Join Early Retirement Today
Closed Thread
 
Thread Tools Search this Thread Display Modes
Another Unscheduled Change/Delay to PPACA: Smoker's Premiums
Old 07-09-2013, 08:20 AM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Another Unscheduled Change/Delay to PPACA: Smoker's Premiums

According to this CBS report, the government computer systems can't properly compute/accept the required premiums from smokers as computed under the PPACA rules. It has something to do with the conflict between
a) Smokers can be charged up to 50% more.
b) Older insureds can't be charged more than 3x the rate of younger insureds.

Another thing that will reportedly require "at least a year" to fix. Until then--old smokers get artificially lower rates. There's a trend here . . .
__________________

__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now  
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-09-2013, 08:34 AM   #2
Thinks s/he gets paid by the post
Tadpole's Avatar
 
Join Date: Jul 2004
Posts: 1,170
Quote:
old smokers get artificially lower rates.
Did Medicare add a smoker's fee?

Actually, I have a stupider question. What is a smoker? Is it someone who smoked today. Someone who smoked 1,2,... years ago. Someone who smoked more than 1M camels. What about someone who quit today and promises it is permanent this time? Also, once someone is on smoker's rates do they remain on those rates even if they quit permanently?
__________________

__________________
Tadpole is offline  
Old 07-09-2013, 08:46 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by Tadpole View Post
Did Medicare add a smoker's fee?
Interesting, but is not related to this.
- Is Medicare private insurance? Insurance under the ACA is private insurance.
- The ACA allows insurers to charge higher premiums for smokers. That's the law that was passed by Congress and signed by the President. Private insurance through the "exchanges" (what this is about) is supposed to go on sale starting October, 2013.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now  
Old 07-09-2013, 09:14 AM   #4
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,448
This news is confusing. The math is not a problem. That is, the 3X spread between the lowest and highest rates is still 3x if a 50% penalty is added to each. As an example, if the base rate is 100 and the top rate is 300, adding a 50% penalty to each makes the new rates 150 and 450, still a 3x spread.

There is still little news on this. One article I saw indicated that the real problem is, the surcharge is not 50% but instead "up to 50%" and insurers want to implement it with lower penalties on the younger people. So, it would be +10% penalty on a 26 year old and +50% on a 60 year old. That might make sense, as the health risk to smokers is greater for someone who has smoked for 30 years vs someone not yet 30 years of age.

So, charge the same stiff penalty to all, or charge more for long time smokers?
__________________
MichaelB is online now  
Old 07-09-2013, 04:29 PM   #5
Administrator
Janet H's Avatar
 
Join Date: Feb 2007
Location: Pacific NW
Posts: 4,956
Quote:
Originally Posted by MichaelB View Post

So, charge the same stiff penalty to all, or charge more for long time smokers?
Who can afford to smoke? Sheesh... a pack is ten bucks at my local minimart...

$10 x 365 days = $3650.00 per year.
__________________
E-R.org Custom Google Search | You're only given a little spark of madness. You mustn't lose it. (Robin Williams)
Janet H is offline  
Old 07-09-2013, 05:46 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Mulligan's Avatar
 
Join Date: May 2009
Posts: 7,376
Quote:
Originally Posted by Janet H View Post

Who can afford to smoke? Sheesh... a pack is ten bucks at my local minimart...

$10 x 365 days = $3650.00 per year.
Although I am not a smoker, you can buy them for way under half that price in MO. State taxes them at 17 cents pack. I believe we voted down a tax increase this past year on them. Something is wrong with us as everyone always likes to kick a smoker and squeeze more taxes out of him.
__________________
Mulligan is offline  
Old 07-09-2013, 06:06 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Apr 2013
Posts: 5,570
Quote:
Originally Posted by Tadpole View Post

Did Medicare add a smoker's fee?

