Did You Have Health Insurance Prior to Signing Up With an Exchange?

[scrabbler1]

Hamlet, +1(+2). AllDone, also +1.

When I went from employer coverage to having to buy my own HI 5 years ago, I was dismayed at how the tax code treats employer-based HI so much more favorably than it does in the individual market.

Employer-based coverage provides a tax-free subsidy of the premiums while the tax code allows the workers to fully deduct their portion of the premiums regardless of income. It does not matter if the worker can itemize his deductions on Schedule A, his portion can be made with pretax dollars.

Now look at the tax code when someone loses those two big benefits, as I did starting in 2009. I had no employer subsidy, of course. But I could not even deduct the entire premiums I paid because I had to exclude 7.5% of my AGI first (since raised to 10%). So some of my premiums were made with after-tax dollars while some were made using pretax dollars, quite a bit worse than those in group health plans.

Add to that the higher cost of an individual policy versus being part of a group health policy. The ACA provides a subsidy like the employer-based one but it is not nearly as big as what I would get from an employer because the ACA's subsidy is based on income. And I am still stuck with the 10%-of-AGI exclusion for the rest of the premium, assuming I can always itemize. To me, that should be separate from Schedule A the way IRA deductions and other above-the-line ones are so they can always be deductible.

[NoMoreJob]

Yes, my wife and I purchased individual coverage since ER in 2003. I went to a policy though our state exchange for 2014 because otherwise the cost of the HSA policy that would have replaced our old one would have doubled in cost from $7,000 to $14,000.

[Malcolm2]

Quote:

Originally Posted by Hamlet Do you understand that the group insurance that you get through a large employer is already "government insurance" in the same way that the new individual insurance is going to be "government insurance"? The large group insurance market works the way it does because the government set rules saying that insurance companies weren't allowed to charge different rates to individuals working at a large company. When you work for a big company, the young health folks subsidize the older sicker folks' insurance costs. .

Of course the large elephant in the room (the government) did not normally force people in private companies to pay for others if they don't want or need coverage. Big difference.

I'm with Oldtrig, even though I will extend an old policy as long as able I am not for everyone trying to grab a subsidy, especially those with significant assets. I just don't want our kids to pay for yet another entitlement for us older folks. Perhaps if the entitlement was means tested, but not through income engineering while sitting on large retirement assets as some try.

[NoMoreJob]

Quote:

Originally Posted by Malcolm2 Of course the large elephant in the room (the government) did not normally force people in private companies to pay for others if they don't want or need coverage. Big difference. I'm with Oldtrig, even though I will extend an old policy as long as able I am not for everyone trying to grab a subsidy, especially those with significant assets. I just don't want our kids to pay for yet another entitlement for us older folks. Perhaps if the entitlement was means tested, but not through income engineering while sitting on large retirement assets as some try.

Many (like us) were not given the option to extend existing policies. Our choice was to pay significantly more (double in our case) or take a subsidy. Yes, we currently have 'significant' assets but it's my responsibility to protect those assets as they represent the basis for our retirement income, hopefully for the next 30+ years. We have no pensions or other income other than eventual social security. Would it be responsible of me to prematurely draw down our assets in order to stand on principle especially when in all likelihood it will be my wife who will suffer if there's not enough left in 30 years (I'll likely be gone)? This is the question I wrestle with.

[AllDone]

Quote:

Originally Posted by Malcolm2 Of course the large elephant in the room (the government) did not normally force people in private companies to pay for others if they don't want or need coverage. Big difference. I'm with Oldtrig, even though I will extend an old policy as long as able I am not for everyone trying to grab a subsidy, especially those with significant assets. I just don't want our kids to pay for yet another entitlement for us older folks. Perhaps if the entitlement was means tested, but not through income engineering while sitting on large retirement assets as some try.

But what if you think of the "subsidy" as a "tax break"? Would that be more acceptable to you? Right now about 2/3 of the country pays for their insurance with pre-tax dollars through their employer while those of us in the individual market pay in post-tax dollars. Does that seem fair to you? We could extend the tax savings to everybody, but how do we get coverage to people with "pre-existing conditions? (My BIL is uninsurable due to a condition he was born with, but is extremely healthy. His condition would have been undetectable without modern medical technology.). Additionally, wealthier people pay mostly income taxes while poorer people pay a higher percentage of Their income in the form of FICA and sales tax. (I paid 5% of my income in FICA, my nurse paid 7.5% of her income in FICA). The current system that subsidizes the health insurance of only those people who are employed by large employers and who have higher incomes doesn't seem all that fair to me. Yet, those subsidies provide the same drag on your kids (if subsidies provide any drag at all -- I don't believe that is true.) Any way, that's problem number one.

