Obamacare

[pb4uski]

Has it been determined we will be able to enter our projected 2014 income or will they use the 2012 tax return?

Everything I have seen indicates that the 2014 subsidies that you get during 2014 would be based on your 2012 tax return. However, when you file your 2014 tax return there would be a reconciliation between the subsidy you received during 2014 and what you should have received based on your actual 2014 income and a refund or payment for any difference.

I suspect that there may ultimately be some sort of mechanism for significant changes in income like they do for college financial aid but I haven't seen any mention of it.

In my case, I'll get no subsidy during 2014 and will pay full boat premiums because my 2012 O-MAGI will exceed 400% FPL but I will manage my income in 2014 so my O-MAGI is less than 400% FPL and get a whopper refund sometime in 2015 so it will just be a timing difference but will be a cash flow pain in the butt.

 

[pb4uski]

That was what I was lead to believe since the President said it himself... Like I said, I am not trying to say I am against it or anything. And I need to control myself (not that it would change anything).....But when I punch in the estimator and it shows I would go from under $100 to near $600, that is a startling increase. Especially since I thought I could keep my policy, and then I read must grandfathered plans will not survive the guidelines, and BCBS is silent on the matter. Either unwilling or unable yet to provide clarification on their intentions with their grandfathered plans. I certainly find it hard to believe no one else would be concerned about facing that much on an increase. I guess I am an outlier on insurance costs, but it is all I have been used to.

To begin with, $100 a month is virtually unheard of and $600 a month is on the high side (for one person?). So part of the reason for the startling increase is that your starting point was unusually low.

And while I don't want to poke Porky, I will admit that the whole if you like your plan you can keep your plan rhetoric is turning out to be false.

 

[bUU]

That was what I was lead to believe since the President said it himself...

And it is true. The law didn't do what you are implying: If you are having difficulties in that regard, then it is employers and insurers doing that to you.

Has it been determined we will be able to enter our projected 2014 income or will they use the 2012 tax return?

This was discussed in detail earlier in the thread. Essentially, you'll pay an estimate for 2014 based on 2012 MAGI, and then that amount will be reconciled on your Tax Year 2014 tax form so that effectively the subsidy you get for 2014 is based on 2014 MAGI.

I read an article yesterday (someone else might be able to find it), but IIRC, they said that about 1/3 of the people who have insurance now do not go to the doctor or do not take their medication as prescribed because of the costs...

Some, though no where near all, of that is addressed by some of the minimum standards (the "low bar") that insurance plans now need to include. It will be up to states, though, to do the right thing and enforce these elements in the consumers' best interests, but they now have the backing of the federal government in doing so.

 

[gbstack]

Everything I have seen indicates that the 2014 subsidies that you get during 2014 would be based on your 2012 tax return. However, when you file your 2014 tax return there would be a reconciliation between the subsidy you received during 2014 and what you should have received based on your actual 2014 income and a refund or payment for any difference.

I suspect that there may ultimately be some sort of mechanism for significant changes in income like they do for college financial aid but I haven't seen any mention of it.

In my case, I'll get no subsidy during 2014 and will pay full boat premiums because my 2012 O-MAGI will exceed 400% FPL but I will manage my income in 2014 so my O-MAGI is less than 400% FPL and get a whopper refund sometime in 2015 so it will just be a timing difference but will be a cash flow pain in the butt.

Below is some information from the “Obamacare credits could trigger surprise tax bills”</SPAN> article. I’m hoping it’s true.
“But the government doesn't know how much money you're going to make next year. And when you apply for the subsidy, this fall, it won't even know how much you're making this year. So, unless you tell the government otherwise, it will rely on the best information it has: your 2012 tax return, filed this spring”.
And
“A draft of the application for insurance asks people to project their 2014 income if their current income is not steady or if they expect it to change. The application runs 15 pages for a three-person family, but nowhere does it warn people that they may have to repay part of the subsidy if their income increases”.

 

[pb4uski]

..... but nowhere does it warn people that they may have to repay part of the subsidy if their income increases”.

Surprising that this isn't at least mentioned.

 

[MichaelB]

Thread discussion here http://www.early-retirement.org/for...ear-to-depend-on-multi-year-income-65651.html

Informative paper from KFF on subsidy reconciliation here http://www.kff.org/healthreform/upload/8154.pdf

 

[pb4uski]

From the kff paper:

Eligibility for advance payments will be determined using prior year’s income (as reported on the prior year’s tax return) or current income if it is different from prior year income and can be verified through pay stubs or other documentation.

The partial repayment provisions if one receives more credit than you deserve are new to me and look like they could be gamed to the taxpayer's benefit. The hypothetical family with $50,000 of income that they illustrate would receive $8,640 in premium assistance but if they then exceeded 400% FPL and deserved $0, they would only need to pay back $3,000 of the $8,640. That doesn't seem right to me. I could understand allowing repayment of the $8,640 over a period of time rather than immediately, but to forgive $5,640 doesn't seem right.

 

[Mulligan]

And it is true. The law didn't do what you are implying: If you are having difficulties in that regard, then it is employers and insurers doing that to you.

This was discussed in detail earlier in the thread. Essentially, you'll pay an estimate for 2014 based on 2012 MAGI, and then that amount will be reconciled on your Tax Year 2014 tax form so that effectively the subsidy you get for 2014 is based on 2014 MAGI.

Some, though no where near all, of that is addressed by some of the minimum standards (the "low bar") that insurance plans now need to include. It will be up to states, though, to do the right thing and enforce these elements in the consumers' best interests, but they now have the backing of the federal government in doing so.

