Posted by Larry Hurt

The New U.S. Tax Plan and the Effect on Health Care

The New U.S. Tax Plan and the Effect on Health Care

The new Republican tax bill is complicated, but what it will mean for health in the United States is simple. 

It will denote less health insurance for persons; less health coverage for elderly and needy Americans; lower revenue for doctors, hospitals, less-productive workforce.

The tax bill will be the most critical health care legislation passed since the Affordable Care Act (ACA) in 2010. The law’s two significant health-related aspects are the removal of the penalties paid by people that failed to have health insurance as required by the mandate and the bill’s overall impact on the deficit.

The Congressional Budget Office (CBO), states the repeal of the individual mandate penalties could lead to as many as thirteen million fewer Americans possessing health insurance. About a population of five million is projected to be people who initially purchased health insurance as persons either within or outside the ACA’s marketplaces. Some person will decide not to buy insurance because the penalty has been eliminated. Others, especially higher-income individuals who are not eligible for subsidies under the ACA, will drop coverage due to the rise in average premiums predicted by the CBO. The increase of these will take place because, with the repeal of the mandate, many young, healthy people will leave markets, leaving a sicker, more costly insurance pool behind.

Efforts to reduce federal spending will be stirred by increases in the deficit. Medicare and Medicaid jointly accounted for about $1.25 trillion in federal spending in 2016, which was about 30% of the federal budget; they will be the primary targets for deficit reduction. No guarantee assured that such efforts would be successful, but if are, reforms could take several directions. It could for Medicare include increasing the eligibility age from 65years to 67 years or beyond caps on spending for every beneficiary (possibly reducing covered benefits), or increases in cost-sharing that would result in recipients using fewer services. Reforms would likely lead also to fewer people covered, reduced benefits, and higher cost-sharing for Medicaid.

For conservatives that have long desired to reduce the generosity of entitlements in the U.S., These changes would be a means to reduce the size of government. There is no doubt that American health care can be reduced through carefully planned and implemented reforms in our delivery system. Precipitous cuts, however, could be damaging.

What's the Connection between Health Care and your Taxes?

Minimum essential coverage

The Affordable Care Act (ACC) has mandated that everyone must participate in the duty of health insurance. With the aid of your income, the government can monitor your coverage. Lowest essential healthcare coverage can be gotten through one of the following venues:

  • Health insurance coverage via your employer
  • A program sponsored by the government such as Medicare or Medicaid
  • A health insurance policy from an insurance company
  • Health insurance via the Healthcare Marketplace
  • Coverage under an approved plan by the Department of Health and Human Services

How does healthcare affect taxes

Modified adjusted gross income

If you decide to buy a health plan through the Marketplace, you will require calculating your household’s gross income. It is considered as your modified adjusted gross income and includes all income from all sources, as well as your spouse if filing married. This amount should show your income on your tax return. It determines your qualification for lower-cost health insurance premiums. When filling out the Marketplace application, include:

  • Social Security payments
  • Alimony payments
  • Net income from self-employment and business income
  • Salaries and wages, alongside tips
  • Unemployment payments

Individual shared responsibility provision for tax years after 2018

For tax years after 2018, if they decide not to buy health insurance coverage, then you are expected to make an individual shared responsibility payment with your tax return. The annual fee is ascertained as a percentage of the declared amount of income on your tax return or. The 2018 individual shared responsibility payment is estimated as the greater of:

A family flat dollar amount that is  $695 per individual adult while $347.50 for a child, having a maximum amount of $2,085, or;

2.5 % of your household income more than the threshold of your filing status.

The amount is covered at the national average of the Marketplace’s bronze level premium.

Premium tax credit

You may be qualified to receive a premium tax credit if your tax credit is gotten from the Marketplace. This credit is aim at assisting you with monthly premium payments and is ascertained by the information on your tax return. To be qualified, you must:

  • Make your health insurance purchase via the Marketplace
  • Be unqualified for a plan offered by the government or your employer
  • Not be a claimed dependent on another person
  • Be within the range of a particular income limit
  • Not have a separate marriage filling, except under certain circumstances
Larry Hurt
Contact Member