Putting a HIT on seniors; this tax is really going to hurt

Healthcare is always a top issue for senior citizens. No one wants to become a burden. Predictable, controlled healthcare costs help to ensure a fixed-income in retirement will last a lifetime.

Now there is a huge complication facing California’s seniors. It’s called the Health Insurance Tax, or HIT. It’s set to go into effect on Jan. 1 and will add $245 to the average annual premium for every Medicare Advantage beneficiary.

This is a huge burden. Medicare Advantage has been an important resource for lower income seniors. More than one-third of all enrollees live on less than $20,000 per year. The cost of the HIT tax represents a measurable percentage (1 percent) of their available resources.

What’s more, only half of Golden State seniors have any savings, such as a company 401(k) or private investments. Thus, they have no well from which to draw to supplement their Social Security or pension check. The only way to pay more for health insurance will be to decide which essential needs to give up. Rent? Groceries? Medicine?

The impacts will only get more harsh with time. The HIT is designed to increase every year and will continually drive costs upward at the same time our population is aging. The fastest growing cohort in California is aged 80 and older. As seniors live longer, it becomes increasingly likely that even the more affluent will exhaust their savings in their later years, making higher healthcare costs all the more damaging.

Senior citizens deserve better.

With Medicare, America promised to take care of our elders in their golden years, and it’s unfair to change the game and raise their costs now. The HIT tax is a financially destabilizing force and it should be eliminated.

The broader economic impacts are equally problematic, because the HIT tax will affect 100,000 Americans including the vast majority of California’s 3.7 million small businesses and their 7 million employees. A recent study by Oliver Wyman predicts private sector job losses in the 152,000 to 286,000 range if the tax goes back into effect.

Every time California loses jobs, our tax base erodes and it becomes harder to fund the services that seniors rely on, such as community centers, transportation assistance or food programs.

The only option is for Congress to head off the HIT. Republicans and Democrats have come together on the issue before, when 400 voted to suspend the HIT tax for 2017. That was a welcome breath of relief for California seniors, and lawmakers should look to do at least as much for 2018 and beyond.

There isn’t much time to dally.

The end of the year is fast approaching and Medicare Advantage plan pricing is being set right now. Rep. Jeff Denham needs to convince his colleagues to take action as soon as they get back to Washington, so seniors can enjoy the peace of mind of knowing they can afford their healthcare premiums, today and tomorrow.

This story was originally published August 29, 2017 at 11:22 AM with the headline "Putting a HIT on seniors; this tax is really going to hurt."