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How president Biden’s proposed plans will affect seniors

On Behalf of | May 17, 2021 | Elder Law

The new administration has announced ambitious plans involving spending for infrastructure and other projects, and also new taxes to pay for these plans. The plans are contained in three proposed legislative packages: The American Families Plan, The American Rescue Plan, and the American Jobs Plan.  Many of these projects involve traditional bricks and mortar infrastructure such as roads and bridges. But these programs also envision the human aspect of aging infrastructure as a priority (along with childcare and education too).

How will these new laws affect seniors? Here are some of the most significant results that may impact (or have already impacted) seniors.

COVID PROTECTION – The vaccination program continues to report steady progress. Individuals who have been vaccinated (that includes me) have described a whole new attitude and feeling in our day-to-day lives. The effort continues, despite resistance, and our country is opening back up again.

ENHANCING & SAFEGUARDING SOCIAL SECURITY –  Most seniors depend on their Social Security income benefits. Pending proposals include increasing benefits for the oldest recipients between ages 78 and 82. Also, retirees with 30 years of employment could receive an increased minimum benefit, which would be most helpful to the lowest income earners. Widows and widowers would also see higher benefits. The Social Security trust funds are always under siege with dire (but credible) predictions of insolvency, especially as our population ages, but the workforce does not keep pace.

EXPAND MEDICARE & MEDICAID – Proposals include lowering the Medicare eligibility age to 60, and giving Federal agencies the power to negotiate drug prices in hopes of lowering prescription costs. Legislation will also encourage states who have so far declined to do so to expand Medicaid under the Affordable Care Act.

PROTECT THE AFFORDABLE CARE ACT – Millions (20 million plus) gained health insurance under the so-called “Obamacare” program. The pending suggestions would reduce costs, which could especially help seniors not yet age 65 as well as younger family caregivers without employment or insurance.

HELP FOR FAMILY CAREGIVERS –  Biden has proposed a tax credit of up to $5000 for family and informal caregivers, to bolster the human infrastructure in support of aging. When a family caregiver gives up or loses employment, they do not compile Social Security credits toward their own retirement. These bills would fix that problem.

PROMOTE RETIREMENT SAVINGS – This may help future seniors more than our present elderly, but one idea is a universal or mandatory 401(k) to promote more widespread retirement saving (but with an individual opt out provision). This would especially help lower income savers, who don’t have as much access to retirement plans.

How will the administration pay for all this? By increasing taxes, supposedly on those who can most readily afford to pay. These proposed tax changes include an increase in payroll tax for those with annual incomes of $400,000 or more, to be paid by both employers and employees. New rules would also change some of the existing tax law structure such as for capital gain tax, also intended to raise revenue from the wealthiest among us.  There is also talk of increasing the Federal Gift and Estate Tax that affects the very- and ultra-wealthy.

Biden’ s proposals also include raising the top rate for capital gain tax on investments, and eliminating the stepped up basis for inherited assets. This would undo a fundamental principle of estate and investment planning and would cause somewhat unpredictable consequences for both rich and middle class families.

Plans are also forming to increase tax enforcement and collection efforts. Administration officials have been in the news lately citing a huge amount of uncollected taxes owed, perhaps as much as $1 to $7 trillion per year.

What’s missing from these plans? There is no attempt to promote “Medicare for All,” or a “public option” for universal healthcare, which was a platform plank of candidate Biden and many others last year. Similarly, some commentators think the proposed power to negotiate drug prices is too weak and not as strong as expected.

What opposition will there be? Answer: plenty! Big Pharma always strenuously opposes drug price negotiation measures. States always try to limit Medicaid costs. The opposition party always fights hard for lower spending. The ACA has faced innumerable votes to rescind it entirely. And everyone hates increased taxes.

These ambitious plans, if implemented, would help seniors in some important ways. If you are a politically active participant, add your views to the discussion. We all have to wait and see what changes actually take effect, and which do not.