Healthcare and Taxes: What You Need to Know
Healthcare and taxes is a confusing subject in the United States, and it has been this way ever since Obamacare came into the picture. American taxpayers are obligated to get insured or face a tax penalty — but that’s just scraping the surface of how health insurance impacts taxes here. It’s a complex subject to grasp fully, especially if you don’t follow politics, but it’s important to understand for personal finance reasons.
Where Healthcare Stands in 2017
Right now, there seems to be a serious risk of a successful Obamacare repeal act, and that could have a major financial impact for Americans. In fact, many health insurance providers are ditching Obamacare altogether. Anthem made a big move by leaving Ohio, putting more than 10,000 without credible coverage. If only this company leaves the marketplace, it would mean no available health insurance for more than 275,000 Americans.
Both citizens and health insurance companies are focusing on whether the American Health Care Act (AHCA) bill will pass. This bill, also known as Trumpcare, passed the lower chamber (House Republicans) in May. But, a revised bill is expected by summer’s end.
The repeal of Obamacare makes for pivotal changes to healthcare costs and implications for American taxpayers. With Trumpcare, there are no tax penalties for non-insured citizens. Instead, there’s a sizable premium (30 percent) added for the first year after reinstating coverage if uninsured for 63 or more days.
Even so, the Trumpcare movement is in its early days, and things are subject to change. The current goal is to achieve tax code reform this fall, but there are no talks of backdating the mandates. Thus, as an American taxpayer, you must look at Obamacare’s impact on your taxes for the 2017 season.
Facts: What to Know About Health Care and Your Taxes
The prospects look good for the future. While there are problems with Trumpcare too, the revised bill could fix the big concerns. This change could make healthcare less of a tax burden for Americans, but for now, check below for some things you all should know.
Be Ready for the Tax Penalty
Are you not insured? If so, the 2017 tax bill will include a penalty unless you qualify for one of the exemptions. The penalty for running a full year without coverage is high on a $100,000 income — doing so will cost you $2,242.50 if you have no kids or dependents. Similarly, the hit would be $992.50 on a $50,000 annual income. Use the Obamacare tax penalty calculator to get an idea on what it will cost you.
Not Disclosing Health Insurance Can Cost You
There is some confusion floating around the country right now. Americans previously needed to disclose whether they had adequate healthcare coverage. This year, tax returns were not blocked for not disclosing this fact. But, the IRS’s choice to accept these claims does not mean that a non-disclosure prevents a tax penalty. Instead, non-insured taxpayers will receive an adjusted tax bill once the IRS does a manual assessment. Essentially, just because Trumpcare is gearing up for a 2017 takeover doesn’t mean Obamacare is out of the picture when filing taxes next year.
Millionaire Households Can Prepare for the Best
The 400 top-earning taxpayers in the United States will save an average of around $7 million in Medicare taxes once Trumpcare takes effect. The 0.9 percent Medicare tax on incomes over $200,000 (and $250,000 for couples) will be removed in the event of a successful repeal. But for now, wealthy taxpayers must keep these high costs in mind when preparing for their tax bill next year.
Healthcare in the U.S. is going through revolutionary changes. It’s important for American taxpayers to stay aware of the latest developments. By being in the know, you’ll have better control over your finances.