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What the Democratic Platform Would Mean for You

Americans 50 and older could see big changes in their taxes and health-care coverage

By Bob Rosenblatt | September 6, 2012
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Bob Rosenblatt is a writer and editor specializing in aging issues. His blog, Helpwithaging.com, focuses on the finances of aging.

Next Avenue recently scrutinized the Republican platform to explain what it would mean for you. Now the Democratic platform is out. Much of it discusses what’s wrong with the Republicans’ proposals, but there are some specific ideas, too.
 
For the Democratic vision to become reality, Barack Obama would need to win the White House and the Democrats would need to maintain their majority in the Senate and capture control of the House. Even under that scenario, it’s unlikely the entire Democratic platform would become law. (Next Avenue offered a similar caveat in our analysis of the Republican platform.)
 
But here’s what the key elements in the Democratic platform would mean for Americans in their 50s and 60s:

Taxes
 
What the platform says: The President is “fighting to stop middle-class families and those aspiring to join the middle class from seeing their taxes go up and to extend key tax relief for working families and those paying for college, while asking the wealthiest and corporations to pay their fair share.”  
 
Taxes would not be raised for families making less than $250,000 a year, and the Bush tax cuts would be extended for them. The platform supports allowing the Bush tax cuts for the wealthiest to expire.
 
The platform says “we will always vigorously oppose the type of tax reform supported by Mitt Romney,” but calls for reforming the tax code so it is “fairer and simpler” and so “no millionaire pays a smaller share of his or her income in taxes than middle-class families do.” It also supports expanding the child and dependent care tax credit.

(MORE: The Security of Future Retirement Benefits: 5 Questions for Obama and Romney)
 
What it would mean for you: The Bush tax cuts would be extended for individuals with incomes of less than $200,000 a year, along with married couples with incomes below $250,000 a year. For those with higher incomes, the top two tax rates would rise to 36 percent and 39.6 percent (from the current 33 percent and 35 percent). 
 
For Americans in the top two brackets, the top tax rate on long-term capital gains (assets held for a year or more), would increase from 15 percent to 20 percent and dividends would be taxed as ordinary income.
 
Currently, the child and dependent care tax credit is based on a sliding scale and lets families write off between 20 percent (if their incomes are over $43,001) and 35 percent (for incomes of $15,000 or less) of their expenses. The maximum credit is $2,100. President Obama has proposed expanding the credit, so families with incomes of up to $75,000 could get the 35 percent credit; the 20 percent limit would apply to families with income of $103,000 a year or more.

Although the estate tax is not mentioned in the Democratic platform, President Obama has proposed lowering the current exemption from $5.12 million to $3.5 million. It’s scheduled to drop to $1 million in 2013.

Retirement and Social Security

What the platform says: “We will block Republican efforts to subject Americans’ guaranteed retirement income to the whims of the stock market through privatization.”  In addition, the platform states that “President Obama will make it easier for Americans to save on their own for retirement and prepare for unforeseen expenses by participating in retirement accounts at work.”

What it would mean for you: Employees and employers would continue paying 6.2 percent of wages (up to $110,100 in 2012) into the Social Security trust fund. The Democrats have not offered a specific plan to deal with Social Security’s long-term financial problems. But President Obama has previously favored increasing the income level on which Social Security taxes are collected.

It’s unclear exactly how Americans would have an easier time saving for retirement, although during the 2008 presidential campaign Obama called for enacting automatic enrollment in employer-sponsored retirement plans.
 
Private Health Insurance and Health Care

What the platform says: The document notes that Democrats are committed to carrying out all provisions of the Affordable Care Act.

(MORE: What Are Private Medicare Advantage Plans?)

What it would mean for you: The Obama administration says its policies will increase the number of Americans with health insurance by about 30 million, a direct result of the new law’s individual mandate and the expansion of Medicaid, the federal-state health insurance program for the poor.

If the Affordable Care Act stays on track, by 2014 you could buy health coverage through insurance exchanges, which are designed to make health insurance more affordable and easier to purchase. Insurers would be barred from excluding customers with pre-existing health conditions or limiting annual payouts. You’d be required to purchase coverage or face a penalty on your federal tax return — $95 per adult and $47.50 per child, with a maximum penalty of $285 for a family or 1 percent of family income, whichever is higher.

Medicare

What the platform says: Democrats "adamantly oppose any efforts to privatize or voucherize Medicare.”

What it would mean for you: The current Medicare program, in which Americans enroll for federal health coverage at age 65, would continue without significant changes for current or future beneficiaries.

Beneficiaries with Medicare Part D drug coverage would continue receiving a 50 percent discount on brand-name prescription drugs and a 14 percent discount on generics once they have reached the “donut hole,” spending between $2,930 and $4,700 on prescription medications.

Medicaid

What the platform says: “We will strengthen Medicaid and oppose efforts to block grant the program, slash its funding and leave millions more without health insurance.”

What it would mean for you: Millions would be added to the Medicaid rolls due to a new federal mandate. Everyone with income of up to 133 percent of the federal poverty level ($14,856 for an individual and $30,656 for a family of four) would be eligible for Medicaid.