How the Health Care Ruling Will Affect Your Finances

by Emily Guy Birken · 25 comments

No matter your opinion on the recent Supreme Court ruling on the Affordable Care Act, changes mandated by that act might affect your finances in the future. Unfortunately, between the talking heads and angry individuals on both sides of the health care debate, it can be rather difficult to figure out exactly how your finances will be affected. Here is a basic breakdown of what the ACA will do for the average American:

Tax on the Uninsured

This is by far the most controversial aspect of the Supreme Court’s recent ruling. According to the court’s decision, Americans will be required to either have or buy health insurance as of 2014. Otherwise, you will pay a tax penalty of:

  • 2014 – No more than $285 per family, or $95 for a single adult, or 1% of income, whichever is greater.
  • 2015 – No more than $975 per family, or $325 for a single adult, or 2% of income, whichever is greater.
  • 2016 – No more than $2,085 per family, or $625 for a single adult, or 2.5% of income, whichever is greater.

There are several exemptions for this penalty, however. There are eight categories of exemptions: “These include individuals who will be exempt for religious reasons — for example, Christian Scientists; incarcerated individuals; undocumented aliens; individuals who can’t afford coverage (i.e., their required contribution would exceed 8 percent of their household income); individuals who will be without coverage for less than three months; other individuals deemed to be in a ‘hardship situation,’ as will be defined eventually by the Secretary of Health and Human Services; individuals with incomes below the federal tax-filing threshold; and members of Indian tribes.”

No Exclusion for Pre-Existing Conditions

As of 2014, it will be illegal for insurance companies to deny or exclude coverage for those individuals who have pre-existing conditions. Children under the age of 19 who currently suffer from a pre-existing condition do not have to wait to apply: as of right now, health insurance plans cannot deny benefits to minors with pre-existing conditions. In addition, there are now national high-risk pools that individuals with pre-existing conditions can join in order to get health insurance sooner than 2014.

This provision of the ACA will make it much less likely that a chronic condition could lead to huge medical bills.

Are You Going to Be Fully Audited if You Don’t Pay Up?

The next big fear is that failure to pay will result in a tax audit. You probably won’t be audited if you don’t pay the penalty. Instead, the IRS will send you a letter letting you know that Uncle Sam wants your money. The law makes it clear that failure to pay the penalty won’t result in criminal charges. Additionally, the government can’t put levies or liens on your property to collect this penalty. Instead, you are likely to be subject to a withholding of future tax refunds. So, if you’re due a refund, and you haven’t paid your penalty for not having health insurance, you might not receive the money, since it will be used to pay what you owe.

Effect on the American Economy

It is unlikely that any economist can puzzle out the exact effect this ruling will have on the American economy. However, we do know that the federal government expects to spend over $1 trillion over the next ten years in order to subsidize health care coverage and expand Medicaid eligibility.

It is important to note that some experts expect the new law to reduce the deficit. According to, “the nonpartisan Congressional Budget Office estimated that the law could reduce deficits modestly in the first 10 years and then much more significantly in the second decade.”

Part of the reason why it is difficult to determine the overall economic fallout of this decision is because we cannot easily calculate the costs of continuing to have so many Americans remain uninsured.

The Bottom Line

The intention of this law is to make health care affordable for all Americans. While there may be some growing pains as we adjust to the individual mandate and other aspects of the ACA, overall this ruling should help the bottom line of families and individuals.

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{ read the comments below or add one }

  • Nancy says:

    Here is something I found out the hard way. This is directly from Cover Oregon

    How do I know if the insurance offered by my employer is affordable?
    An employer-sponsored plan is affordable if the portion of the annual premium you must pay for self-only coverage does not exceed 9.5 percent of your household income. (See question 7 for what is included in household income.) The affordability test applies only to the portion of the annual premiums for self-only coverage and does not include any additional cost for family coverage. If the employer offers multiple health coverage options, the affordability test applies to the lowest-cost option available to you that also satisfies the minimum value requirement.

