How Obamacare is Costing My “Middle-Class” Family More in 2013

by Darwin on October 15, 2012

Obama’s medical insurance legislation that was first billed as not being a “tax” (hilarious given the number of “fees” and “surcharges” it levies; even the Supreme Court could not pass up the opportunity to classify it as such), and also claimed that the plan would be “revenue neutral” (which it clearly won’t be if you look out a few years) also gave the impression that the costs would be primarily borne by business and the rich. Well, middle class Americans are bearing quite a burden as well, regardless of what you read in the ever-adoring mainstream media. See, in anticipation of the pending legislation, healthcare costs have skyrocketed leading into and shortly after it’s passage. It’s hard to believe, by my insurance costs (company sponsored by a large blue-chip) zoomed by 43% this year. Unbelievable huh?

Now, some critics will say that the cost increases had nothing to do with Obamacare and that they were increasing before hand. While I don’t think that is the case, let’s check out some of the other non-plan related hard costs our family is seeing since its passage. We make well less than the $250,000 per year that Obama calls the top of the middle class, so I’m not being hit with some of the surcharges and fees that more wealthy Americans are. But here are a few spots where I’m paying more out of pocket for medical coverage than I would have prior to Obamacare:

  • FSA Contributions Limited to $2500 – We’re really going to feel this one in 2013 and beyond. See, while many people have minimal medical expenses, we have 3 kids, each of which have their own medical needs which are not covered by the medical/local health system. Take two of our sons for instance. They have both had severe speech issues since they started talking and given the nuances of their needs, what’s “pre-existing”, what they CAN pronounce, etc., they do not get adequate coverage through either the state or the school, so for years, we’ve been paying out of pocket for an excellent local speech therapist privately. My wife’s a teacher and is well versed in the downside of not addressing and resolving speech impediments early on. It affects everything from the ability to read and learn to social stigmas. Therefore, it’s been a priority for us to pay out of pocket to resolve rather than wait until 1st grade with a mediocre public school speech therapist. Anyway, these lessons are $50 a pop every week. That’s $2600 a year just for speech for a single kid! Now, add on the fact that my company’s health care coverage has become increasingly expensive each and every year. Aside from the higher monthly premiums we’re seeing, we now have high deductibles and the old HMO option is gone (used to be 100% coverage post-deductible). So, now we also pay 10% of all medical charges even after the deductible is exceeded. For a couple typical items like ER visits, doctor’s visits, “The Snip” (yes, I penned a piece on the financials of my vasectomy) which I’m really looking forward to and some others, the out of pocket expenses are a few grand there as well.
  • FSA Eligible Limitations Imposed – This one already kicked in shortly after passage of the bill. You can no longer deduct many of the items you used to as part of your Flex Savings Account. Our family routinely uses OTC meds that are no longer covered. While the hit isn’t nearly as substantial as the last one, since probably all Americans utilized OTC meds to some degree each year, when you spread this change across a several million households, it really adds up! It’s a money grab which has no real relevance to the intended plan benefit itself. How does limiting deductions for a common medical necessity that existed previously help benefit Americans? It’s just another federal money-grab (redistribution of wealth).

By capping our total FSA deduction at $2500, it’s easily a few grand next year that won’t be deductible. So, let’s call it an extra $2000 non-covered.
25% tax bracket * $2000 = $500 difference from 2012.

That’s $500 in tangible costs I’m contributing to Obamacare above and beyond the future effects of worsening and increasingly expensive coverage as a result.

Now, if you are one of those nasty “upper-classers” that the administration keeps talking about, here are some additional goodies you can look forward to:

  • A 3.8% surtax on “investment income” when your adjusted gross income is more than $200,000 ($250,000 for joint-filers).
  • A 0.9% surtax on Medicare taxes for those making $200,000 or more ($250,000 joint).
  • Many industry taxes that will undoubtedly be passed on to consumers (medical device taxes, pharma industry taxes, etc.)
  • Taxes on your health insurance benefits in a “cadillac plan” after 2018, etc.


Do You Anticipate any Cost Increases for Your Family as a Result of Obamacare?


