The ACA: Its Impact on Clients with
Special Needs and the Elderly
Andrew H. Hook, CELA, CFP ® AEP®
Hook Law Center
Virginia Beach and Suffolk, Virginia
www.hooklawcenter.com
History
• The ACA has survived Challenges
since its March of 2010
enactment.
– Nat'l Fed’n of Indep. Bus. v.
Sebelius, 567 U.S. ____, 132 S.C.
2566 (June 28, 2012)
– 2012 Presidential election
– 2013 Government Shutdown
• The challenges continue – The
ACA authorizes tax credits for
Health Insurance (HI) purchased
thru a Marketplace (HIX)
established by the “state.”
– Only 14 state HIX
– IRS regulations would include
Federal HIX
– To date, 4 law suits filed
4/13/2015
• The ACA has and continues to
evolve.
– Class Act repealed.
– The Supreme Court made Medicaid
expansion optional for the states.
– Employers will not be penalized for
failure to provide HI until 2015.
– Individuals have until March 31,
2014 to sign up for coverage on an
HIX to avoid a penalty (i.e. you do
not need to be covered by 3/31).
– Existing non-conforming individual
health insurance policies for
existing customers grandfathered
for 2014
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What is
the ACA?
Health Insurance
Reform
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4/13/2015
No lifetime or annual limits;
Prohibition of rescission of coverage;
Extension of dependent coverage;
Prohibition on preexisting conditions
exclusions;
No excessive waiting periods for eligibility to
become covered by a plan;
Providing a summary of benefits and coverage
(SBC) to participants;
Deductible limitation;
No cost sharing for preventive care;
Plan enrollees are allowed to select any
available participating primary care provider;
Premiums can be based only on limited factors;
Limitation on Medical Loss Ratio (MLR); and
Effective process to appeal coverage
determinations and claims
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What is the
ACA?
Means of Expansion
of Access to Health
Insurance – Expand
the number of
persons with HI by 24
Million and provide
89% coverage for the
non-elderly
4/13/2015
• Individual Mandate – 2014
• Premium Tax Credits & Subsidies –
100% to 400% of Federal Poverty
Level (FPL) - 2014
• Large Employer Mandates - 2015
• Medicaid Expansion – 2014
– For 2014 thru 2022, the federal
government will pay 93% of cost
– MAGI up to 143% of FPL and no
resource test
– The Supreme Court made this
provision optional for the states
– To date, 26 states have adopted
expanded Medicaid coverage
– Several other states including
Pennsylvania and Virginia are still
considering expansion
– Medicaid expansion in Virginia
would permit 400k add’l enrollees
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What is a HI
Marketplace?
A Health Insurance
Marketplace is a
health insurance
exchange (HIX) used
by individuals to
purchase HI policies
qualifying for
Premium Tax Credits
(PTC)
4/13/2015
• Operated by state, state/federal
partnership, or federal government
• Must offer Qualified Health Plans (QHP)
with Essential Health Benefits (EHB’s)
• Four Levels of coverage – based on % of
projected expenses covered
• PTC based on Modified Adjusted Gross
Income (MAGI) increased by (i) tax
exempt interest and (ii) the excluded
portion of the taxpayer's Social Security
benefits.
• For example a 62 year old male with
MAGI of 100% of the FPL ($11,490)
would be entitled to a credit of
$7097/year and would pay only
$230/year for a Silver level plan.
• For example a 50 year old male with
MAGI of 300% of the FPL ($34,470)
would be entitled to a credit of
$1280/year and would pay premiums of
$3,270/year for a Silver level plan
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What is the impact
of the ACA on the
Elderly?
The provisions of the ACA
should be incorporated
into a client’s retirement
plan. Our clients are
worried about Health and
Long-Term Care expenses.
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4/13/2015
Medicare Part A will provide minimum essential
coverage under the ACA, i.e., satisfy the
individual mandate
A 3.8% unearned income Medicare tax applies to
all or a portion of the net investment income of
certain individuals, estates and trusts
The threshold for tax deductibility of
unreimbursed medical expenditures is increased
from 7 1/2% to 10% of AGI
The doughnut hole in Medicare Part D will be
gradually reduced to 25% in 2020 for both brand
name and generic drugs
Payments to Medicare Advantage plans will be
reduced to levels comparable to payments for
traditional Medicare
Individuals retiring before age 65 will be able to
obtain health insurance without pre-existing
condition exclusions
The ACA will not diminish the need for
traditional Medicaid and VA asset protection
planning
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What is the Impact
of the ACA on
Special Needs
clients?
Planning for persons with
Special Needs will evolve
from Special Needs Trust
planning to Special Needs
Planning.
4/13/2015
• The ACA will provide access to HI policies
with no pre-existing condition exclusion.
• To obtain Medicaid, PTC & subsidies,
income tax planning will become more
important. Many Special Needs clients may
not have previously filed income tax
returns.
• However, ACA HI policies & expanded
Medicaid coverage will not provide LTC
services nor income. Therefore, Medicaid &
SSI asset planning will remain important for
many Special Needs Clients.
• Guardianship orders and Trusts should
authorize the fiduciary to investigate and
purchase HI coverage.
• The ACA may reduce the need for COBRA
coverage.
• The ACA may result in the creation of more
support trusts that may be converted to
SNT’s.
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What are the Federal Poverty Level
Guidelines?
4/13/2015
Family Size
100%
400%
1
$11,490
$45,960
2
$15,510
$62,040
3
$19,530
$78,120
4
$23,550
$94,200
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What Conclusions
should we reach
about the impact
of the ACA?
The provisions of the ACA
must be considered when
formulating Retirement or
Special Needs plans.
• The ACA is one of many laws
that must be considered when
formulating a Retirement or
Special Needs plan. Other laws
include:
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Social Security Act
Internal Revenue Code
ERISA
Medicare Act
Medicaid Act
• As with all laws, the ACA will
continue to evolve and change.
• Attorneys and financial planners
must educate themselves about
the ACA.
4/13/2015
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Sources of Add’l
Information about
the ACA
The federal government,
Kaiser Family Foundation
and AARP are excellent
sources of additional
information. I light of the
evolution of the ACA, we
recommend regular visits
to these sites to keep
current.
4/13/2015
• www.healthcare.gov
• www.kff.org
• http://www.aarp.org/healt
h/health-insurance/
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Hook Law Center, P.C
OFFICES IN VIRGINIA BEACH AND SUFFOLK, VIRGINIA
(757) 399-7506
WWW.HOOKLAWCENTER.COM
MEMBERS OF:
SPECIAL NEEDS ALLIANCE
NATIONAL ACADEMY OF ELDER LAW ATTORNEYS
AMERICAN COLLEGE OF TRUST AND ESTATE COUNSEL
FINANCIAL PLANNERS ASSOCIATION
4/13/2015
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