On June 28, 2012, by a Supreme Court vote of 5-to-4, President Obama’s much debated landmark health care bill signed into law on March 23, 2010, known as the Affordable Care Act (ACA), was found constitutional. The majority opinion, including Chief Justice John Roberts, upheld the individual mandate, (the requirement for all Americans to purchase health insurance), under the provision of the government’s right to tax people who chose not to purchase insurance. What will this mean to you?
As a financial planner I know the financial risks associated with health care costs. Increasing health insurance premiums, lack of adequate insurance due to unaffordable premiums, and most critically – the inability to purchase any insurance at all due to a pre-existing medical condition have all led to financial strain or possibly bankruptcy for many American families and individuals. A 2009 Harvard study found that medical expenses contributed to over 60% of US bankruptcies. Within my practice I have personally counseled a client who was considering a possible bankruptcy due to medical expenses and felt frustration with another client in her early fifties who simply could not buy insurance after her deceased husband’s plan would no longer insure her. She remained uninsured for several years until she qualified for Medicare. Most financial planners are intensely aware of the need to consider substantial health care costs within a financial plan. Will the Affordable Care Act provide a level of financial security and medical coverage that so many currently do not have?
There are many provisions to the law as detailed at www.healthcare.gov. Several provisions that have been most popular have already been implemented such as…….
- Young adults can stay insured on their parents’ health plan until the age of 26. It is estimated that this provision has insured approximately 3 million young adults.
- Children with pre-existing conditions cannot be denied coverage.
- Insurance companies cannot rescind your coverage due to an application error or other technical mistake.
- Lifetime limits of coverage are eliminated. A family will not have to worry about exceeding their benefit limits in the case of a catastrophic or long-term illness.
- Small business tax credits have been established to help employers provide insurance coverage for employees.
- A menu of free preventative services is now available.
- Prescription drug discounts for seniors.
Many additional consumer protections will be implemented over the next 18 months. The final provisions effective on January 1, 2014 will include prohibiting discrimination due to pre-existing conditions or gender and eliminating annual limits on insurance coverage. Learn more about the timeline of the Act’s provisions.
With the Supreme Court decision, Americans will be required to purchase health insurance or pay a tax for non-compliance. Individuals of limited means will receive assistance under the law. Some may call this personal responsibility; others may say this provision of the Affordable Care Act is unconstitutional, – but no matter one’s opinion, it seems that the ACA is law.
As a financial planner, I am anxious to see how this law may impact the financial lives of my clients. Will health care become affordable and easily obtainable for American families – will insurance claims be paid when submitted – will buying health insurance really translate into “health care”? I am optimistic. Our current system has left many behind – I hope this new Act will actually provide “Affordable Care”.
Pamela Sandy, CFP®
CONFIANCE, LLC, Financial & Investment Advisors