The other problem that bothers you is the mandate. I don't like being told what to do, either. However, I don't want to get hit by an uninsured driver or pay for an uninsured person's ER visit, so I like other people to be told what to do. Megacorp is required to provide insurance to all of it's employees at the same price regardless of age or health history, if it provides insurance to any employee. I suppose that there are people who are mean enough that they would forego insurance rather than contribute to their coworkers' expenses, but those people are secure in the knowledge that if their own health situation deteriorates, they can jump into the pool. They are acting as free-riders. If everybody did that, then the whole system would collapse. That's why the Heritage Foundation called the individual mandate "personal responsibility", back when they were still in favor of an ACA like plan.

In any system you find a few people who work the system and bend the rules a little. Sorry. In this case, though, a lot of hard working people are getting a more fair system that has previously been denied to them.

[scrabbler1]

Another good post there, AllDone, +1.

I worked for 23 years in the insurance industry, specializing in the actuarial area of personal auto. While it is not the same as health insurance, there are some similarities. First, the industry and government have worked hard to minimize the level of "free riders" who game the system to burden everyone else with the costs of their not buying insurance. States over the years (1980s and 1990s) strengthened their mandatory insurance laws to make it tougher for drivers to own cars without proper insurance. This, in turn, keeps the cost of Uninsured Motorists (UM) coverage low. UM is basically what insured drivers pay to compensate for the many drivers who choose to go without insurance, a "free rider" subsidy. States with stronger mandatory auto insurance laws tended to have the lowest UM rates.

Another thing insurers are allowed to do (and this is more for homeowners, not auto; I did work on HO a few times) is to not allow people to buy HO insurance within a certain number of days (at least 30, but it may be more) before a major weather event approaches, such as a hurricane. This prevents people from choosing to go without HO insurance until they see a big storm approaching, then being able to collect if their home gets damaged or destroyed. This is akin to those in the HI arena who wait until they get sick before they start buying insurance, also gaming the system by not paying into the system while they were healthy.

And remember what I wrote in Post #41 about the unequal tax treatment of those in group health plans versus those of us in the individual market and how those of us in the latter are at a disadvantage when it comes to taxes.

[unclemick]

Too old for ACA.

However as noted in previous posts went from 1993 to 2006 without any health insurance - couldn't afford it. Post Katrina and early SS bought BC/BS up north aka MO - way cheaper than LA.

heh heh heh - I absolutely DO NOT recommend anyone follow my example.

[Calico]

Quote:

Originally Posted by AllDone But what if you think of the "subsidy" as a "tax break"? Would that be more acceptable to you? Right now about 2/3 of the country pays for their insurance with pre-tax dollars through their employer while those of us in the individual market pay in post-tax dollars. Does that seem fair to you? We could extend the tax savings to everybody, but how do we get coverage to people with "pre-existing conditions? (My BIL is uninsurable due to a condition he was born with, but is extremely healthy. His condition would have been undetectable without modern medical technology.). Additionally, wealthier people pay mostly income taxes while poorer people pay a higher percentage of Their income in the form of FICA and sales tax. (I paid 5% of my income in FICA, my nurse paid 7.5% of her income in FICA). The current system that subsidizes the health insurance of only those people who are employed by large employers and who have higher incomes doesn't seem all that fair to me. Yet, those subsidies provide the same drag on your kids (if subsidies provide any drag at all -- I don't believe that is true.) Any way, that's problem number one. The other problem that bothers you is the mandate. I don't like being told what to do, either. However, I don't want to get hit by an uninsured driver or pay for an uninsured person's ER visit, so I like other people to be told what to do. Megacorp is required to provide insurance to all of it's employees at the same price regardless of age or health history, if it provides insurance to any employee. I suppose that there are people who are mean enough that they would forego insurance rather than contribute to their coworkers' expenses, but those people are secure in the knowledge that if their own health situation deteriorates, they can jump into the pool. They are acting as free-riders. If everybody did that, then the whole system would collapse. That's why the Heritage Foundation called the individual mandate "personal responsibility", back when they were still in favor of an ACA like plan. In any system you find a few people who work the system and bend the rules a little. Sorry. In this case, though, a lot of hard working people are getting a more fair system that has previously been denied to them.

+100

I receive health insurance from my employer, and I pay for it with tax free dollars as you describe. I feel very fortunate to have this benefit. I am equally glad that folks like your brother-in-law (one example among millions) now have affordable access to health insurance too. It is not perfect, by a long shot, but it is an improvement over the old system.

[MichaelB]

In the year 2022, once the ACA is fully implemented, the CBO projects the total gross outlay for exchange subsidies, new Medicaid and Chip participants will cost around $250B.

The taxpayer cost of employer based health care (tax expenditure) in 2013 is around $248B. The CBO projects that to rise to around $450B in the year 2022.

