For more than 30 years my practice has focused on financial planning for small business on taxes, benefits and health care. We can agree that these are issues in the spotlight right now after last week’s election.
Over the past week I’ve read comments by other small business accountants that basically say that it is too soon to know what changes president elect will have on these areas. Their comments seem to be based on what they read in mainstream media news. Yet the consensus of industry intelligence – sources different than what’s on the headline news – tells a different story. These sources, along with stock market movements and the actions of health insurance companies this past week give indications as to the future of these sectors. The consensus of opinion of leaders in these fields is compelling and, in my opinion, reasonable cause to advise clients immediately. Yet I understand that most other small business advisers disagree.
What’s going on? Why are advisers on Main Street saying one thing when the traditional sources of industry intelligence saying another? The current situation is similar to one wrote about last year where CPAs chose to avoid advising clients about parts of the ACA that might trigger tax penalties. My conclusion this week is that we again have a gap in small business advice created by the surprise election results and that industry intelligence has not caught up with many advisers.
Here are three key points that I emphasized with my small business clients this week:
1) ACA is doomed to collapse from internal economics, not repeal legislation
There is every reason to believe that ACA as we know it will collapse. The president has the means to remove funding for key measures of the law without Congressional approval through House of Representatives v. Burwell, launched by Republican leaders last year. Health insurance industry leaders and the stock market indicate concerns that this will happen.
2) New health care options are ahead
As the result of this expectation of ACA change, many businesses are “going slow” for 2017. My closest business associates who used to offer advice on health insurance through my firm Freedom Benefits are no longer offering this advisory service for 2017. We are truly “on our own” this enrollment season. But we expect that additional health insurance options and non-insured plan resources (specifically the return of HRAs) to be available soon; we just need to wait for industry retooling.
3) Taxes are going down for business owners
There is agreement among Congressional leadership over key points in the president elects tax reform plan. A this point it is reasonable to predict a financial windfall for our affluent clients and now is the time to begin making preliminary plans for the likely changes ahead. This is exactly the opposite of what tax planners expected until a week ago so this significant change in forecast should be factored into our financial planning as soon as possible. Those who wait until after the change may miss out on profitable opportunities.
In summary, I think that it would be naive to wait until all the dust settles before beginning to plan our response to the likely changes ahead.