Potential Consequences Of Obamacare

How Obamacare May Affect Your Finances

As the Affordable Care Act—known as Obamacare—soon takes effect, like many Americans, you’re probably waiting to see how this expansive overhaul of the healthcare system will impact 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 clear.

Understanding the following changes in the mandated healthcare system will help you make informed decisions when it comes to
seeking debt solutions.

Your Current Health Insurance Plan May Change or Disappear

Whether you’re financially comfortable with your current health insurance or feel you’re overpaying, your plan as you know it may change. To comply with new standards and avoid certain taxes, companies are likely to:

  • Phase out some insurance plans
  • Offer less desirable coverage
  • Require more financial outlay from individuals

In such cases, it may be more economical to leave your employer’s plan and purchase coverage with government subsidies via the Obamacare state health exchange. Learn how to
better manage your budget here.

Your Taxes May Be Affected

Obamacare introduces two
notable tax changes:

  • Flexible Spending Account (FSA) Cap: As of 2013, the maximum annual pre-tax contribution is capped at $2,500.
  • Medical Deduction Threshold Increase: Prior to Obamacare, you could deduct medical expenses exceeding 7.5% of your adjusted gross income. That threshold now increases to 10%.

Positive Changes for the Self-Employed

If you’ve held back from starting your own business due to the need for employer-provided health insurance, Obamacare could be your opportunity. Affordable non-employer-based insurance allows greater freedom for aspiring entrepreneurs.

A study by the Kellogg School of Management at Northwestern University found that when Tennessee allowed individuals to obtain their own insurance, many left traditional employment. Researchers estimate that Obamacare could lead 500,000 to 900,000 Americans to become self-employed.

If you’ve been waiting for the right time to launch your business, this could be it. You may even be able to
get better control of your debt in the process.

Though only time will reveal the full financial impact of Obamacare, access to more affordable care is likely to provide some relief for your budget and long-term 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.

Julie Bawden-Davis

Julie Bawden-Davis is a bestselling journalist, novelist, blogger, and YouTuber. A prolific author, Julie writes in several genres. She enjoys creating page-turning suspense served up with a dose of romance, garden books that turn any brown thumb green, and spiritual books meant to enlighten and inspire. Widely published, Julie has written 45 books and more than 4,000 articles for a wide variety of national and international publications. She lives in Southern California, where she enjoys sunny, blue skies most days and year-round gardening. Julie gains inspiration from being surrounded by plants when she writes.