Just our first installment


Recently I wrote in to provide information that BCBS has sent me regarding the Affordable Care Act. Kudos to them for keeping me so well informed. Because I think it’s important that everyone know about these changes as they occur, I want to share some more information that I’ve recently learned.

Beginning with my (and your) January 2014 premium, five new federal taxes will be added as a result of the Affordable Care Act. A new state tax will also be included. These taxes are based upon the amount of your premium and are required for every individual. (Since I don’t know how it will work for employers; this only applies to individuals).

A list of the new taxes follows, utilizing the exact wording from the BCBSM website (in some cases I’ve changed the wording slightly for the sake of brevity).

Federal taxes are: 1) Federal Insurance Premium Tax: An annual tax to provide revenue for the Federal Government; 2) Comparative Effectiveness Tax: Funds the Patient-Centered Outcomes Research Institute, which compares how well different medical treatments work; 3) Reinsurance Fee: The Transitional Reinsurance Program was created to stabilize the cost of insurance during the first years of health care reform (the fee supports this program); 4) Risk Adjustment Fee: The fee supports a FEDERAL program that compensates health insurance companies that have a less healthy membership. This helps keep the cost of insurance stable; and 5) Marketplace Fee: Pays to run the Health Insurance Marketplace (which was created to provide a new way to shop online for health insurance) and make it self-sustaining by January 1, 2015.

Two state taxes are included. These are: 1) Michigan Claims Tax: This tax went into effect on 1/1/12. It is a 1 percent tax on certain health insurance claims. It replaces the 6 percent tax on Michigan’s Medicaid services; and 2) State Insurance Premium Tax: A quarterly tax based on health insurance policies that cover individuals in the state of Michigan.

Anyone wishing to estimate their tax can do so by using the online tax estimator which is available on under the “Help” tab.

Since I don’t know what my 2014 premium will be yet I used my current premium, and I will see a 10.4 percent increase in my premium. Of this, 7.96 percent is due to federal taxes and 2.54 percent is due to state taxes.

That means a person currently paying $500 a month will see an increase of $52.50 ($39.80 per month from federal taxes and $12.70 from state).

That’s no small change. I’m not sure if percentages are based on a sliding scale or not, so it may be best to plug in your own premium amount and see what your increase will be.

I know that many people don’t understand the opposition to the new health care law, but one of the main reasons is that it has been changed significantly from the bill that was originally passed.

The original bill signed into law limited the amount that insurance companies could charge for premiums, but that was later stripped from the law without approval by Congress. The result? Insurance providers are required to cover more, but are also allowed to charge people dearly for that coverage. In many cases initial information is showing that overall savings will be questionable, as lower premiums are a trade-off for higher deductibles and co-payments.

And the big question remains, how will all of this be paid for? Millions of people will be covered for free or at a very low price, but the money has to come from someone – and that “someone” is the rest of us.

More services will be covered, but don’t think for a moment that insurance companies are going to absorb those costs; they’re going to pass their increases on to the consumer. If they don’t, they’ll go out of business.

The bottom line is that there is no such thing as a free lunch.

Someone has to pay, and the brunt will fall on the middle class. Higher premiums won’t bother wealthy Americans. The poor won’t have to pay anything.

But middle class Americans will have to step up to the plate.

President Obama vowed not to raise taxes, but beginning in January 2014 we’re going to see the first of them.

Have you heard anything about these taxes until now? I know that I haven’t. I’ve also heard that there are several other new taxes hidden in this law, but since no one was able to read it beforehand, I guess we’ll have to wait and find out. This is just our first installment, I fear.

The Cleveland Clinic has stated that this law will shift the burden of cost to the patient. Although the title of this law is “The Affordable Care Act,” sadly at this point I don’t see that the affordability of insurance has been addressed at all.

Kathy Tomosaski