The Patient Protection and Affordable Care Act (PPACA), better known as the Affordable Care Act (ACA), is a federal statute signed into law in 2010. The objective of the Act is to increase affordability and rate of coverage for health insurance and reduce the overall costs of health care, which will be executed through mandates, subsidies, tax credits, and other means. The ACA is divided into 10 titles with some provisions that became effective immediately, while others are phasing in over a 10-year period.
But what does this mean for most seniors?
“If you don’t have insurance between age 60 and 65, that’s a concern.” – Andrea Skolkin, OneWorld Community Health Centers, Inc.
Individuals over 65 will likely find that not much will change as far as Medicare is concerned, says Andrea Skolkin, chief executive officer for OneWorld Community Health Centers, Inc. More preventive care is covered and prescription drug coverage will improve, she says, but most facets of Medicare will carry on as before.
“People who have Medicare, other than the little bit of expansion in the ‘donut hole’ [Medicare Part D coverage gap between the initial coverage limit and the catastrophic-coverage threshold for prescription drugs], should be secure in their coverage,” she explains. “The new marketplace isn’t for people who have Medicare.”
Sixty-plus individuals who will definitely be affected by ACA are those seniors who haven’t reached the Medicare eligibility age of 65 and are without medical insurance. In January 2014, uninsured individuals will be required to buy health insurance, available through an exchange, or pay a penalty tax. Some people will certainly struggle to finance the premiums, but currently, seniors who don’t yet qualify for Medicare and can’t get covered through an employer are likely to take their chances and go without health insurance altogether, Skolkin says.
“If you don’t have insurance between age 60 and 65, that’s a concern,” she says. “We see a lot of it—people 55 and up—who are being ‘right-sized,’ if you will, out of their jobs and are left without anything until they are eligible for Medicare. Especially at our new clinic in West Omaha, we see a lot of uninsured adults.”
From a financial standpoint, it’s fair to say that ACA will not spell good news for everyone’s pocketbook, says EJ Militti, a financial advisor with The Militti Group at Morgan Stanley Wealth Management.
“[For] the wealthy and those who have properly saved for health care and other retirement costs, there is less to like and greater confusion about government-mandated health care. Moreover, those considered wealthy will be helping foot the bill of this epic legislation,” he says, explaining that a Medicare tax increase and additional taxes on taxable investment income have been instated, and other proposals are pending. “In my opinion, there is little doubt higher-income earners are going to be paying more in taxes. Higher-income earners need to be aware of future tax proposals on the table.”
On the other hand, Militti points out, some Americans will clearly benefit financially from the legislation.
“[For] the wealthy and those who have properly saved for health care and other retirement costs, there is less to like and greater confusion about government-mandated health care.” – EJ Militti, The Militti Group at Morgan Stanley Wealth Management
“The poor, the lower middle class, the long-term unemployed, and those with pre-existing conditions will benefit the most, and that’s by design,” Militti says. “The entire premise for government-mandated health care is to provide taxpayer-financed subsidies for those who, otherwise, cannot provide for themselves.”
EJ Militti is a Financial Advisor with The Militti Group at Morgan Stanley Wealth Management. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Smith Barney LLC, Member SIPC, or its affiliates.
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