Actually, I have a stupider question. What is a smoker? Is it someone who smoked today. Someone who smoked 1,2,... years ago. Someone who smoked more than 1M camels. What about someone who quit today and promises it is permanent this time? Also, once someone is on smoker's rates do they remain on those rates even if they quit permanently?
I think insurance companies get to decide that for you. I've been aware that any "misinformation" will be settled when the insurance company gets the bill. Have a death claim, they look at , if you smoke or have, the DRs. can and will inform insurance. Trust me as an ex smoker, you can smell them coming. Obviously there are other signs of "smoking", I don't know how it's defined.

IMHO the insurance company will make sure any mistakes will be resolved in their favor.
__________________
MRG is online now  
Old 07-09-2013, 08:59 PM   #8
Thinks s/he gets paid by the post
Htown Harry's Avatar
 
Join Date: May 2007
Posts: 1,516
Quote:
Originally Posted by MichaelB View Post
As an example, if the base rate is 100 and the top rate is 300, adding a 50% penalty to each makes the new rates 150 and 450, still a 3x spread....

So, charge the same stiff penalty to all, or charge more for long time smokers?
In your example, the older smoker has penalty of $150, the younger smoker has a penalty of $50.

It seems to me there is already an implicit penalty on long time smokers built into the percentage-times-a-percentage rate calculation method.
__________________
No doubt a continuous prosperity, though spendthrift, is preferable to an economy thriftily moral, though lean. Nevertheless, that prosperity would seem more soundly shored if, by a saving grace, more of us had the grace to save.

Life Magazine editorial, 1956
Htown Harry is offline  
Old 07-09-2013, 09:11 PM   #9
Thinks s/he gets paid by the post
Htown Harry's Avatar
 
Join Date: May 2007
Posts: 1,516
Here's something interesting.

Searching for more info I found an April thread on an actuary's discussion board. The "news" of a memo in the AP report cited in the OP's post is something that has been in play for several months.

April 8th post:

Smoking Loads under ACA: "We screwed up, you deal with it" - Actuarial Outpost

Quote:
Along with others, we found that when submitting the rate template, it resolves to an error when doing this - that the higher-age rates for smokers are greater than 3 times the 21-year-old rate for smokers. We asked CMS about this, and they released a [e-mail] bulletin today.

"Accordingly, we ask that, until further notice, all issuers using the Rating Tables Template and that will be offering non-grandfathered plans in the individual and small group markets implement the tobacco rating factor for their non-grandfathered policies so that older adult smokers are not rated in total more than 3 times of the total rate for a younger adult smoker. One way to accomplish this is if an issuer imposes a 1.2 to 1 tobacco rating factor on a 21-year -old smoker, the issuer should use the same 1.2 tobacco rating factor for the 65-year-old smoker. If an issuer implements the tobacco rating factor with the result that an older smoker is rated up more than 3 times of that of a younger smoker, the submission of the issuer will be rejected by the system. We intend to implement a system change that will allow for processing of tobacco rating factors that vary based on age, and we expect this to be completed after calendar year 2014."
edited to add:

Reading the actuary thread to the end, the "templates" are mentioned often. I found them here:
http://www.serff.com/plan_management_data_templates.htm

The stated purpose of the templates: "These Microsoft Excel workbooks are referred to as "templates" and are intended to create a nationwide standard of plan- and issuer-level data collection for the use of QHP certification, exchange operations, and oversight activities." The final revisions were in May.

My interpretation: The templates are a fundamental building block for starting up the exchanges. Pressed by deadlines to start insurers preparing their ACA rate tables for submission to state and federal exchanges, the CMS folks ran out of time to deal with a macro change that would allow a higher % tobacco surcharge percentage to be applied to older smokers.
__________________
No doubt a continuous prosperity, though spendthrift, is preferable to an economy thriftily moral, though lean. Nevertheless, that prosperity would seem more soundly shored if, by a saving grace, more of us had the grace to save.

