Obamacare eliminates a tax deductible for many Americans struggling with losing their existing health plans.
Millions of Americans facing higher out-of-pocket costs after losing their existing health insurance will also be damaged by what is effectively a tax hike imposed under Obamacare.
Before President Obama’s health reform law went into effect, Americans could deduct out-of-pocket medical costs if they amounted to at least 7.5 percent of the individual’s annual income. Ten million American families save more than $10 billion annually using this deduction, according to IRS and Office of Management and Budget [OMB] figures.
But now under Obamacare, Americans can only deduct out-of-pocket medical costs if they amount to 10 percent of the individual’s income.
This Obamacare provision eliminates many Americans from being eligible for the tax deduction just as millions of people losing insurance are facing higher out-of-pocket costs than ever before.
“Middle-class families who might have had an escape hatch because they could easily deduct their out of pocket expenses will now find it more difficult,” said Ryan Ellis of Americans for Tax Reform, which estimates that the average family affected by this Obamacare provision makes just more than $53,000 per year and will now have to pay between $200 and $400 more in annual income taxes.
“If a person making $100,000 a year has $8,000 in out-of-pocket medical costs, he used to be able to deduct $500. Now he can’t deduct anything,” Ellis told The Daily Caller.
The new Obamacare provision is expected to generate between $2 and $3 billion per year in new tax revenue for the federal government, according to the Joint Tax Committee.
The White House did not return a request for comment.