Earlier this month, the U.S. Senate and the House passed what was known as the largest tax reform in the United States within the past 30 years. It’s as high as $1.4 trillion, with Trump calling it a “Christmas gift” to the public.
With Trump’s policy in effect for 2018, are you actually paying more or less tax money?
The Tax Policy Center predicts that about 80% of the population will have reduced taxes next year. After 2025, only the wealthiest will be able to enjoy the tax cut benefit.
Another mandate, effective starting 2019, is the repeal of the health insurance requirement under the Affordable Care Act. This is the individual mandate that requires all individuals to obtain health insurance otherwise pay the penalty.
Many individuals still have a common misconception that they will not face any penalties if they don’t have health insurance for 2018. With that being said, KCAL would just like to remind you that that is incorrect!! For 2018, if you do not have health insurance, you will have to pay a fine.
Why? Because the new tax law repealing the individual health insurance mandate becomes effective in 2019!
The fine will show up on your tax return so don’t be surprised when you see it!
How much is the fine? Under the 2018 state law, the penalty is 2.5% of your annual household income, or $695 per adult, whichever is higher.
For example, if you are a two person household with an annual household income of $70,000, then your fine would be around $1,750 (70,000 x 2.5% = 1750, which is greater than 695 x 2 = 1390).
With no more penalties in the future, will you still buy health insurance?
With the repeal of the individual health insurance mandate, many insurance agents predict that the young and healthy pool of individuals will choose to not buy health insurance. With the premium increase, many individuals question whether it’s more worth it to pay the premiums or the penalties.
According to the Congressional Budget Office (CBO), this repeal would result in an additional population of 13 million uninsured individuals, with 5 million previously insured under Obamacare, but switching out.
Since the healthy, younger, wealthier individuals may not buy health insurance, the remaining sick, elderly and middle class policyholders will only make the insurance companies’ rates even higher than before.
Medical bill comes in the mail but you have no insurance?
Doctor visit: with insurance, $5 copay with a Silver 94 plan, $75 copay with a Bronze plan, and $25 copay with a Gold plan; without insurance, it could cost up to $200. For heart disease treatment, with insurance, it could cost around $6000 with a Bronze plan, around $2000 with a Silver plan; without insurance, it could cost $11,755 at the least. If you’re pregnant, with insurance would cost you around $6000 with a Bronze plan and around $4000 with a Silver plan; without insurance could cost you at least $12,000!
The Congressional Budget Office estimates that these huge medical bills could lead to bankruptcy in the future; even before Obamacare gets repealed. Premiums will also increase at least 10% and the premium for a 60-year old policyholder in Arizona has also increased $1469!
What should I do?
Regardless of how the policy changes, we still need to take advantage of this moment. Since it’s nearing the end of the year, here’s a few things you need to make note of:
First, the deadline to enroll into health insurance is January 31, 2018!
If you do not have health insurance next year, you will still get penalized and have to pay the penalty! With that being said, if you do not have health insurance or if you need to switch plans, please do so as soon as possible! If you would like your health insurance to be effective on February 1, you must apply by January 15. Your health insurance will become effective on March 1 for any day after January 15 up until the deadline.
Secondly, with Trump’s new tax bill, December 31 is a very important date for everyone.
KCAL Insurance Agency offers various annuity and retirement plans and IRA products tailored to your retirement and financial needs. Setting up an IRA account will not only help you save money on taxes but it can also help you gain more health insurance benefits.
For more information on health insurance or IRA, please feel free to contact KCAL!