Tax Reform and Health Insurance: New Options for the Self-Employed & Early Retiree

You may not have heard the news recently, but the United States just passed into law a complete overhaul to the tax code. But what you may not have heard was tucked inside that bill was a repeal of the Obamacare individual mandate.

For folks living in the world of financial independence or the pursuit thereof, the repeal of the individual mandate has the potential to change the way you buy health insurance in early retirement for the foreseeable future.

Tax Reform and Health Insurance: New Options for the Self-Employed & Early Retiree

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The purpose behind the mandate was to force the young and healthy into the exchanges so they are pooled with the older, sicker, and more costly patients to basically subsidize their insurance premiums.

What’s the Individual Mandate?

The individual mandate has always been a hotly contested subject ever since Obamacare passed. The Republicans challenged the legality of the mandate and took it all the way to the Supreme Court.

Why was the Individual Mandate Repeal Included in a Tax Law?

Well, the mandate stuck because the Supreme Court ruled the government isn’t forcing people to buy health insurance, just that they are levying a tax, if they don’t buy it and the government has the right to pass new taxes.

Low-income folks will still buy on the exchanges because they’ll continue to get the majority of the premiums subsidized. And the sick because they’ll have limited other options.

What’s that Mean for the Obamacare Exchanges?

For early retirees living modestly on their massive fortunes (and reporting a low taxable income every year), you’ll likely still benefit from the government subsidies. But take advantage while you can, that could be the next thing Washington targets…

You certainly should care…optionality, my friend! As long as the subsidies are still flowing on the exchanges, that remains a great option. Even if rates go up 10% in 2019, the subsidies will also rise.

Do Early Retirees Care?

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