Friday, July 18, 2014
The Affordable Care Act tax credits may provide the incentive needed to turn more Americans into "job creators"
Despite the 3 panel judge ruling this week that the tax credits in states relying on the Federally-facilitated Marketplace will not be allowed, the full panel of judges or supreme court will rule that they are allowed and Americans will still begin choosing their qualified health plans on the Federally-facilitated Marketplace and their state facilitated marketplace in earnest between Nov 15 and Feb 15 (all individuals and small businesses who are not covered by another qualified health plan will select a plan through these marketplaces going forward), they will find that they like what they see. Lowered costs for coverage and tax credits as incentives for both individuals and small businesses!
In some cases the individuals who qualify because they fall within 138% of the Federal Poverty Level in the chart above, they maybe eligible for tax credits of as much as $800/mo that can either be applied directly toward their health insurance premium, or taken as a tax credit on their tax returns when they file. Small businesses with under 25 employees and at least 70% of eligible employees participating in their group will also be eligible for tax credits up to 80% of the costs for providing qualified health plans through the marketplace to employees. They only need to have one employee to qualify! See a knowledgeable tax advisor or insurance broker for more information on this subject (this post and the author is not providing tax advice, and the examples cited is hypothetical based on current guidelines).
The root cause of almost half of US bankruptcies being due to medical expenses is far less likely to occur going forward. It is also not going to be a contributing factor to poor credit scores any longer. The most cited reason given by individuals surveyed with credit scores lower than 600 was lack of stable or enough income to service the household debt and living expenses of the household. Health issues of primary wage earners or family members was a causal driver to job absenteeism which led to loss of income from wage or business proprietorships. That problem is solved with the Affordable Care Act, and once Americans understand and get used to the law, they are going to thank this administration for implementing the law. Even Republicans and Tea Party members will look back and realize they were on the wrong side of the issue when the economy is booming with job creators. The 2014 and 2015 tax credits triggered by the Affordable Care Act may actually inject a much needed stimulus into the middle class to shake the US economy loose of the economic malaise from stagnant wage growth in the middle class. That has led to weak consumer demand on goods and services typically picked up by middle class consumers (such as specialty retailers and casual dining which have been particularly hit hard). Only time will tell.
Affordable Care Act marketplaces will require everyone to choose a qualified health plan unless one works for a large multi-state employer, or the government, or is covered by a spouse's or parent's plan or eligible in a government health plan like Tricare, VA, Medicare or Medicaid. The country may soon find it is being transformed into a country of "job creators" starting with the low wage individuals creating the first jobs for themselves. For the first time in a long time, low wage earning Americans will be incentivized with these tax credits to quit accepting low wage jobs and compete openly to service customers or deliver products and goods directly as self employed agents and entrepreneurs. The cost of affordable health care as a benefit provided by large employers is off the table as an excuse as to why individuals can't quit and follow their dreams to do better than work in a low wage job for a large employer. The remaining hurdles for individuals will be availability of credit from suppliers, access to capital to either educate themselves with a particular set of skills to service customers or actually deliver products and services on time and as promised. Access to investors, banks and suppliers will be more important than ever, and individual credit scores will play a major role in the cost of money for entrepreneurs. It may be time to start talking to credit repair service providers who specialize in credit repair (attorneys are a great source of information). The process can take a year to go from a 500+ FICO score to an 800+ FICO score, but the rewards will transform lives of individuals for the better, which will in turn help the country become a booming economic engine with manufacturing, skilled labor and very low unemployment.
There are specialists who can educate individuals on business models with a business model canvas, successful franchise systems for sale, business brokers selling main street businesses, management consultants with MBAs ready to step in and guide owners, skilled trades training programs at community colleges, certification courses for in-demand skills in IT, healthcare and software, computer language training academies, free courses at MIT, Coursera, and our public school systems. This leaves no excuse for Americans to not get healthy (physically and with skills) and to no longer accept low wages from employers. You can find mentors willing to help by taking the first step and share information.