Tax Pros Face Obamacare - More Concerns About Premiums Than Taxes

Post by: Butch Zemar in Uncategorized
The reason most tax professionals are more concerned with premium increases than tax increases, is because future premium increases are the unknown. The tax changes are known and can be calculated in advance to aid in client business decisions. It’s difficult to advise a client on a health insurance strategy without knowing that future costs will be consistent with 2014 within some factor of inflation. The ACA has provisions that were designed to reduce the rate of inflation at which health care cost were increasing (80/20 rule, caps on premiums of older plan participants), but it’s unknown how effective those provisions will be going forward. I’ve attached a good brief from the American Academy of Actuaries issued last May that discusses the issues impacting future healthcare premiums, which I had bookmarked. It’s definitely work reading.

I have heard from some clients that their premiums have increased in 2014, but in most cases their coverage was also significantly expanded. You have to consider changes in coverage when comparing the cost of health care plans. For this reason it is misleading to look solely at premium price changes in 2014, because this year increases in coverage will lead to lower out of pocket costs down the line. The issue I’m most concerned about is that the system stems the historical 7% annual increase of premiums in future years, when insurance coverage levels are comparable from year to year.

Troy W. Griffiths, C.P.A.
www.twgriffiths.com

8 Jan 2014