute to a medical flexible spending account that allows you to save pre-tax salary for medical expenses. Until 2013, there was no government cap on the amount of money you could put in the account tax-free, but now that is limited to $2,500.
If you deduct a large portion of medical expenses from your taxes, the law also results in significant changes to how you fill out your tax return and your allowable deductions. Prior to Obamacare, a taxpayer could deduct medical expenses that reached over 7.5 percent of the person's adjusted gross income. In 2013, that figure jumps to 10 percent.
Experience positive changes if you're self-employed
If you've always wanted to be your own boss but have stayed employed for the health benefits, the fact that you can obtain affordable non-employer-based insurance all on your own means you can succumb to your entrepreneurial instincts.
Research done by the Kellogg School of Management at Northwestern University on what occurred in Tennessee when the state allowed individuals to obtain health insurance without going through an employer found a significant increase in the number of individuals who chose to chuck off the chains of what the study calls "employment lock." Researchers at Kellogg estimate that the health reform will result in anywhere from 500,000 to 900,000 people going into business for themselves.
So, if you have a brilliant idea for how to make money but have been afraid to strike out on your own because of insurance, now is your chance to open up shop and provide your own debt help.
Though time will tell all of the ways that Obamacare will affect your finances, it's good to know that more affordable care is likely to help you with your debt.
About the Author:
Julie Bawden-Davis is a Southern-California-based writer specializing in personal finance and insurance. Since 1983, her work has appeared in a wide variety of publications, including Family Circle, Ladies' Home Journal, Parenting, Entrepreneur and The Los Angeles Times.