It passes, What Now?

[FUEGO]

Of that dollar you earned, you only keep about half of it. At this point you have to ask yourself if it's really worth busting your chops to earn a little more. And since the subsidy is still phasing out once you hit the 28% bracket, before it completely phases out there's a "bracket" where you lose about 60 cents on the dollar if not a little more to taxes and lost subsidies.

I think you have discovered the nuance of the law. It's another measure to encourage you to either shoot for the moon or acquiesce to mediocrity.

 

[ziggy29]

Any word on HSA's? I read that they would be impacted based on an earlier version of the bill but not sure if it made the final cut.

I *think* the only current impact is that premature withdrawals for non-medical purposes would be subject to a 20% penalty instead of 10%. Not sure that made the final cut but I think it was in the bill the Senate passed so I assume it did.

[Edit to add: I think it also removes the HSA eligibility of OTC medical expenses, now that I think of it. Again, haven't seen the full analysis of the final law's impact on HSAs otherwise.]

 

[FUEGO]

I *think* the only current impact is that premature withdrawals for non-medical purposes would be subject to a 20% penalty instead of 10%. Not sure that made the final cut but I think it was in the bill the Senate passed so I assume it did.

Ok. I wonder if High deductible plans will continue to pass muster under the new minimum requirements that all insurance plans will have to meet in the future? In other words, will I continue to be able to contribute to an HSA and retain our HDHP from DW's job?

 

[Zathras]

One aspect of "What Now" that I haven't seen mentioned is the immediate impact on small businesses. They will get tax credits of up to 30% this year to offer health insurance to employees. Anyone here working for a small business that might be encouraged to offer a policy with such a credit?

Good point.
A number of years ago, the business I worked at paid for the full amount of health insurance for all employees (about 10-25 employees).
This credit would definately allow the company to either hire more, or make more capital investments to grow the business.

 

[FinanceDude]

In my case I'll probably consider switching to a more expensive plan during even years (while I am subsidized) and probably only getting a catastrophic HSA eligible plan on odd years.

I was at a meeting last week where an economist who has made numerous appearances on CNBC spoke. Turns out his wife is a pediatrician. This was before the vote, but he simply told everyone to go get themselves an HSA and fund it, like he did.

 

[FUEGO]

One aspect of "What Now" that I haven't seen mentioned is the immediate impact on small businesses. They will get tax credits of up to 30% this year to offer health insurance to employees. Anyone here working for a small business that might be encouraged to offer a policy with such a credit?

Or the flip side. What will be the impact on small businesses that are subject to the penalty for not providing health insurance? Fire enough employees to get under the size threshold so you won't be subject to the penalty?

 

[samclem]

I've come across some folks who are concerned that companies (especially those not receiving a subsidy) will modify their benefit package to comply with the letter of the law. The least expensive thing to do is for them to offer insurance only for the employee, and not the employee's family (thereby avoiding any penalty). If this happens, then the rest of the family would go to the exchanges to buy their insurance. I assume they'd get some sort of subsidy, but not the entire "family amount" since the employee still has employer-provided insurance.

 

[FUEGO]

I've come across some folks who are concerned that companies (especially those not receiving a subsidy) will modify their benefit package to comply with the letter of the law. The least expensive thing to do is for them to offer insurance only for the employee, and not the employee's family (thereby avoiding any penalty). If this happens, then the rest of the family would go to the exchanges to buy their insurance. I assume they'd get some sort of subsidy, but not the entire "family amount" since the employee still has employer-provided insurance.

I'm not 100% clear on how it works, but the employee may opt to forgo the employer provided coverage and get subsidized family coverage from the exchanges or privately (and get the subsidy). Particularly if the exchange provided plan is better than the employer provided, and their premiums wouldn't change.

I think if that happens, then the employer will be penalized on all employees if even just 1 employee opts for the subsidized insurance. I didn't really understand that part though. How would an employer handle vindictive or simply unique employees that opted for publicly subsidized coverage and ended up costing the company tens of thousands of dollars? Fire them?

 

[ziggy29]

Or the flip side. What will be the impact on small businesses that are subject to the penalty for not providing health insurance? Fire enough employees to get under the size threshold so you won't be subject to the penalty?

Never underestimate the law of unintended consequences.

