The Retirement Planning Group (RPG), a consulting firm which works with individuals and companies regarding retirement and insurance planning, recently published a release addressing many common incorrect assumptions in relation to the Affordable Care Act and health care reform in general.
Scott Loochlan, a partner with RPG, commented, “With confusion and misinformation coming from both sides of the spectrum, many Americans are trying to separate the facts from fiction regarding health-care reform and its influence on their pocketbooks. Not only will this legislation affect millions of Americans, but will also have a long- lasting impact on businesses.”
The ACA will require most businesses to provide health care coverage for their workers, although some of these companies can utilize tax credits to help them offset some of the expenses from offering health benefits. The fact is, though, that most businesses will have to add health insurance costs into their operating budget. This is one of the most important points to the opponents of this mandatory, universal-coverage plan: increased operating costs will result in increased prices for goods and services, at a time when the national economy is still struggling to regain the ground lost during the recent recession.
Mr. Loochlan listed several important issues which Americans have seriously misunderstood regarding the ACA, as well as providing a glimpse into the ACA’s financial impact on both industry and on the individual.
Myth 1. The ACA won’t make insurance premiums rise. Actually, individual premiums will go up a little, but not too much, due to government subsidies and requirements for better coverage mandated by the law. The new benefits will be given to those currently enrolled in health insurance, but the hike in rates will only be applied to new enrollments.
Myth 2. People will have to switch their coverage. Plans which already exist prior to the implementation of the new laws will be exempted from some normally mandatory requirements, but they are required to provide the new benefits. If the insurance companies post limitations on certain conditions, they could jeopardize their “grandfathered” state, subjecting them to penalties. Most insurance policies already offer the majority of the new benefits required under the law.
Myth 3. Senior citizens are going to lose their Medicare coverage. Normal Medicare benefits are not affected by cuts in the new reforms, but there is a new program called Medicare Advantage, which allows private insurers to give Medicare benefits. The ACA’s goal is to capitalize on savings in productivity in the health care system by adding preventative care and wellness examinations, which will save Medicare money over the long term by preventing some health issues.
Myth 4. Companies will have to give health coverage. Businesses that have more than 50 workers will have to either give health insurance coverage to full-time workers or pay a penalty. Employers will have to guarantee “minimum essential coverage,” and in order to stem some of the rising costs, they will most likely give insurance which will encourage more cost-effective treatments.
Myth 5. The ACA will increase taxes. These health care reforms aren’t to be paid for by increases in income and/or payroll taxes; instead, they will be funded by a surtax, which will only be applied to those who fall into the highest income brackets, the top 1.2% of U.S. households. However, the most expensive health insurance package could possibly be subject to a “Cadillac” tax, wherein these higher expenses would be passed along to employers and employees.