Life Magazine editorial, 1956
Htown Harry is offline  
Old 07-10-2013, 07:49 AM   #10
Thinks s/he gets paid by the post
 
Join Date: Feb 2011
Posts: 1,629
MichaelB's right that adding a fixed %surcharge for all smokers would be easy to administer & not violate the "3X base premium" rule. The issue is balancing extra HI premium cost to smokers vs extra overall cost of health care delivery to smokers . Setting HI premiums too much higher for smokers could lead more to NOT buy HI, while not charging smokers "enough" would increase premiums to non-smokers to stay within the "3X + low smoking surcharge" rate structure possibly increasing their nonparticipation rate.
What I don't understand is how the Gov't has taken almost 3 yrs to deal with this. The "ran out of time" excuse sounds like the kid claiming the dog ate his term paper night before it was due
__________________
ERhoosier is offline  
Old 07-10-2013, 08:18 AM   #11
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,448
Looks to me like the issue is with the insurers. They don't want to charge the smokers premium to the younger people, just the older ones. They want to have it both ways.

Harry's link shows this is not a new issue, just getting it's turn in the spotlight. The decision would need to be in 2012 to allow the worksheet coding and give time to the insurers to prepare their pricing strategy for June deadline submissions.
__________________
MichaelB is online now  
Old 07-10-2013, 08:49 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by MichaelB View Post
Looks to me like the issue is with the insurers.
The insurers are just trying to apply the government's own (somewhat arbitrary--IMO) rules for premiums, and the government's own computer systems won't allow them to do it properly. The government is right to take responsibility for the SNAFU.
Quote:
"Because of a system limitation ... the system currently cannot process a premium for a 65-year-old smoker that is ... more than three times the premium of a 21-year-old smoker," the industry guidance said.
If an insurer tries to charge more, "the submission of the (insurer) will be rejected by the system," it added.
Now they should fix it so this program launches in its entirety on time. Or, there should be a change in the legislation to allow a delay.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now  
Old 07-10-2013, 10:02 AM   #13
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,448
They say beauty is in the eyes of the beholder.

I donít recall another legislative initiative subject to such such scrutiny or transparency, and I think itís a good thing, blemishes and all. Adapting, delaying and reconsidering parts improve the likelihood of a successful undertaking.
__________________
MichaelB is online now  
Old 07-10-2013, 10:59 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,271
Quote:
Originally Posted by MichaelB View Post
...
I donít recall another legislative initiative subject to such such scrutiny or transparency, ...
When was the last time we had such wide-reaching, complex legislation, that required a Supreme Court decision to determine if it was even valid or not, and that polling showed was unpopular?

That's not a political statement or value judgement, just a factual observation - I don't think it is surprising that it is being scrutinized heavily. It affects a LOT of people! Scrutin away (paraphrasing Mayor Daley there)!

We need transparency because we need to know how to deal with this. Shouldn't we expect full transparency for something that affects so many of us in such significant ways?

Quote:
Adapting, delaying and reconsidering parts improve the likelihood of a successful undertaking.
Fine, it's unlikely to get everything right the first time around on such a complex bill (which is part of the problem, IMO, but that's water under the bridge). But that is the job of Congress - to make the laws, no?

For retirees, those considering ER, or others trying to plan for the future - it's tough when the laws are complex and the rules are being changed on the fly by moving implementation dates.

-ERD50
__________________
ERD50 is online now  
Old 07-10-2013, 11:38 AM   #15
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,448
In the US things (laws, rulings, and court decisions) can be challenged and often go to the Supreme Court, not because they need the Supreme Court to rule, but because our judicial process allows it.

We should expect transparency on all our legislation, we just haven't seen it to this degree elsewhere (to my recollection). I think that is positive.

Back to the PPACA, this is really an amazing process. A rule is proposed, then submitted to the public for discussion and feedback. All constituents are free to respond, all comments are considered and addressed with a public, published response. Some comments and suggestions lead to reconsider the rules or their implementation. A slow and messy process, with built in delay, but not a bad way to go about implementing this legislation.
__________________
MichaelB is online now  
Old 07-10-2013, 11:44 AM   #16
Thinks s/he gets paid by the post
 