Usually they define "small business" as 50 employees or less when it comes to giving "small business" extra goodies or exemptions from costly regulatory laws affecting larger businesses.

Which is why I'd be constantly living in fear if I worked for an employer with, say, 52 employees. If you have 80 employees, you probably won't let 30 of them go because of the impact to your business, but if you were just barely over 50, you'd think about finding ways to squeeze a little more out of the 49 who remained...

 

[FUEGO]

Never underestimate the law of unintended consequences.

Usually they define "small business" as 50 employees or less when it comes to giving "small business" extra goodies or exemptions from costly regulatory laws affecting larger businesses.

Which is why I'd be constantly living in fear if I worked for an employer with, say, 52 employees.

I think I saw 100 employees as a number they were using.

I don't want to exaggerate the effect the law will have on those businesses with 101 or 102 employees. Many probably already provide insurance that complies or substantially complies (and can be brought into compliance easily and cheaply). But in terms of competitiveness, there are some businesses for which it may not be a feasible employee benefit (along with paying minimum wage). A business with 101 employees may not be able to compete with one that has 90-95 employees but does not have expensive insurance to buy or a penalty to pay.

 

[Alan]

Preventive care...will be free of copayments or deductibles starting this year.

I don't know how common this is, but the company plan we have has always been like this. In fact DW has just had her annual physical including the usual tests for her age, and unlike all other doctor visits there is no co-pay and nothing applied to the deductible.

I guess it might only make sense to insurance companies in company group plans as the individuals are more likely to be with them in the longer term. (or maybe it is the company that pays extra to fund this as they have a long term vested interested in the health costs of their employees).

 

[FinanceDude]

All I will add is that I will be the first one to say: "I told you so", when this turns into yet another bloated govt entitlement program with massive fraud that loses billions on a yearly basis. My kids will have to work until they're 90 to pay for it...........

 

[Leonidas]

All I will add is that I will be the first one to say: "I told you so", when this turns into yet another bloated govt entitlement program with massive fraud that loses billions on a yearly basis. My kids will have to work until they're 90 to pay for it...........

Don't look for any medals for that prediction. Seriously, aren't the terms "Government Program" and "bloated program with massive fraud that looses billions on a yearly basis" synonymous? The US Government spends other people's money like Imelda Marcos buying shoes.

Did anyone notice the Las Vegas newspaper ran a poll asking readers who were not currently insured if they planned to buy insurance and comply with the law - 44% said no. No doubt not a reliable poll, but I wonder how many people are out there who will refuse.

 

[chinaco]

Another Informational timeline of events

Timeline: When health care reform will affect you - CNN.com

 

[Rustic23]

Alan,
My point was annual physicals are not covered by Medicare as 'Preventive Medicine' so the question will they be under any new plan. What your doctor considers preventive may not be what the government does. I had always considered an annual physical preventive, but when you turn 65, the government does not. Sure seems like it is even more so then.

 

[clifp]

You're struggling to make ends meet so you think you may want to work a little longer and harder to make a little extra money.

But for every dollar you earn there, you lose 15 cents to federal income tax, you lose about 15 cents of your health insurance subsidy and you lose about 14 cents to self-employment taxes (15.3% less the deductibility of half of it). In a state with an income tax you could lose another 5 cents to state income tax.

Of that dollar you earned, you only keep about half of it. At this point you have to ask yourself if it's really worth busting your chops to earn a little more. And since the subsidy is still phasing out once you hit the 28% bracket, before it completely phases out there's a "bracket" where you lose about 60 cents on the dollar if not a little more to taxes and lost subsidies.

I am thinking that subsidy maybe the worse thing about the bill. In the past these crazy marginal tax doughnut holes where people faced 50+ marginal tax rate apply only to the wealthy or very poor. Classic example in the past included a the mom who got off welfare to get a minimum wage job faced a 50%+ marginal rate due to loss of food stamps, welfare reduction. At the upper end people with AMT could face 50%+ marginal due to phases out of deductions, and various credit.

However the doughnut hole range in the current bill is huge 43-88K depending on family size and covers more than 1/3 of all American households. Now admittedly for the typical American who have insurance from work this won't matter. But for the retiree, contractors, self employed, these are the most likely people to both buy their own and insurance and have the ability to shift income.

