Warning: Medicare and ACA Costs Will Impact Your Personal Finances


It doesn’t matter if you’re young, old- or some age in between: health care costs are increasing. What matters is that you understand why costs are increasing, and what the financial impact is to you. Once you have that information, you need to fit that cost increase into you personal budget.

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ACA (Obamacare) penalty increases for 2016

CBNC points out that the Affordable Care Act penalties for not having health insurance will increase in 2016. They quote a Kaiser Family Foundation study, which states that the fine for a household without health insurance will increase to $969 in 2016. That is a 47% increase over that $661 penalty in 2015.

Now, healthcare.gov (the ACA site) provides information on financial aid for people who have a low level of income. If you know someone who doesn’t have health care coverage, have him or her check out the site.

However, if a household makes too much money to quality for financial aid (see healthcare.gov) AND does not have health insurance, the fine in 2016 will average $1,450 in 2016 (versus $1,177 for 2015).

Here’s a post I wrote with more detail about the Affordable Care Act.

Medicare premium increases for the elderly

I also wrote a blog about Medicare that discussed the difficulties of enrolling in the plan. Medicare, as you probably know, provides health insurance for the elderly. Part B covers services, like lab tests, surgeries and doctor visits. Medicare also covers supplies, such as wheelchairs and walkers.

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Medicare is funded through payroll tax withholdings. There are 4 major Parts to Medicare, including a new Part D that covers prescription drugs.

Kiplinger explains that the rates people pay for Part B will increase on Janaury 1, 2016. The increase may be from 15% to as high as 52%.

Fox Business reports that Social Security benefits were not given a Cost of Living (COLA) adjustment for 2016. Seniors spend about 15% of their income on medical expenses.

With no COLA increase, the federal government will charge Medicare beneficiaries with high incomes a bigger percentage of the Medicare increase. Low-income retirees will pay a small increase and high-income elderly people will pay a bigger percentage increase.

Medical debt affects your credit rating

So, we have a situation where younger people may have an issue with ACA costs increasing. The elderly face higher Medicare costs. Now, some people may simply visit an emergency room, get treatment and not pay the bill. Well, as I pointed out in this post, not paying medical bills will negatively impact your credit score. So not paying should not be an option.

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Revisit your personal budget

The solution here is to revisit your personal budget. This post can help you review your spending and make some decisions about cutting discretionary spending. Maybe you go to Starbucks and order black coffee (do they still sell black coffee?) Or, maybe you drop the premium version of Pandora and listen only to the free version (I have it on right now).

While medical costs can be a challenge you can find solutions and have peace of mind.

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) http://www.accountingaccidentally.com/

(you tube channel) kenboydstl

Image: Stethoscope, Dr Farouk (CC By 2.0)





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