    What this means is that they only look at the lowest premium on an employer offered insurance policy and not what it costs to put the family on it. Therefore, if the employee’s premium is $100 and then it costs $1000 to include his family, then the monthly premium is $1,100!!!!!! And because family insurance is available, you are not about to qualify for a tax premium from the government to bring down costs. THIS IS INSANE!!!!! How many average households can afford this?

  • Russell Hoffman says:

    Obama care has an intent. That being the eventual subjegation of the people
    to the goernmant’s one payer system. Goodbye Freedom. And they want to get our guns. Hello 1984.

  • Kevin@moneywisdomtips says:

    Go get a good insurance and you may be free of the burden of this policy.

  • Kate says:

    I live in Canada, which already has this kind of rubbish system. Believe me, it is not free. You cannot legislate that doctors and nurses and technicians will work for nothing — in fact, you cannot force them to work for you at all. A large percentage of the doctors in Ontario are up in arms because the government, who is their employer, has unilaterally slashed the fees they can charge and the wages they can earn, and even more than before they will be heading to the USA or back home to India to work where free enterprise is not yet against the law. “Free” medical care, my butt. I paid $21 for THREE PILLS tonight, and that was cash money. “Free” health care does not include prescription drugs.

    • Shane says:

      It is interesting to see the reaction from someone who is currently having to deal with a unilateral healthcare system. I myself haven’t figured out exactly what is and isn’t good about the bill, but have been reading it and I am not finding many things I like about he program.

  • Victor Cuevas says:

    You’re living in a fantasy world if you think:

    1. This will reduce health care cost: Cost are already going up as a result of this law and all of it hasn’t even been implemented yet.

    2. This will reduce the deficit: Since when has any massive bureaucratic entitlement ever reduced the deficit.

    3. This will only cost 1 trillion dollars over the next 10 years: The CBO had to factor the cost based on the criteria the government gave them. That means the program is prefunded for a few years before the full law takes affect. Then the cost is calculated based on only a few years of implementation, not the whole 10 years of use. When the CBO works the numbers as they should be done, the results are quite different.

    4. You will keep your current health care plan with your employer: Health care premiums will continue to increase for employers because of this law. In 2014 when the pre-existing conditions go away, premiums will skyrocket. The tax penalty employers will pay for not providing health insurance is way less than providing health coverage. They will drop your coverage, as many of already indicated they will. Then you will be on the street shopping at one of the exchanges set up in your state. That coverage will be more expensive than your employer’s insurance. So you won’t pay for it and opt to pay the tax, which is far less than health insurance. If you get sick or hurt, you’ll just call the insurance company to get insurance to pay your bill. Then you’ll drop your coverage later. How do you think health insurance can operate like that? This is all designed to get us into a single payor system. Many democrats already admit to this. Obama himself in a speech to unions a few year ago stated he is for single payor. This law is just the precursor to a single payor system.

    Don’t you realize this law will not increase health insurance coverage? It’s a scam. Folks, just think about this using your common sense. It will put a tax on middle class and lower income people because you won’t be able to afford health insurance. So you will pay the tax. Kiss your tax returns each year goodbye. Rich people can pay and poor people earning under 10K a year get it free. The rest of us are stuck with a screwed up law. That’s the real truth.

    As I’ve stated, many if not most, employers will drop health insurance and opt to pay the penalty. Smaller companies for sure will drop their insurance. They already pay more because, with fewer employees, their risk pool is smaller. Forget this so called national risk pool for pre-conditions. Do you really think you’ll be able to afford that insurance. It’s not going to be cheap at all.

    Those companies that do keep their health insurance will have deductibles around 10K to make it any where close to affordable. The health exchanges will be more expensive than paying the tax. Obama has already given thousands of exemptions to this law to companies and unions, for the time being. What’s the use of the law if you turn around and give exemptions to companies. He gives them because otherwise these companies will lay off people. And many of the taxes built into this law haven’t even been implemented yet. There’s even a tax coming on “Cadillac Plans”, health plans that have generous benefits like low deductibles. So those plans will go away. But unions get an exemption. How about that. Obama’s biggest supporters, the unions, get a break from some provisions of this law. So YOU get to take up the slack. What a racket!