Join Date: Feb 2011
Posts: 1,629
Quote:
Originally Posted by ERD50 View Post
For retirees, those considering ER, or others trying to plan for the future - it's tough when the laws are complex and the rules are being changed on the fly by moving implementation dates.
-ERD50
Agree 100%. Regardless of how one felt about ACA during legislative process, it was passed, upheld by SCOTUS, and is the law. It would be best for all to implement ACA AS PASSED, then decide on administrative & legislative tweaks to fix it. Trying to fix a moving target is an exercise in futility, and some legal scholars are now suggesting this Admin's handling of ACA (e.g. ignoring hard deadlines written in the law) could be establishing a bad precedent. What good is any law Congress passes if the Executive branch simply changes or ignores the law's features as it wishes?
IMHO- ACA can still be implemented largely as passed, deadlines & all. Just quit the political BS and/or hire competent admin types to write the workable (NOT perfect, but functional) reg's to get us started. If all the computers can't interface yet, use paper forms for 2013 OE. After all- paper forms worked reasonably well for most of SS program- and for conducting WWII
__________________
ERhoosier is offline  
Old 07-10-2013, 12:53 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by ERhoosier View Post
It would be best for all to implement ACA AS PASSED, then decide on administrative & legislative tweaks to fix it. Trying to fix a moving target is an exercise in futility, and some legal scholars are now suggesting this Admin's handling of ACA (e.g. ignoring hard deadlines written in the law) could be establishing a bad precedent. What good is any law Congress passes if the Executive branch simply changes or ignores the law's features as it wishes?
Amen. The executive branch does not have the authority to choose which laws, or parts of laws, to enforce (plenty of case law to the effect--see this piece for more). Unsurprisingly, Presidents of all political affiliations have tried in the past to disregard big and small aspects of legislation, and their own lawyers (the Office of General Counsel) have been found this to be improper. If that doesn't happen this time, then there is always the court system, but the problem in this case is that there may be no entity with "standing" to bring the case to court.

It's a terrible precedent. As we grapple with other issues (immigration reform, spending priorities, etc), we need to know that the compromises reached in Congress can't be overridden by the President (whoever he/she is).

Implement this thing just as it was designed and we'll be more quickly able to adjust it based on real-world experience. That'll be the best way to get it right for retirees--and everyone else.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now  
Old 07-10-2013, 12:54 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,271
Quote:
Originally Posted by MichaelB View Post
...

Back to the PPACA, this is really an amazing process. A rule is proposed, then submitted to the public for discussion and feedback. All constituents are free to respond, all comments are considered and addressed with a public, published response. Some comments and suggestions lead to reconsider the rules or their implementation. A slow and messy process, with built in delay, but not a bad way to go about implementing this legislation.
But isn't that supposed to happen as part of the law-making process?

I realize the Executive branch is responsible for executing legislation, but I thought that meant executing what was written. Moving something slated for one year into the next year seems to be not executing what was written.

Again, not trying to take this political, I'm just trying to understand how people and businesses are expected to plan, if the implementation of a three year old law is in flux from what was written.

Does the Congressional Budget Office need to re-do its calculations?

-ERD50
__________________
ERD50 is online now  
Old 07-10-2013, 02:01 PM   #19
Thinks s/he gets paid by the post
 
Join Date: Feb 2011
Posts: 1,629
Quote:
Originally Posted by samclem View Post
.....then there is always the court system, but the problem in this case is that there may be no entity with "standing" to bring the case to court....
WTF If the law says I'm supposed to get HI from my large employer & the Executive branch refuses to recognize that legal requirement, seems to me I should have "standing" in the courts as an injured party. If a future Exec branch refused to recognize same-sex marriage in a fashion contrary to US law, don't you think a married same-sex couple would have "standing" for a court challenge?
__________________
ERhoosier is offline  
Old 07-11-2013, 07:58 AM   #20
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,448
The outrage!

Rest assured, dear friends, our political process is not in jeopardy, there has been no egregious abuse of power, checks and balances are still working, same sex marriage, immigration reform, and spending priorities are all safely in the hands of Congress, where they are certain to be dealt with in a manner befitting this most venerable group. If there are any lingering concerns regarding lawful compliance of health care reform implementation, the process for challenging those remain open and available.

Most importantly, no one will be denied health care because of this, and all components of the PPACA are still scheduled for implementation.
__________________

__________________
MichaelB is online now  
Closed Thread


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 09:38 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.