Monday, October 28, 2013

Figure out your health care premium and budget accordingly

For the past few weeks, politics have trumped economics. I still find it hard to believe that, with so many deadlines of national importance, our elected officials made certain they enjoyed their vacation time. I was raised with the idea that you didn’t take time off unless your work responsibilities were in order.

Evidently, keeping our nation running and open for business is not the top priority in Washington.
I’m not alone in believing the taxes I pay Uncle Sam every year far exceed my fair share. I even used to comment that I’d like to meet the other family I support. Taxes have grown so much in recent years, I still joke that it feels like I’m carrying the tax burden of two households.

In the past year, I’ve highlighted some of the new taxes in the Affordable Care Act that might impact your pocketbook. The one that most news agencies talk about is the tax penalty for not purchasing health insurance.

Readers also need to be aware that there’s now an additional Medicare tax on investment income that kicks in for married couples with income in excess of $250,000. High-income earners must also pay an additional 0.9 percent tax on wage (earned) income.

These are just a few of the many changes, and there are now additional IRS agents to make certain we all comply.

Because of the new taxes and the way healthcare was restructured and re-categorized, I was hoping that premiums for healthcare insurance would only see modest rate increases. But my instincts told me they’d be significantly higher.

Unfortunately, Blue Cross Blue Shield recently informed me that my instincts were right. And the reality far exceeded my fears. I was stunned when Blue Cross notified me that my current health insurance program was being discontinued.

However, they did suggest another program that I could switch to. I’m aware that health care coverage is complex and I didn’t expect the new offering would have the same coverage as the discontinued program. But the differences were incredible.

First, the premium was 14 percent higher. Significant, but not surprising. The annual deductible, though, was a shocker. For 2014, it will increase a whopping 275 percent over the 2013 amount.

I was so stunned; I redid the math and contacted Blue Cross to make certain I was correct. They confirmed, and I kiddingly told my wife that if I could afford it, our new healthcare coverage program would make me sick.

So it’s important that everyone does their math as soon as possible in order to establish a realistic budget for 2014. Don’t be surprised when all the Christmas credit card bills come in January. Between increased taxes, premiums, and deductibles, I’m projecting the new health care law will increase my own number by an additional $1,000 per month.

I don’t like it, but I have to budget for it. Suddenly the affordable health care act doesn’t feel so affordable. I strongly suggest that everyone does their own analysis and math projections. For some, there might not be any significant change; for others, the change could hurt quite a bit.

But, rather than guess, I urge you to get a handle on it ASAP. You might conclude that, in addition to supporting another family, you’re now also subsidizing their health care.

Fax your questions to Ken Morris at 248-952-1848 or email to Ken is a registered representative of INVEST Financial, member FINRA, SIPC and is vice president of the Society for Lifetime Planning in Troy. All opinions expressed are those of Ken Morris. INVEST and Society for Lifetime Planning are independent companies.