Obamacare and the Self Employed

Obamacare will not require companies with 50 or less employees to offer health insurance starting in 2014.   Small companies will not have to pay fines like companies with 51 employees or more.

Starting in 2014, individuals and small businesses will have insurance choices called “Affordable Insurance Exchanges”.  Exchanges will make it easier for individuals and small businesses to compare health plans, get answers to questions, and enroll in or offer to employees, a health insurance plan that meets their needs.

What is an Affordable Insurance Exchange?

An AIE is a state based, competitive health insurance arena where people and small businesses can choose and buy affordable private health insurance.  By 2014, every state will have an Exchange tailored to the state’s specific needs. Tax credits will be available for many businesses to help them purchase coverage in the Exchanges.

Exchanges are not themselves insurers, so they do not bear risk themselves, but determine the insurance companies that are allowed to participate in them.  An exchange will promote insurance transparency and accountability, facilitate increased enrollment and the delivery of subsidies, and play roles in spreading risk to ensure that the costs associated with those with high medical needs are shared more broadly across large groups rather than spread across just a few beneficiaries.

Exchanges offer Americans more choice because insurance companies will compete for business on a level playing field, driving down costs. Exchanges will have the same purchasing clout as big businesses and will give consumers a choice of plans to fit their needs.

In 2014, if you work for yourself, you will be able to take advantage of government health care subsidies if you are self-employed and earn less than four times the poverty level.  The government’s definition of poverty is based on total income received and 1n 2012, the poverty level was set at $23,050 (total yearly income) for a family of four.

The problem is that many people are just above the income threshold for such assistance yet cannot afford insurance and will be penalized with a tax.  Starting in 2003, the self-employed could write off 100 percent of their premiums at tax time on Form 1040, Line 29.   This has allowed self-employed people to reduce their adjusted gross income by the amount they pay in health insurance premiums during a given year.  Moving forward, it is unclear if this tax deduction will still be available if you earn over the poverty level, but feel the bite of having to purchase health insurance through an Exchange.

The question many Americans are wondering now is where self employed expats fit in to Obamacare.  Do they still have to purchase the national health care, even if they do not live, work, or receive health care in the U.S. ?