 

[Westernskies]

One aspect of "What Now" that I haven't seen mentioned is the immediate impact on small businesses. They will get tax credits of up to 30% this year to offer health insurance to employees. Anyone here working for a small business that might be encouraged to offer a policy with such a credit?

My small business already provided BCBS Health Care Insurance to our employees. So is it safe to assume that we can get a full refund of all premiums paid and a 30% tax credit going forward? This will enable us to be competitive with companies who were able to outspend us on R&D in the past by not providing expensive health coverage for their employees and are now able to take advantage of this new tax credit.

Where do I sign up?

 

[Martha]

Thanks Rich_in_Tampa, but the summary didn't address my question. Reading it straight from Subtitle B, Section 1101, clause d2 (attention all humans: its on page 48) of http://docs.house.gov/rules/hr4872/111_hr3590_engrossed.pdf seems to say that only those who have been without coverage for 6 months are eligible for inclusion in this pre-existing pool. Since the provision takes effect 3 months from enactment, I'd have to guess that means someone who has a pre-existing condition and no insurance from approximately "3 months before tomorrow" onwards.

So it seems that those who are forced to keep working to obtain group coverage without pre-existing exclusions are outta luck until 1/1/2014 unless they want to "go naked" for 6 months. Or perhaps they're good 18/36 months before 1/1/2014 assuming their group coverage gives them COBRA eligibility.

Unless the next Senate reconciliation bill changes all this.

This was one of my major irritants in the bill. People are forced to go bare, they can't even use up Cobra and then go on the pool. Things like this make my blood pressure go up.

 

[Gumby]

We already have a "public option" in my state. But the big problem is that you need to go bare for 6 months to qualify. It would be just my luck to be hit by a truck during that period.

 

[Alan]

Alan,
My point was annual physicals are not covered by Medicare as 'Preventive Medicine' so the question will they be under any new plan. What your doctor considers preventive may not be what the government does. I had always considered an annual physical preventive, but when you turn 65, the government does not. Sure seems like it is even more so then.

I hadn't realized that. It really seems short sighted to not encourage Medicare participants to have regular check-ups. It will be interesting to see if the new law defines preventive care as including regular check ups. In Japan, people visit their doctor 3 or 4 times more often than in the USA, mostly for check ups. Could be a contributing factor to their longer life expectancy.

 

[DeborahB]

We already have a "public option" in my state. But the big problem is that you need to go bare for 6 months to qualify. It would be just my luck to be hit by a truck during that period.

We have a high risk pool already - you just have to be denied coverage (I think by 2 commercial insurers, can't remember). It costs a fortune and will keep me from bankruptcy if something happens - but they can't refuse me.

That 6 months without coverage thing seems insane - I noticed that.

 

[jdw_fire]

Alan,
My point was annual physicals are not covered by Medicare as 'Preventive Medicine' so the question will they be under any new plan. What your doctor considers preventive may not be what the government does. I had always considered an annual physical preventive, but when you turn 65, the government does not. Sure seems like it is even more so then.

from the link chinaco provided in the post before yours

2011
• Medicare will provide free annual wellness visits and personalized prevention plans. New plans will be required to cover preventive services with no co-pay.

 

[Martha]

We have a high risk pool already - you just have to be denied coverage (I think by 2 commercial insurers, can't remember). It costs a fortune and will keep me from bankruptcy if something happens - but they can't refuse me.

That 6 months without coverage thing seems insane - I noticed that.

Most risk pools have a six month wait, certainly at least before covering preexisting conditions. There is a HIPAA exception in most cases where if you are coming off of a group plan you can get on the risk pool. There isn't such an exception on the bill that was passed.

 

[donheff]

Most risk pools have a six month wait, certainly at least before covering preexisting conditions. There is a HIPAA exception in most cases where if you are coming off of a group plan you can get on the risk pool. There isn't such an exception on the bill that was passed.

There is a fix that deserves bi-partisan support.

 

[skyvue]

Don't look for any medals for that prediction. Seriously, aren't the terms "Government Program" and "bloated program with massive fraud that looses billions on a yearly basis" synonymous? The US Government spends other people's money like Imelda Marcos buying shoes.

Did anyone notice the Las Vegas newspaper ran a poll asking readers who were not currently insured if they planned to buy insurance and comply with the law - 44% said no. No doubt not a reliable poll, but I wonder how many people are out there who will refuse.

How will they track, fine and collect on these penalties?