What Now For Obamacare?

man-379677_1280Now that the Republican Party has taken control of both houses of congress there is a question about the future of “Obamacare.”  However, it is not time, yet, for those who have been harmed by “Obamacare” to rejoice.

All that has changed is that Mr. Obama no longer can count on Harry Reid to halt any attempts by congress to dismantle the Affordable Care Act.  With the Republican victory, in January there should be no buffer between congress and the president.  Bills to “repeal and replace” will be sent to Mr. Obama’s desk.  He will be forced to either sign them into law, or, as he has promised many times, veto them and explain to the American public why he refuses to change a law that has hurt most small business owners in America, along with most middle-class Americans with dependents.

Yes, there are parts of the ACA that are good, but there are also parts that attempt to transfer the wealth of Americans from the middle-classes to the lower-classes.  For the upper-class, the ACA is nothing more than a nuisance. The combination of the Individual Mandate with inflated premiums has been a major hardship for the middle-class.

The majority of Americans have spoken and reminded the politicians in D.C. that forcing a personal agenda on Americans has consequences.  Mr. Obama will have to spend his last two years trying to defend his extremist positions.

Having said my peace, let me speculate on what the future of “Obamacare” is.

Unfortunately, very little will happen in the first part of 2015.  The new senate does not even meet until January.  By the time they can do anything, the Annual Enrollment Period will have happened.  During that time, you will need to make your health insurance selection for 2015 as if nothing has happened.

I saw an interview with one of the Senators from TX, Ted Cruz.  He predicted that congress would attempt to repeal the entire PPACA, but Mr. Obama has vowed to veto any attempt like that.  If congress tries that, it will only be for show.

As I said, there are several things in the PPACA that are popular.   What is more realistic is that congress will “chip away” at “Obamacare” by repealing individual sections of the law that are not as popular.  Only then will America see if Mr. Obama will insist on his political gambit to buy votes or allow changes to the PPACA that make sense for Americans who are not in his voting base.

That process could take several months, or even a couple of years to work itself out.  Until it happens, “Obamacare” is still the law of the land and must be obeyed.

There is, however, a potential for a major change in the law in the summer of 2015.

Last summer, a lower court ruled that the language in the PPACA, that was written by Harry Reid, is too vague.  The language of the law states that citizens who live in state that operate their own health insurance exchanges are eligible for federal tax-credits.  However, states like my home state of Texas, and 35 others, elected not to spend the time, money and resources to build their own exchanges.  They use a federally built exchange.

The lower court ruled that the language in the PPACA is not clear that people, who live in states that use a Federally Facilitated Exchange are eligible for tax-credits.

The issue is expected to be ruled on by the U.S. Supreme Court.  If that court elects to hear arguments in March, their decision will not be public until the summer.  If the Supreme Court rules that the language in the PPACA is too ambiguous, they can stop “subsidies” for all Americans who live in states that have Federally Facilitated Exchanges until congress rewrites the law.

The problem is that the 114th congress, that we will have in 2015, is no longer Barack Obama’s rubber stamp, like the 111th congress was.  It is questionable whether congress would even attempt to rewrite that portion of the PPACA.

If that were to happen, the “subsidy” payments, for Americans who live in 36 states, could stop in mid-year.   In that case, Americans would have to pay the full price for health insurance.  Millions of Americans will lapse their health insurance, later in the year, if the Supreme Court does not extend tax-credits to people who live in states using the Federally Facilitated Marketplace.

How Can You Protect Yourself?

I know, and understand, that for many the price of health insurance is too expensive.  Many people need the “subsidies” just to be able to afford coverage.

Those people who live in one of the 14 states that have built a state exchange do not have to worry about this issue.  The potential problem will only affect those Americans who live in one of the states served by http://www.healthcare.gov.

The nice thing about the “subsidies” is that you can choose to take them as an advance against your 2015 income taxes or defer them until you file your tax return for 2015 and know your actual income.

Although I understand that many Americans have no choice but to take those “subsidies” as tax-credit advances, I advise my clients that if it is possible, they should buy their health insurance “Off Marketplace” (directly from the insurance company), pay the full premium and defer taking any tax-credits until they file their tax returns for 2015.

If they do that, and the Supreme Court rules that “subsidies” are not allowed, they will not be harmed. If the Supreme Court rules that “subsidies” are allowed in states using http://www.healthcare.gov they will still be able to claim any subsidy they are entitled to and get it in a lump sum in their income tax refund.

I know that this strategy is not ideal, especially for Americans with tighter budgets.  Unfortunately, they may have no choice but to claim a “subsidy” and take their chances with the Supreme Court.