TrumpCare: A CFP-M.D. On What Advisers Need To Know

TrumpCare: A CFP-M.D. On What Advisers Need To Know

With the news this week that an amended version of the American Health Care Act (AHCA) has passed in the House of Representatives, substantial changes to the existing framework of the Affordable Care Act could impact advisors and their clients in the coming year, and while it remains uncertain whether the current version of AHCA will become law (it is still has to pass a deeply divided Senate), McClanahan notes that now is the time to start planning for contingencies. Key issues to be aware of include: 1) AHCA would eliminate the current list of “Essential Health Benefits” under the ACA, giving states (and the insurers in those states) the option of enacting a shorter list of required essential benefits, which means it’s possible that coverage for everything from pregnancy and contraception, to mental health and preventative medicine, might no longer be required in health insurance policies in at least some states (and the new rules would apply for both individual policies purchased from insurance exchanges, and for employer health care coverage, which means advisors must be especially vigilant in reviewing clients’ employer health care coverage in the coming years); 2) AHCA would eliminate the prior ACA requirement that coverage be priced based on a “community rating” (cost of care in a particular area of coverage), and instead will revert back to personal underwriting for individuals and experience ratings for large groups, which means unhealthy individuals may see a substantial increase in premiums, and while pre-existing conditions will be covered, clients will still have to pay more (with one estimate that a 40-year-old with diabetes would increase premiums from $4,020/year to $9,620/year, and someone with metastatic cancer would face premiums of $146,650/year)… which means, at the least, that proactively helping clients navigate health insurance decisions will become more crucial than ever; 3) premiums for older individuals will be permitted to go as high as 5 times the amount for younger individuals (while the ACA limited the cost difference to “just” 3X the premiums), which means costs may get a little cheaper for young people, but could become prohibitively expensive for those looking to retire early (before age 65 when Medicare kicks in), or even those in their 50s and early 60s who are still working but want to become consultants or start a small business (as individuals and small business plans will have less leverage to negotiate pricing compared to large employers). On the flip side, the AHCA would result in tax relief for the clients of many advisors, as the 3.8% surcharge on net investment income (above $200,000 for individuals and $250,000 for couples) would vanish, as would the 0.9% Medicare surcharge on earned income (on the same earned income thresholds).


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