As of January 1, ObamaCare has officially gone into effect. With the start of ObamaCare, many individuals, businesses, and insurance providers will begin to see the effect of new taxes and fees that the healthcare law has put into place.
The goal of these taxes and fees is to fund ObamaCare going forward. Regardless of the purpose, there is concern that the consumer will bear the brunt of those costs.
Health Insurance Companies Hit with Majority of ObamaCare Fees
The biggest fee that has gone into effect with ObamaCare is an annual fee that health insurance companies must now pay each year. For 2014, those fees will amount to approximately $8 billion. Over the next 10 years, those fees are projected to top over $100 billion.
Those fees for health insurance companies are intended to help subsidize insurance premiums for those individuals who qualify. However, insurance companies do not plan to eat those fees. Rather, it is expected that the insurance companies will pass those fees on to consumers across the board.
A study conducted by Oliver Wyman estimated that the insurance company fee will result in an average insurance premium increase to consumers of over 2.25 percent in 2014. And premiums will continue to increase for consumers each year going forward for at least the next 10 years, by over 3.5 percent each year.
For this reason, hundreds of members of the House of Representatives are trying to repeal this fee.
In addition, health insurance companies must pay several other fees under ObamaCare, many of which critics believe the insurance companies will likewise pass on to consumers.
One of those fees is designed to raise an additional $25 billion in the next three years. This money will be used to pay for medical expenses of those obtaining insurance through ObamaCare who have pre-existing conditions.
Another fee involves charging higher insurance premiums for certain individuals considered low-risk in order to subsidize the premiums of individuals who are considered high-risk.
Individuals Face Penalty for Choosing to be Uninsured
Individuals also face a fee if they do not obtain health insurance coverage. For 2014, individuals who do not obtain coverage by March 31 must pay either $95 or 1 percent of their income, whichever is higher. The penalty for individuals who remain uninsured will increase in 2015 and thereafter.
However, for many consumers, the penalty in 2014 is significantly less than the cost of paying for insurance coverage. Therefore, they are simply choosing to pay the fee as a way to opt out of ObamaCare.
It is unclear when or if the fee will increase enough to drive many consumers to obtain health insurance or if they will simply continue to pay the fee because it will mean less money out of pocket for them.
But proponents of ObamaCare continue to tout the benefits and that they are more than worth the costs to consumers. Those include that insurance companies can no longer deny coverage to individuals with pre-existing conditions or limit the amount of coverage they provide to individuals annually.
Connect with Mark on Google+
Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.