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.”