How Will the New "Age Tax" Affect You?

The American Health Care Act (AHCA) passed through the House of Representatives last week (May 4) - bringing Republicans one step closer to fulfilling one of President Trump's key campaign promises.

While the new bill still has to hurdle its way through the Senate, there is one provision that Americans should keep a close eye on, because it will have significant effects on America's senior population....

It's called the "age tax."

What Is the "Age Tax?"

age tax

Under former President Barack Obama's Affordable Care Act, health insurance companies are permitted to charge older Americans (aged 50 through 64) no more than three times what they would charge younger enrollees.

Now, the new AHCA (a.k.a. "TrumpCare," a.k.a. "RyanCare") allows health insurance companies to charge older Americans even more - five times what they charge younger enrollees.

And that's just the default guideline.

The AHCA also allows states to seek a waiver to permit insurers to charge older customers even more if they see fit, according to a May 4 report by CBS News.

The provision was introduced by Rep. Larry Bucshon (R-IN). Bucshon argued that since healthcare costs for seniors are on average 4.8 times more expensive, premiums must be adjusted accordingly.

How Will the "Age Tax" Affect Seniors?

Two large classes of Americans won't be affected by the "age tax."

First, seniors who stick with their jobs (and employer-provided health insurance) until they reach age 65 and are eligible for Medicare won't be impacted.

Second, Americans age 50 or lower will be relatively unaffected by this new "age tax," while senior citizens shopping for private insurance will pay the price.


The Truth About the Social Security Trust Fund

The class that will get hit are adults age 60 or older buying individual health coverage. According to a recent study by AARP, if the legislation passes in its current form, annual insurance premiums for those Americans would rise over $3,200 to $17,900. And since the median income for seniors who buy health coverage is about $20,000, this increase would be "extremely burdensome."

AARP representatives argue that seniors simply can't afford to buy health insurance at such inflated premiums.

In fact, one section of the proposed AHCA changes the current need-based system of premium tax credits to a flat credit, which would further increase low-income seniors' financial burden. You see, flat tax is a system that applies the same tax rate to every taxpayer regardless of income bracket.

Between the two changes, AARP says that healthcare premiums for a 64-year-old earning $15,000 a year would increase by $8,400.

However, it is important to note that after the age of 64, seniors are eligible to register for Medicare.

An $80 Billion Cover-Up? Under the watchful eye of Congress, the government will soon be implementing a controversial plan that threatens the retirement of millions of Americans. And they're using an obscure loophole buried in Title 29 of the U.S. Labor Code to do it. If you have a 401(k), IRA, or any type of retirement account, this could cause you to miss out on $68,870 or more. Learn more...

Follow Money Morning on Twitter @moneymorningFacebook, and LinkedIn.

[mmpazkzone name="end-story-hostage" network="9794" site="307044" id="138536" type="4"]