{ 9 comments… read them below or add one }

krantcents October 15, 2012 at 10:29 pm

No, in fact I am expecting some savings. I may one of the last people who still has their employer pay for medical insurance. It makes up for the lack of raises! It is one of the drawbacks of being a teacher.


Financial Samurai October 16, 2012 at 1:14 am

After engineering my layoff, I have my ex employer paying my all my medical expenses for a long, long time.

I don’t think we can blame Obamacare for the health insurance increases. There are numerous variables at play.


Money Beagle October 16, 2012 at 10:12 am

Actually we had a big bump two years ago, where our costs practically doubled. After that backlash, they kept our costs the same last year, and just announced that the increases will be a modest 2.8% this year. I think in a lot of cases, the costs were being absorbed by employers and they just can’t do that, so there’s always a big ‘bump’ year. I can’t necessarily say I think that’s tied to Obamacare, but I can’t say it isn’t either. Everyone will have their own opinion.

To be honest, I think people overlook some of the positives. I think preventative care is 100% covered as a mandate of Obamacare. For parents of two very young children, this has saved us thousands since they were both born. I don’t know that the sub-par coverage for the speech therapy can be tied back to Obamacare, but regardless, you most likely would have been hit with the pre-existing clause at some point. I also think that removing lifetime limits is big for people who go through expensive cancer treatments or have other big needs. Also, everybody says that when we ‘pay for’ insurance to give coverage to everybody, this will cost a ton of money, but in reality, those people are still getting medical care today and somebody is paying for the cost of writing that off, so the difference may not be as staggering as some think.

I think people who want to trash Obamacare would often be unpleasantly surprised at how things would change if they did repeal the whole thing. Some costs would go down but you can bet that anything that insurances companies no longer ‘have’ to do, they will immediately stop doing and those caught in that trade-off crossfire will see their costs increase. And many of those will be middle class, that much is for sure.


Kevin @ Ask For Benefits October 16, 2012 at 10:57 am

The changes in FSA contributions has a hidden counterpart. Most qualified expenses are also deductible on Schedule A, but only those that exceed 7.5% of adjusted gross income.

The most valuable aspect of an FSA was that you got first dollar savings on deductible medical expenses. There was no spending threshold to meet. Now the contributions have been limited to $2,500.

This limitation is compounded by an increase in the Schedule A deduction threshold to 10% of AGI beginning in 2013.


william galton October 16, 2012 at 12:15 pm

Hey i just read that otc drugs are still deductible but you need some sort of documatation from ur dr that u need refills. That doesnt seem unreasonable.


ParatrooperJJ October 16, 2012 at 2:40 pm

One thing I do is schedule my annual Dr. visit for the end of the year or the beginning of the next year. I take in my list of OTC items and have him sign off on them. The fulfills the requirement.


Melissa October 18, 2012 at 2:55 pm

My 3 year old has some severe speech issues, and I just called the local public school, she was evaluated, and now she gets speech classes for free every week, even in the summer, even though she is not enrolled in the school. These will be free to her until she starts private school in kindergarten. Is that something you can look into?


Darwin October 18, 2012 at 3:38 pm

Hi, thanks for the comment. So, we have a couple issues. 1 is that our 1 son spent 3 years in pre-school, as he just wasn’t ready for Kindergarten at age 5 (summer birthday among other issues). That was at least 2 years of speech we had to pay for out of pocket and now that they’re both eligible for speech through the school, there’s a big gap between the skills/effectiveness of the school-provided therapist and the private one. My wife’s saying on this is, once you drive the BMW, you don’t want to trade down to the Yugo. I mean, the Yugo is free, but not as effective and remediating these speech issues quickly and effectively is important to her (I’m taking her word for it!)…Although I do recall having speech lessons myself for years; perhaps it’s hereditary?


101 Centavos October 22, 2012 at 9:04 pm

I’m enrolling in benefits this week. A big question on rates reduction is whether I’m going to pledge to give up cigars and go “tobacco-free” to enjoy lower rates. Decisions, decisions…


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