In addition to health-care reform, the Affordable Care Act (ACA) will have an impact on clients’ investments, as they plan to cover health costs and prepare for the possibility of new tax liabilities.
Chris Hennessey reviews the top concerns about the ACA for all types of clients.
Surtax may hit high earners
The ACA established a 3.8% Medicare surtax on net investment income. The tax will affect individuals with incomes above $200,000 and married couples with incomes above $250,000.
Impact on pre-retirees
Clients younger than 65 may benefit from some of the provisions of the ACA. This group would be required to sign up for health care under the ACA, which prohibits them from being denied insurance due to pre-existing conditions. The ACA may also provide access to insurance for those seeking to move away from a corporate job and its associated group insurance coverage, reduce their hours or go into consulting. A health-care exchange plan may help them bridge the gap in health insurance coverage before these workers are eligible for Medicare at age 65.
Retirees may see changes in Medicare
Retirees should be mindful of any increases in premiums for Medicare, Medigap, or supplemental plans. The ACA may affect Medicare benefits over time, which could mean fewer doctors available for new Medicare patients. At the same time, because of the law, there have been improvements to the prescription drug program and more preventative services are being covered.