    Bottom line is this. If you believe Obama and the supporters of this law that Obama care will extent high quality health care to everyone, and it will be affordable, and it will not hurt this nation financially, and it will help reduce the deficit, and all those other nice things they say, GET YOUR HEAD OUT OF THE SAND. Spend the next month researching yourself. Nancy Pelosi herself, the then speaker of the house, in her famous speech said, when asked about the law, “You have to pass the law before you can find out what’s in it”. The democrats who voted for this law didn’t even know what was in it. It’s 2500 pages long and none of them read it. Obama said he would be a transparent president but no one got to see what was in the law before DEMOCRATS passed it. Not one Republican voted for it. The democrats had the majority in both house and rammed the law through. The majority of America didn’t want it. So in the 2010 elections, more democrats lost their seats in congress at one time than ever before, not to mention a huge shift in governorships that went to Republicans. This was a bad law when it was passed and even a worse one now, since we know much more about it.

    We should repeal this law and start from scratch with something that makes economic sense for this nation. We’re at the point of bankruptcy and have had our national credit rating reduce for the first time ever. This is the slowest economic recovery since the Great Depression. The is the longest unemployment has been over 8% since the Great Depression. This is the highest unemployment we’ve seen among the minority communities in modern times. This is the highest deficit our nations has ever had. It has doubled in the almost four years Obama has been president.

    Folks, you have to wake up. We’re in deep trouble. And this law is making it worse. What good is Obama care when people don’t have jobs and the nation goes broke.

    You really want hope and change? It starts with changing who’s in the white house.

    • Katherine says:

      Well written Victor.
      I wish people would get the blinders off and not have to wait to have the train hits them before they understand how badly is going to hurt all but a lucky few.

      • Whoa2ya says:

        You are absolutely right! I don’t understand how so many people believe the Affordable Care Plan can possibly be affordable!! Look at Britain, look at Canada – their social health care is not only bankrupting these countries, the care they actually receive is substandard to say the least. Oh and I see that illegal aliens are exempt as well – ha!

        • Marie says:

          Hey Whoa2ya, US is in a worse financial situation than the UK. Not my fault your government will spend 4 trillion dollars on one war and mine will spend it to help citizens. It is not my fault your Government spends so much on police because your crime rates are astonishingly high. The NHS costs about 75 billion per year. Divide the 4 trillion your Government spent on ONE WAR by 75 billion (NHS COST PER YEAR), then you are left with 57 years that the NHS spends on their health care to match your 4 trillion but if you account that the costs will go up, the UK will have 50 ish years of the NHS being free to match what you spend on ONE WAR.

          Yep, I’ll take my 50 ish of universal free health rather than 4 trillion spent on one war along with deaths of soldiers.

          Bearing in mind you have so many wars you spend billions in, accounting for all of them we (UK) could probably spend 200 years on the NHS to match what you spend on War and Police (not saying police is not a worthy cause, but extremely high crime rates means more fire arm and more and more police, SWAT etc.).

          Or if you say its 3 trillion

  • Liberty Is Dead says:

    “The intention of this law is to make health care affordable for all Americans. ”

    No, the intent of this law is to bring as many people into the government system, drive private insurance out of business, thus leading to single payer (GOVERNMENT) “healthcare”.

    This will give the ruling class absolute power over their subjects, aka “ordinary citizens”.

    • Ma says:

      Nope. The public insurance option of the draft legislation was killed at the last minutes by the for profit health ins lobby. This law, like most, was driven by profit.

  • Martha says:

    I’m sure all employers who currently offer health benefits will continue to offer them for the same cost next year and the year after that, and basically forever. The president said if we like our health care coverage, we can keep it. He was telling the truth.

    • KT says:

      Unless your comment was meant ironically, it’s far from true. Employers who find it more advantageous to pay $2000 per year per employee to the government not to have a health insurance plan versus paying $6000 to $8000 to subsidize single coverage for that same employee may well drop their insurance plans.
      As to offering health benefits for the same cost next year and “basically forever”, that hasn’t been true for a very long time. Each year insurance costs increase by double digit for many employers and they have no choice but to pass along those costs to their employees. And employees who are fortunate enough not to have their health insurance premiums increase pay in different ways – it’s usually due to either not getting a raise or getting a much smaller one than they would have received if the health insurance costs hasn’t gotten up.
      I suggest people do a lot more research into this before making the type of assumptions made above. Health care is not going to be the same when this game changer goes into effect.

