5 Myths of Health-Care Reform

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.

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The majority of companies will now be required to provide health insurance for their employees, while some businesses will be able to use tax credits to offset the cost of this benefit, many companies will need to factor this expense into their business plan.

Here are some common myths regarding the health reform and a look at the law's financial repercussions for individuals and businesses.

1.) The Bill Will Not Impact Insurance Premiums:  In the individual market, the cost of premiums will slightly increase due to subsidies and mandates of better coverage. The more comprehensive benefits design is required under federal law but the increased rates will apply to those who are newly enrolled.

2.) You Will Be Forced to Switch Coverage:  Health-care plans in existence before the law’s adoption are exempt from certain requirements, but are mandated to provide certain benefits. If insurers restrict coverage of specific conditions, they risk losing their “grandfathered status.” For companies that do not meet the grandfather conditions, consumer protections will be added which may increase expenses. However, many grandfathered plans already offer the majority of consumer protections required of new plans.

3.) Seniors will Lose Medicare Benefits: There are no cuts to the traditional Medicare benefit but rather to the Medicare Advantage- a program that uses private insurance firms to deliver Medicare benefits. The law aims to capture productivity savings in the health system by adding coverage of preventative services such as annual wellness exams to help save Medicare money in the long run.

4.) Businesses Will be Required to Provide Coverage:  Employers with 50 or more employees will be subject to “play or pay” rules. If qualified companies don’t provide “minimum essential coverage” to full-time employees they will have to pay a penalty. To ease the rising cost of care, employers will most likely provide coverage that encourages the most cost-effective treatments.

5.) Health Care Reform Will Increase Your Taxes: Health-care reform will not be funded by broad-based income or payroll tax increases but rather by a surtax that will only apply to the highest earning 1.2% of American households. However, more expensive health-care plans may be subject to a “Cadillac tax” where the expenses will likely be passed on to you or your employer.

Scott Loochtan a partner of Retirement Planning Group[RPG], specializes in the retirement and insurance planning for individuals, businesses and corporations. 

About Retirement Planning Group & Senior Services of Illinois [SSI]: Located in Riverwoods, Illinois, Retirement Planning Group [RPG] is a nationally renowned firm committed to tailoring the retirement process to each individual client. With a 95% client retention rate over the course of 16 years, the expert staff of financial professionals takes time to counsel each prospect and deliver a plan that will work for them. They have been featured in esteemed publications like the Wall Street Journal and Crain’s Chicago Business.