OK, so by now everyone has heard the term Obamacare, and most have at least some idea of what it is and how it will impact them. We thought we’d take a minute to answer the question that’s been on everyone’s mind. Where is the money coming from?
As with all government programs, the costs associated with Obamacare must be sourced from some budget line item, right? Here are the basics:
Not surprisingly, Obamacare is being funded primarily through taxes, including:
– an expanded Medicare tax on incomes over $200,000/$250,000for individuals and joint filers respectively,
– an excise tax on high end insurance policies,
– an annual fee on insurance providers,
– specialty taxes on pharmaceuticals and high-cost diagnostic equipment, and
– a federal sales tax on indoor tanning services.
In addition to these taxes, additional Obamacare funding is being provided by offsets (such as cost savings related to changes in Medicare Advantage).
The specific breakdown for Obamacare (with associated figures) are as follows:
– $210.2 billion from a .9% increase in the Medicare tax rate and a 3.8% added tax on unearned income for high-income taxpayers
– $60 billion from an annual fee being charged to health insurance providers
– $32 billion from a 40% excise tax on health insurance premiums in excess of the $10,200/$27,500 limits for individuals and families respectively
– $27 billion from an annual fee being charged to manufacturers and importers of branded drugs
– $20 billion from a 2.3% excise tax on manufacturers and importers of certain medical devices
– $15.2 billion from an increase in the adjusted gross income on medical expense deducations (from 7.5% to 10%)
– $13 billion from an imposed limit on flex spending in cafeteria plans (max $2,500)
– $14.9 billion from other revenue sources (including the above-mentioned offsets).
As with most governmental programs, the amounts seem staggering and the exact degree of impact at the individual level has yet to register. Ultimately, the majority of the revenue raised for Obamacare will come from high-income taxpayers and the insurance and related providers themselves.
At the end of the day, the total bill for Obamacare will be significant and the true success and/or benefits of the program itself remain to be seen. If you have any questions about Obamacare and how it will impact your small business or your employees, please contact Lescault and Walderman at 866-496-2042.
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