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Celebrating Financial Freedom

These ObamaCare Healthcare Changes Are Coming Out of Your Pocket!

There’s been a lot of debate ever since the beginning of the Affordable Care Act, also known as Obamacare, about whether it’s good or bad, legal or illegal, and so forth.

I’m not going to enter that debate.

However, I believe it’s important to point out some of the costs that have taken effect this year and point out how they may affect your pocketbook.

The Affordable Care Act is Like Baking Cakes

I’ll start by asking you to use your imagination a bit.

Imagine you want to make money baking and selling cakes for friends and family. All you need are a few ingredients and an oven.

But then your neighborhood association discovers you’re running a small business out of your home. Since they make the rules in the neighborhood, they decide that you can only charge $3 per cake, and those that can’t afford a cake will get it for free.

At that point you don’t have many options available. You could ask paying customers to provide their own ingredients to cut down on costs, but that means they’re now buying cakes for people that will get them for free.

Does that sound like something customers would want to do? It’s not fair to the baker, and it’s not fair to the customers either.

Somebody Has to Pay For Obamacare

But that’s the gist of the Affordable Care Act in a nutshell. It’s a promise to fix healthcare by limiting out of pocket expenses, cover all Americans, and ban lifetime caps on benefits.

On the surface that sounds great. But somebody has to pay for all those great things.

You are that somebody.

3 Healthcare Changes That Will Cost You

Below are three important changes to healthcare that began on January 1, 2013 that could affect your pocketbook substantially.

Medical Tax Deductions

In years past, you were allowed to deduct any medical expenses that added up to more than 7.5% of your adjusted gross income.

  • Now- That deduction has increased to 10%.
  • What This Means For You- This means that an average family making $50,000 will have to spend $1,250 more before they can get a tax deduction on their medical expenses. That also means they will be paying another $200-$400 in taxes on that additional $1,250.

Medical Device Excise Tax

Excise taxes are taxes paid for the purchase of physical goods. Medical devices have never before been taxed.

  • Now- Certain medical devices are now taxed at a rate of 2.5%.
  • What That Means For You- This means that the end cost of these devices to the consumer will be going up. It’s not likely that surgeons will absorb the extra cost when they place a pacemaker, artificial joint, or other device.

Flexible Spending Accounts

A flexible spending account allows you to pay for medical expenses with nontaxed dollars. Previously, employers set the limit on how much an employee could put into that account every year. Most employers set the limit at $5,000 or set no limit at all.

  • · Now- The Affordable Care Act caps FSA contributions at $2,500 per year.
  • What This Means for You- This means many families have only $2,500 in nontaxed dollars to spend on medical expenses, instead of the $5,000 or more they once had. This results in more taxes paid to the government. Families with a lot of medical expenses during the year will be hit harder than before because of this FSA cap.

More Affordable Care Act Changes in 2014

These are only three of the changes the Affordable Care Act has brought this year, and even more changes are due in 2014. Who knows what next year’s changes will bring, but you must understand, it’s likely that costs will continue going up for the average family when it comes to healthcare, so start preparing now.

By the way, if healthcare or other costs are causing you problems and you want to find a way to get out of debt, I’ll be launching my Celebrating Financial Freedom online Christian get out of debt course soon. If you’d like to find out more about it, just click here.

"Dr. Jason Cabler is a Christian personal finance blogger, author, and speaker. He teaches how to get out of debt and live a debt free lifestyle through his Celebrating Financial Freedom blog and self study course . His new book "How to Budget- The Quick and Easy Guide to Making a Budget That Works" is now available ( more info here ). He can be reached for interviews or speaking engagements by email , and can be found on Twitter , Facebook , and Google + ."


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