Even as many new health-insurance plans are rolled out for the new year, myriad questions remain. “Continued uncertainty makes it difficult to plan ahead,” says Ronald Gelok, an RIA in Parsippany, N.J., a state that hasn’t established its own insurance exchange, instead defaulting to the federal marketplace at healthcare.gov. “People are putting off decisions because the situation is changing on a weekly or even daily basis.”

Who Is And Isn’t Affected
By “people,” Gelok means practically everyone—business owners and individuals of all ages and income levels. “For pre-retirees, it’s difficult to budget because we’re not sure what they’re going to be paying [over the long term]. For small-business owners, there is uncertainty as to what small-group plans are going to cost. And so forth,” he says.

This uncertainty stems not just from partially fixed technical glitches at the federal Web site. It’s equally due to the machinations of Washington politics, how state insurance commissioners—who set local rates and local rules—react to federal mandates, and the insurance companies themselves, which jockey for positions in the various markets, sometimes adding to or subtracting from their networks of preferred medical practitioners.

Adjusting To Changes
For many, the true impact of the Affordable Care Act didn’t hit home until they received a notice of termination from their current carrier. The panic may have been eased when the federal government announced a year’s extension for carriers that wished to maintain legacy plans. How many old plans will remain in force, however, remains to be seen. At best, this is only a temporary solution. “Will individuals be back in the same boat 12 months from now?” asks Gelok, reiterating clients’ queries.

Those who have looked at new plans are comparing costs and benefits, and for the most part not coming up with easy answers.

“The questions I’m getting as an advisor [are]: (1) Does this pertain to me? (2) Should I be worried? (3) How do I take advantage of retiring early now? (4) How do I compare what I have now to what my choices would be if I went to the exchange?” says Peg Chromy Webb, a senior vice president at Wealth Enhancement Group in Minneapolis. (Minnesota has its own state-based exchange.)

These questions, Webb notes, are similar to those asked when 401(k)s were new. “There was a tremendous learning curve for individuals when that shift happened,” she says. “This is where we position ourselves as advisors: to help with the terms and higher understanding of benefits, compare costs or refer the client to a specialist in the health-care field.”

Business Owners
Employers aren’t immune to the confusion. “The greatest misunderstanding of the law surrounds the rule that employers with 50 or more full-time employees have to provide health insurance,” says Bob Phillips, managing principal at Spectrum Management Group in Indianapolis (in Indiana, which defaults to the federal exchange). Most employers “interpret this to mean the employer has to pay for the insurance,” he says. “This isn’t the case. The employer only has to make the coverage available.”

The employer mandate has been postponed for another year, adds Phillips. “Most regulations still have not been written, so advisors are uncertain what to recommend to their clients,” he says. “Making a move before there is clarity of rules can be very costly, which results in inaction.”

Even small-business owners—those with fewer than 50 full-time employees—aren’t spared. They aren’t required to make coverage available, but those who do are experiencing rate changes, in some cases hikes so drastic they are forced to consider raising deductibles or otherwise cutting back on benefits.
“The most common concern I am hearing from … small-business people is what health care will cost for them and their employees, and if they will be able to continue to provide it,” says Mike PeQueen, managing director and partner at financial-planner HighTower Las Vegas, in a state with its own exchange. He is also a board member at an agency that distributes health insurance to members of the Las Vegas Chamber of Commerce.

Many of these concerned business owners, he says, are “not fully informed about what the ACA requires of them and what the actual penalties/costs are associated with changing or not providing coverage. … My small-business clients are already discussing if they can reduce coverage or increase deductibles in an attempt to control costs.”

The Upside
This doesn’t mean everyone is complaining about the insurance reforms. “Several of our clients who are contemplating retirement, but have stayed with their current company because they have a spouse that has a pre-existing condition, have reported that the ability to secure insurance through the exchange has allowed them to accelerate their retirement plans, which [to them] is a significant positive,” says Michael J. Merlin, executive director, family wealth director and financial planning specialist at Atlanta-based Hansberger & Merlin, part of Morgan Stanley Wealth Management. (Georgia does not have a state-based exchange.)

Webb, the advisor in Minneapolis, tells a similar story. “A 60-year-old client has talked about retiring and starting her own business for years,” she relates. “The only reason she was staying at her current employment was to have health insurance for herself and her retired husband. [Now] her mind has opened up to all the possibilities again with the new options [available].

She and her husband can now get coverage and live their dream of part-time work and building a business of their very own.”

Webb also tells of a 62-year-old divorcee who was considered uninsurable because of pre-existing conditions. “She was able to stay on her ex-husband’s plan at work only for the number of years of alimony,” says Webb. When the alimony and coverage expired in 2013, she had to rely on distributions from her IRA.

“She will live off cash and show income low enough to be eligible for tax credits” under the ACA, says Webb, in addition to securing “better coverage than she would have if the act didn’t happen.”

Massachusetts, whose state-run insurance program was a model for the ACA, may be experiencing the least traumatic transition.
“In all honesty, I haven’t heard any clients voicing concerns over the health-care changes,” says A.J. Sohn, managing director at Antaeus Wealth Advisors in Boxborough, Mass. He acknowledges, though, that his sample may be “atypical in that our clients are solid income earners and have good net worth.”

Mixed Feelings
While others applaud the law’s provision that allows children to remain on their parents’ plan through age 25, some recoil at being forced to buy coverage at age 26. “Am I better off paying the penalty for not obtaining coverage than attempting to pay for a plan I might not be able to afford?” one young client asked Gelok. “It’s hard to answer,” he says. “As a planner, you want to advise people to buy insurance because who knows when a crisis might occur. On the other hand, you’re supposed to advise people to live within their means.”

Conundrums like this may resolve themselves in time, assuming the current uncertainty doesn’t go on forever. But is the worst behind us? “We will see rates stabilize and people gain a better understanding of how everything works,” says Mike Weintraub, president of the retirement planning division of Ascension Benefits & Insurance Solutions in Walnut Creek, Calif., a state with its own exchange. “Medicare’s early years were much like what we are seeing today, and most Medicare beneficiaries would not give up their coverage today.”

Still, what remains when the panic clears is anyone’s guess. “We are in a period of disruption in the quality of medical care that will be realized and felt over the next few years as the law continues to roll out,” says Phillips, the advisor in Indianapolis.

A Mixed Bag
Most likely the final result will be a mixed bag. “The confusion and technology snafus will get better as people are actually able to get into the Web site and look at their coverage options,” says Merlin. “[But] there is still an incredibly large amount that is unknown.”

Among those unknowns, Merlin cites the ACA’s effect on employment and corporate earnings. “It would be a significant concern if the engine of economic growth were curtailed due to these new challenges,” he says.

Even optimists acknowledge cause for anxiety. “In the long term, having healthy Americans will drive down costs, but until then, nobody knows what will happen,” says Weintraub.

A Realistic Approach
To be sure, with so little visibility, there is only so much advisors can offer clients. “Each client is different and requires a unique approach,” says Weintraub. “[Most] would benefit by using an advisor who can help educate and guide them.”

And so far, the best guidance may be to wait and see. Beyond that, advisors are recommending health-insurance brokers. “Brokers who specialize in this area have their hands on the pulse of the daily news flow,” says Gelok. “That’s more than I can say for most advisors, attorneys or accountants.”