It has been a year packed with activity on the presidential and congressional level. We have seen proposed, amended and failed legislation, blocked executive orders, investigations, and charges of collusion on both sides. Here’s how developments from 2017 are likely to impact seniors, veterans, and persons with disabilities.
What Happened with Health Care?
2017 saw multiple attempts by Congress to repeal and replace the Affordable Care Act. The House passed its legislation but Senate Republicans did not. The legislative process and the House and Senate bills were explained in detail in previous editions, so we will begin this recap with a short summary.
Even though the Republicans have a majority in both the House and Senate, they only have 52 Republicans in the Senate. Sixty (60) votes are needed to pass new legislation, so they have been attempting to pass the legislation through the Budget Reconciliation process which only requires 51 votes. However, because that process is limited to budget items only, they could not include provisions that some Republicans wanted in a full repeal and replace bill—such as letting insurance companies sell across state lines to increase competition, lower prices and create better plans, and allowing the government to negotiate lower drug prices.
Republicans were also trying to make changes to Medicaid. The Affordable Care Act allowed states to expand Medicaid to some low-income Americans above the poverty level, which greatly increased the number of people on Medicaid. Also, the funding for Medicaid is open-ended, which means the funding increases as need increases.
The goal of Medicaid reform was to reduce the number of enrollees and reduce future spending so that it grows more slowly. Instead of open-ended benefits, both the House and Senate plans would have provided the states with either a per capita cap (a certain number of dollars per person) or a block grant of funds, which each state could use as it wished.
Republican proposals would also allow insurers to charge older Americans and those with pre-existing conditions more for their coverage than they charged younger, healthier people. (Those who could not afford the higher premiums would receive premium assistance from the government.) Insurers would also be allowed to offer plans that did not include all of the Affordable Care Act-mandated benefits and comprehensive-only plans for younger, healthy Americans.
After promising “Repeal and Replace” for more than seven years, Republican leadership seemed to be caught off-guard by its members’ objections. Conservative Republicans wanted a full repeal and replace while some moderate Republicans wanted to keep some of the more popular parts of Affordable Care Act, including Medicaid expansion and no extra charges for those with pre-existing conditions. In the end, Senate Republicans were unable to pass any health care reform, not even a flat repeal of Affordable Care Act as a starting point.
That has not stopped President Trump from taking some action through Executive Orders (EOs) to start dismantling the Affordable Care Act. In October, he signed an EO that included a 90% cut to the advertising budget for the Affordable Care Act enrollment period starting November 1st. The EO also directed agencies to issue new regulations that would expand the ability of small businesses and other groups to band together to buy insurance through association health plans, and it lifts limits on short-term health insurance plans.
A second EO, also signed in October, cut off payments to insurers that are known as cost-sharing reductions (CSRs). These were created under the Affordable Care Act to reimburse insurers for reducing out-of-pocket expenses for customers making up to 250% of the federal poverty level (about $61,000 for a family of four). The payments are the subject of an ongoing lawsuit that argues they were not properly authorized under Affordable Care Act. The White House agreed and decided to end them. Congress can easily solve the problem by passing a law appropriating funds for the CSRs. However, a new multi-state lawsuit has been filed to stop President Trump from halting the payments to insurers.
What This Means for Seniors, Veterans and the Disabled
The uncertainty about the future of health insurance is very unsettling to many seniors, the disabled and Veterans who depend on Affordable Care Act or Medicaid for their health insurance. According to one recent study, about 15.6 million people are covered by individual insurance plans. (Most Americans have insurance through their employers or are on Medicare.) But almost 70 million are currently covered by Medicaid, including about 11 million Veterans who do not get their health care through the Veterans Affairs system.
The Congressional Budget Office (CBO) estimated that as many as 23 million people would lose their current health care coverage if the House or Senate bills had passed. This number includes individuals who would voluntarily discontinue their health care coverage when the individual mandate was eliminated. It also includes millions who were added to Medicaid by the expansion under Affordable Care Act.
Many leaders on both sides believe something must be done soon to address several issues with the Affordable Care Act: Premiums continue to rise; deductibles and copays are so high that many cannot afford to use their plans; and insurers, who underestimated costs, are leaving markets. Many counties across the country will have no plans in the individual marketplace in 2018.
Members of Congress have stated they will try again as part of the tax legislation they are working on now. There have also been bi-partisan meetings with some early proposals.
Some Positive Developments for Veterans
President Trump campaigned on helping Veterans. With his actions, encouragement and the appointment of Secretary of Veterans Affairs David Shulkin, there have been some positive developments this year. Here are some of the highlights:
- The Accountability and Whistleblower Protection Act of 2017: was passed in June and promptly signed by President Trump. Written in response to an Obama-era scandal in which Veterans died waiting for doctors’ appointments, this law will make it easier to discipline and fire bad employees, better protect those who report misconduct and improve care for Veterans.
- Veterans’ complaint hotline was established:  (855) 948-2311
- The Veterans Choice Program (VCP) Extension and Improvement Act: President Trump also signed this into law improving the 2014 program that allows eligible veterans to receive care from providers in the community instead of only from the VA.
- VA Electronic Health Record (EHR) System:  The VA announced in 2017 that will modernize its medical records to use the same system as the Department of Defense. The Veterans’ records will now follow them when they leave service, providing faster and better care.In August, President Trump signed The Veterans Appeals Improvement and Modernization Act, which streamlines the process for Veterans to appeal disability benefit claims.
- Forever GI Bill: Also in August, President Trump signed an expansion of Veterans’ education benefits, boosting aid by $3 billion over the next 10 years and extending assistance to some veterans and dependents who didn’t qualify. This bill is officially titled The Harry W. Colmery Veterans Educational Assistance Act of 2017, named for the past commander of the American Legion who authored the GI Bill of Rights in 1944.
- The VA Connect app is being expanded to allow patients to conduct telehealth visits from their home computers and mobile devices and from private medical offices. VA providers in cities where there are a lot of doctors and specialists will be able to help Veterans in areas where there aren’t as many healthcare professionals. This will be a valuable service for those who are home-bound, live in rural areas, or need help in the area of mental health and suicide prevention.
A Major Change for TaxesÂ
On December 22, 2017, President Trump signed the Tax Cut and Jobs Act which was the largest overhaul of the tax laws since 1986. How these new laws will impact you is specific to you. You should certainly speak to your advisors about this sooner rather than later. For example, the exemptions to the federal estate tax doubled so that they are now a $11.2 million a person. That provides a unique opportunity for people with estates valued between $5.6 million and $11.2 million to take advantage of certain tax planning strategies. In addition, it is also a great time to review, revise, and simplify the now unnecessary complexity of older trusts created during the former tax regimes. If you created a trust but have not reviewed it in years, have an estate planning attorney review it for an analysis on what changes might make the most sense for you, your estate, and your family.
Great news for seniors is that the itemized deduction for medical expenses remains (there had been some discussion of repealing). In fact the threshold for the deduction has been lowered from 10% of your adjusted gross income to 7.5% for the next two years. This is a significant advantage for those seniors who are paying for expensive long-term care. They will continue to be able to do so including those who pay high bills but weren’t quite paying enough to meet the 10% of AGI threshold.
In addition, there will be more standard deduction benefits for seniors. Not only will the standard deductions for individuals and married couples be doubling (it will now be $12,000 for individuals and $24,000 for married couples, but those over 65 will be able to add an additional $1,300 deduction.
Lastly, there will be a new $500 tax credit for family members who claim a senior as a dependent.
It should be another exciting year! If you or those you serve have any questions, we would be happy to hear from you.
