8 Things in Washington That Could Hit Your Wallet This Year
From mortgage rates to expiring tax breaks and insurance costs that could pick your pocket in 2014.
January 22, 2014 - 10:50 pm
Higher insurance costs: Companies got a reprieve this year on the new healthcare law as the provision requiring large employers to provide coverage for workers or pay a penalty was delayed until 2015. But new rules set to take effect in 2014 will limit the costs to employees and waiting periods for coverage, and extend coverage to dependents until age 26. Some of Obamacare’s most unpopular provisions go into effect in 2014. A new health insurer tax will impose fees on health insurance companies, raising about $8 billion this year alone for premium subsidies and other provisions. The tax will more likely be passed on to consumers through premium increases.
So if you own a business that provides healthcare coverage to your employees or are an individual buying healthcare through one of the insurance marketplaces, you should not be surprised by the higher premiums due to these new provisions.
Unemployment benefits: About 1.3 million jobless workers lost unemployment benefits at the end of 2013 when Congress failed to extend the program as part of the budget deal reached in December. An additional 3.6 million workers will lose access to benefits over the next twelve months.
The Congressional Budget Office (CBO) said letting the benefits expire could cost as many as 200,000 jobs across the nation in 2014. Most of the effects will be felt in certain regions where unemployment is high and job opportunities are low. States with high long-term unemployment rates, such as Alabama, New Jersey, Nevada, and Rhode Island, will be the most affected. Mark Zandi, chief economist of Moody’s Analysts, said for every dollar the U.S. spends on unemployment insurance, $1.55 returns to the nation’s gross domestic product.
President Obama called in his year-end news conference for Congress to pass a three-month extension when it returned from the holiday break in January, but bills have failed to clear procedural votes. The CBO said the cost to extend the federal benefits by another year is about $25 billion, which has many congressional Republicans balking at the price tag. House Republicans have insisted that any renewal of the benefits be offset.
Millions of subsidized flood insurance policies will lapse: In 2012, Congress passed a law aimed at stabilizing the financially insolvent National Flood Insurance Program by allowing insurance premiums to increase gradually. Last fall, the owners of second homes, commercial properties or properties with multiple flood-related insurance claims began paying increases covering 25 percent of the gap between their subsidized rates and rates reflecting the true risks of building in flood zones. On Oct. 1, 2014, if you own coastal and riverside property in a flood-prone area, you will begin to face higher annual premium increases for the next five years until your premium matches the true risk of flooding.
Multiple bills that would delay the rate hikes have been proposed in both chambers. The bill gaining the most backing, sponsored by Rep. Maxine Waters (D-Calif.), would delay the higher rates for at least another two years. Lawmakers could have a vote on the bill as soon as January.
Internet sales tax: 2013 could have been the last year we had a Cyber Monday without a sales tax. The Supreme Court declined last fall to hear challenges to state laws governing Internet sales tax collection, setting the stage for Congress to take up the issue. The Senate passed the Marketplace Fairness Act, which would allow states to compel out-of-state online retailers to collect sales taxes, in May. The bill moved to the House and was assigned to the House Judiciary Committee under the chairmanship of Bob Goodlatte (R-Va.). In September, Goodlatte released a series of principles to guide legislation on the issue. State Republicans met with leading members of Congress in November to push the measure. Action at the federal level could end the days of tax-free online shopping for everyone in the U.S.