[Malcolm2]

Quote:

Originally Posted by AllDone But what if you think of the "subsidy" as a "tax break"? Would that be more acceptable to you? Right now about 2/3 of the country pays for their insurance with pre-tax dollars through their employer while those of us in the individual market pay in post-tax dollars. Does that seem fair to you? We could extend the tax savings to everybody, but how do we get coverage to people with "pre-existing conditions?

The ACA subsidy is a government entitlement payment paid direct to the insurance company on the persons behalf. Websters defines Entitlement as:
a type of financial help provided by the government for members of a particular group. That money was never the rightful property of the entitlement receiver and comes from someone else, far different from an situation of an employee of mega corp. In the megacorp example the government is only _taking_ less of the employees income. Those two are only the same if you subscribe to the belief that government is entitled _first_ to all of your income and "allows" you to keep some. I don't accept that premise, and I doubt most people do.

Actually most of the retired folks who are buying insurance at market prices are also paying for it after after tax.

It is good that those that those with medical conditions can get health care easier, nobody would deny that and it is good it helps folks in your case. My only issue is to have my kids generation pay for those getting a new entitlement payment that they did not work for while sitting on significant assets. Does that seem right? Just seems wrong to add yet another burden. That is why Medicaid requires personal assets to be used, perhaps carried too far to the extreme with LTC. Many people who decide to buy a ACA policy, if it works, will pay their full way, and then some. Talking points of ACA formal or informal navigators aside I think we must be clear.

[AllDone]

So what you are saying is that if the government gives you a some money and labels it ”income tax break" that's good, but if they label it "something else", that's bad? To me, since money is fungible, it's the same thing.

You are correct, though, that Megacorp pays for your insurance in pre-tax dollars (most companies do a little accounting trick which allows you to pay your share indirectly in pre-tax dollars too). It's not clear to me why you think that break should not be extended to some (or all!) working and retired people in the individual market.* I do agree with you that everyone is entitled to equal treatment, but because of the way we pay taxes in different buckets with labels like "FICA", "sales", and "income", it wouldn't be fair to give a break only to people with most of their taxes in the "income" bucket (aka rich people) and not the people who pay most of their taxes in the other buckets. If it makes you feel better, except for the very poor and the very rich who both pay a lower percentage of taxes, those of us in the working-poor to working-rich income categories pay the same percentage in total taxes.


* Throughout my working life I always seemed to have a colleague or two whose work habits strongly resembled a retired person.

[REWahoo]

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[nvestysly]

The poll has been open for 12 days and the votes so far are 58 YES and 4 NO.

Interesting results. I don't know what it means and it probably doesn't matter. The YES votes are coming in at 14.5:1 over the NO. Thank you to all those who participated in the poll.

I'd like to see a more scientific analysis of the question... "Who is signing up on the Exchange(s)?"

I hear lots of numbers thrown around in the media and I'm not sure what to make of the "facts." If E-R.org is any indication (and I realize it may not be) many of those who are signing up on the exchange(s) already had insurance. So what's happening with the millions of previously uninsured?

[Calico]

Quote:

Originally Posted by nvestysly ......If E-R.org is any indication (and I realize it may not be) many of those who are signing up on the exchange(s) already had insurance......

I think you would have to look far and wide to find a group that is less representative of the population as a whole than the members of E-R.org. The members of this forum, generally speaking, are folks who plan for all contingencies in life, including health care. The millions of previously and/or currently uninsured folks are not represented here. Just my two cents.

ETA: I'm not saying the millions of uninsured folks were poor planners - I understand that there are multiple reasons why folks could not get or afford health insurance. I'm just saying that ER folks as a general rule have taken health insurance costs into consideration and have been in a position to financially afford it.

[M Paquette]

Quote:

Originally Posted by nvestysly The poll has been open for 12 days and the votes so far are 58 YES and 4 NO. Interesting results. I don't know what it means and it probably doesn't matter. The YES votes are coming in at 14.5:1 over the NO. Thank you to all those who participated in the poll.

I'd like to note that while I had insurance when I signed up through an ACA web site, that policy ended at 11:59 PM Dec 31, 2013, and was not being renewed by the insurer. So, while I had insurance, if I had not signed up for an ACA plan, I would have lost insurance.

If non-ACA plans were available to me, they would certainly have included riders to avoid covering certain significant issues.

[audreyh1]

Same here - in the sense that the type of insurance I had (state run risk pool) was rendered obsolete by the new law.

If a risk pool had not been available to me, I may only have had insurance that had a rider against a very minor pre-existing condition, but still worried that if I developed any other condition I would have been subject to the insurance company putting a lot of energy into figuring out how to deny me.