  • Charlotte@EverythingFinance says:

    I agree, I’m glad we have insurance thru my husband’s company and that they won’t be allowed to refuse children with pre-existing illness. The rest is yet to be seen how it will affect this country.

  • Cherleen @ My Personal Finance Journey says:

    I am glad to hear that insurance companies cannot deny children due to pre-existing condition. It was not their fault nor did they chose to be born with an illness. Nobody wants to get sick and stay in bed for days or months or years. It is good that the government will be spending for free medical care.

  • Shilpan says:

    How can deficit go down when our federal government is expected to spend over 2 trillion to fund this massive care?

    • Ginger says:

      It will go down because the hospitals will not be getting large tax deductions for their losses because they have to take uninsured people in the ER. Also, if you make more than $200,000 you will have a tax increase. Then take into account that the money the penalties take in will mostly cover if one of those people go to a hospital and the hospital takes loss.

  • Kevin Ashwe says:

    The ruling will surely affect us.The govt of several nations are spending so much on health and now they are trying to cut cost by all means

  • Marbella says:

    It’s good that everyone has access to free medical care.

    • Katherine says:

      The Affordable Health Care Act doesn’t provide (nor is it intended to provide) “free medical care.” I’m always a bit baffled when people think any medical care is “free.” Doctors are not free, hospital and/or clinic visits are not free, xrays/technicians/lab results/ultrasounds/CT scans and MRIs are not free. I don’t work for free at my job – nor, I suspect, do you either so why assume health care professionals should/would work without pay – that’s the only way this could actually be free and even then you’d have to pay for all material goods involved.
      Until people get over this mistaken notice that medical care doesn’t come with a huge price tag, health care costs will continue to spiral out of control.

      • Marie says:


      • Marie says:

        IN ENGLAND IT IS!. It is because our Government are better.
        do you either so why assume health care professionals should/would work without pay – that’s the only way this could actually be free and even then you’d have to pay for all material goods involved.

        Don’t lash out because your Government spend their money stupidly , and there are other ways it could be like the FREAKING NHS IN EUROPE.
        If you’re on Holiday abroad in the EU and you are a EU resident if you apply for a free card that entitles you to free health care in Europe.

        If you break your leg in Berlin, Germany and you go to a hospital Germany NHS will claim it from the UK (if you are a UK resident).

        The Affordable Health Care Act doesn’t provide (nor is it intended to provide) “free medical care.” I’m always a bit baffled when people think any medical care is “free.”

        Medical care in Europe is :), if you can stop being narrow minded by lashing out at someone who obviously lives in a better country (Europe is better to live in). Baffled? Learn some culture and actually learn what the NHS is, our Government spends miles less than yours when it comes to Wars and spends the money on better stuff.

        And our educational system is better 20th out of the World, US 28th.

        USA is a joke, no legal age to stay in school, people can drop out?
        60 percent of people go bankrupt because of medical bills?
        College is not priced for normal families. In the Uk Cambridge (2nd best university in the World) costs the same as a community college in the UK, all universities are £9,000 a year or CHEAPER. Difference is that in the UK you get into university based on GRADES not MONEY.

        So before you get high and mighty about how expensive health care is, it is doable in terms of free health care 😀

  • Tim says:

    1 trillion over 10 years is not such a large amount when you consider that the US Government has spent 3-4 trillion on the wars in Iraq, Afghanistan and Pakistan in a similar period of time. Surely the health care for uninsured and under-insured Americans will gain more for America as a country than these costly wars?

    • Helen Roberts says:

      Speaking of the US govt. spending trillions…..not to mention the millions our Liar-in-Chief spends on his
      fabulous vacations!!! I don’t remember either Bush or Clinton ever behaving in such a wasteful manner! Bush
      used to go to his ranch in Texas! And the Clintons likewise were more frugal that the Anointed One…..

  • Lance@MoneyLife&More says:

    I am glad I have insurance through work and don’t have to deal with all of this junk. Glad you have the information for those who need it though.

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