Folks, the “Obamacare” penalties will soon be realized. You see, 2014 is the year that the penalty for not having insurance is supposed to take effect. Actually, it was to take effect last year, but the government arbitrarily changed the date. Nevertheless, these penalties are real, and they will be added to your overall tax bill if you do not have “minimal essential coverage.”
In addition to the individual penalty for not having insurance, businesses that employee over 50 FTE (full-time equivalent) employees must provide health insurance that meets minimal standards, or face punishing fines, as well. Some larger businesses have completed cost studies, weighing continuing coverage or dropping it and paying the fine. It turns out that it makes better economic sense to just pay the fines. Time will tell if the majority of companies will continue to bear the insurance burden or just shed the administrative nightmare and just pay a “tax” on the other taxes companies pay to the government.
As an aside, I hope you all realize that companies don’t really “pay tax.” Tax is just an additional cost of doing business, and that built in cost is reflected in the price of goods and services. In the end, it is the consumer paying the tax thru inflated prices. The companies are just the conduit for paying that cost.
In summary, the coming years will prove interesting. The Affordable Care Act, or Obamacare, implements a slew of taxes that most Americans have not heard of yet. There’s tax on investments, new brackets, tax on medical devices, tax on “Cadillac plans,” taxes from changes to FSA and HSA plans, and much more! Overall, this new law creates a new regulatory burden that will cost EVERYONE. Have you ever heard the phrase “there is no such thing as a free lunch?”