One Big Beautiful Bill – It’s Big and It Will Surely Impact Each of Us

At the end of last week our lawmakers passed the One Big Beautiful Bill (OBBB) that has demanded the focus of Washington for weeks spilling into months. This bill is part of the budget reconciliation process which was put into place by the Congressional Budget Act of 1974. It was instituted because lawmakers became less and less interested in compromise and they needed a way to get around the 60-vote requirement to override a filibuster in the Senate and pass a budget with a simple majority. To highlight the non-functional status of Congress, this budget should have been completed by September 30th of 2024. Congress has not passed a budget on time since 1997 and has only done it four times in the last 50 years, which I think is deplorable. Ok, I got that out of my system, let’s find out how the OBBB impacts you and me.

The effects of the OBBB are centered in four areas:

·       Tax cuts

·       Medicaid reforms

·       Spending reductions

·       Debt ceiling increase

Whether you perceive these changes to be positive or negative depends on your age, health, financial situation, and party affiliation. Congress was split on voting, with the Senate having 50 for and 50 against with the Vice President casting the final vote and the House had 215 for and 214 against. Congress certainly divided on whether they saw the bill as positive or negative. I’ll focus on the new law’s impact on you and me and, as always, give you my opinion on whether I thought it was good or bad.

Tax cuts – The bill renewed the tax cuts that were originally passed during President Trump’s first term with some changes and additions. Here’s what impacted seniors:

·       Continued the increased standard deduction with a $6,000 reduction in the amount of your Social Security (SS) that is taxed for a single taxpayer with income below $75,000 or $12,000 reduction for income below $150,000 (both over 65).

·       A reduction in taxable income for up to $2,000 of charitable giving even if you didn’t itemize.

·       If you buy a vehicle in the next four years you can deduct up to $10,000 a year in interest paid on auto loans. That deduction phases out for those who earn more than $100,000 a year ($200,000 for couples).

The qualifications for these deductions are often complicated and may not apply to all of us. You might need to seek help with determining the best way to take advantage of these tax changes. While these additions and changes are not directly related to this blog’s focus on healthcare, I think these tax reductions are prudent and will put more money in our pockets that we can use to offset the cost of our healthcare.

Medicaid reforms – This is the place where the bulk of the money came from to pay for the rest of this bill. I’m very hesitant to say these cuts to Medicaid are prudent. While I think there is waste and abuse in the program and I don’t think these benefits should go to people who abuse the program, I believe this is another case of the government using a sledgehammer to fix the problem and will cause significant collateral damage. Currently, there is no proof of work required to receive Medicaid. By the end of 2026, this bill imposes work requirements for many of those on Medicaid. Recipients are also required to prove eligibility to their state twice a year instead of once. The Congressional Budget Office estimated that about 5 million more Americans would become uninsured by 2034 because of the new work requirement. There must be a better way to fight fraud and abuse.

We did have a great victory! The ORPHAN Cures Act, that we fought so hard to be included in this bill, was finally inserted into the final version. Kudos to all of you that worked to get that important provision passed. Click here to see why was so important. We now have hope that more medicines for rare diseases will be available for us and our loved ones.

Another positive outcome was allowing seniors to continue contributing to their Health Savings Account (HSA), even after enrolling in Medicare. An HSA allows a person to deposit before taxed earnings into this account to use for out-of-pocket medical expenses. Many of us used this account to save taxes in our younger years and now that flexibility is extended.

Some temporary telehealth benefits were also made permanent.

Spending Reductions – Many programs were cut besides Medicaid, with lawmakers again citing eliminating waste, fraud, and abuse. A better approach might have been to use a scalpel rather than an ax. Many of these programs were important to older Americans and the impact of the cuts will have a direct impact on their wellbeing.

Debt ceiling increase – Many lawmakers on both sides of the aisle were concerned with the current trajectory of our nation’s debt. It cost one Republicans vote in the Senate while many others, in both Houses and on both sides of the aisle, made their concern with the debt known as they evaluated this bill. This amount of debt should make us pause and it is not a trivial problem. It is something that should be of concern to all our lawmakers.

The OBBB is a big bill with short- and long-term impacts. I certainly haven’t highlighted all of the implications on older Americans, and I can guarantee that there will be unintended consequences. All we can do is continue to stay informed and speak out when the situation warrants it.

Best, Thair