That is not my understanding. I have an underwritten, HD plan that is an individual policy, that is not involved with an employer. The insurance company will now have to follow the rules of the law, which may make my policy "illegal", based on the laws written concerning "coverage ratio". The reason I say may, is there has been no clarification yet from government or BCBS, whether mine is within the deemed acceptable ratio range.

 

[bUU]

The insurance company will now have to follow the rules of the law, which may make my policy "illegal", based on the laws written concerning "coverage ratio".

The way my spouse has explained it to me, is that they have to bring the policy into compliance.

If they choose to not offer the policy any more, because they don't want to bring the policy into compliance, then - make no mistake - that is their choice and their responsibility.

 

[mpeirce]

I'm lucky enough to have a HDHP which provides exactly what I want from a health insurance product: I pay for normal, day-to-day health services and it kicks in when something really bad happens - hospital, bad illness. And it provides this for a quite reasonable price.

What really irks me about the PPACA is that this scheme, which I am very happy with, is deemed not only wrong headed, but illegal.

Now they have to lard up the policy with "minimum standards" that I have either have no interest in or would much rather pay myself as part of my large deductible. This will, along with the stupid coverage-ratio requirements, change my current policy beyond recognition.

 

[samclem]

If they choose to not offer the policy any more, because they don't want to bring the policy into compliance, then - make no mistake - that is their choice and their responsibility.

So a company offers a product that the consumer likes, the government makes that product illegal, and the consumer is supposed to blame the company for the problem? I'm sorry, but your point is ridiculous. So, I'm ridiculing it. I'm not ridiculing you.

I'm not making a point here about the desirability of the ACA. People can reach their own conclusions on that.

 

[Mulligan]

So a company offers a product that the consumer likes, the government makes that product illegal, and the consumer is supposed to blame the company for the problem? I'm sorry, but your point is ridiculous. So, I'm ridiculing it. I'm not ridiculing you.

I'm not making a point here about the desirability of the ACA. People can reach their own conclusions on that.

Thank you Sam, you saved me from an in depth post.

 

[MichaelB]

So a company offers a product that the consumer likes, the government makes that product illegal, and the consumer is supposed to blame the company for the problem? I'm sorry, but your point is ridiculous. So, I'm ridiculing it. I'm not ridiculing you.

I'm not making a point here about the desirability of the ACA. People can reach their own conclusions on that.

The gov't does not make a product illegal, it sets standards that all providers must meet. Like seat belts in a car. In Mulligan's case, we don't know if his policy will still be available next year or not, if it is at what price, and if it isn't why not.

The benefits (and beneficiaries) of the status quo are easy to value and identify, while the advantages of change are vague and beneficiaries fearful and uncertain.

 

[samclem]

The gov't does not make a product illegal, it sets standards that all providers must meet. Like seat belts in a car.

Is it legal for an automobile manufacturer to offer a car without seat belts? No, it is not. If the manufacturer did so after being told to stop, they would be subject to penalties under the law. It is exactly the same with the new standards for US health insurance. I'm not sure if there's a distinction worth discussing between this situation and an "illegal product."

 

[bUU]

So a company offers a product that the consumer likes, the government makes that product illegal, and the consumer is supposed to blame the company for the problem?

Yes. We're clearly not going to agree about this, but rest assured, the fault for not offering you a compliant product rests with the folks who refuse to offer you a compliant product, no matter how much you want to deflect blame away from them.

I'm sorry, but your point is ridiculous.

I believe that your attempt to place the blame elsewhere is ridiculous.

Stalemate.

Is it legal for an automobile manufacturer to offer a car without seat belts? No, it is not. If the manufacturer did so after being told to stop, they would be subject to penalties under the law. It is exactly the same with the new standards for US health insurance.

Thank you for posting an excellent analog. Are you criticizing the government for passing those nasty laws requiring cars have seat belts?

 

[Marc]

Yes. We're clearly not going to agree about this, but rest assured, the fault for not offering you a compliant product rests with the folks who refuse to offer you a compliant product, no matter how much you want to deflect blame away from them.

I believe that your attempt to place the blame elsewhere is ridiculous.

Stalemate.


Thank you for posting an excellent analog. Are you criticizing the government for passing those nasty laws requiring cars have seat belts?

I strongly agree with samclem on this one; if I don't have an option for a minimal product, one that exists in marketplace today because of demand, then obamacare has limited choice.

Marc

 

[travelover]

Wasn't the intent of the ACA to get rid of policies that had very low yearly or lifetime coverage caps and also to promote preventative care with the intention of warding off expensive emergency room care?

I can see where continuing policies like this could cause everyone else to pick up the costs not covered, in the case of caps, or discourage the poor from seeking proper maintenance visits for conditions like diabetes. It sounds like nannying, but as long as we are on the hook for these costs anyway, maybe it is cost effective in the end.

 

[Texas Proud]

Some, though no where near all, of that is addressed by some of the minimum standards (the "low bar") that insurance plans now need to include. It will be up to states, though, to do the right thing and enforce these elements in the consumers' best interests, but they now have the backing of the federal government in doing so.

I doubt it will.... the plan I have is compliant.... I pay $50 for each visit... I have a $5K deductible.... I have a $500 prescription deductible... I do not think that I my plan is out of the mainstream.... so, if people can not afford to go to the docs and buy prescriptions.... I do not think Obamacare will be changing that problem...

 

[Mulligan]

I doubt it will.... the plan I have is compliant.... I pay $50 for each visit... I have a $5K deductible.... I have a $500 prescription deductible... I do not think that I my plan is out of the mainstream.... so, if people can not afford to go to the docs and buy prescriptions.... I do not think Obamacare will be changing that problem...

I have a similar plan Texas and am currently able to afford to go to the doctor, but if Kaiser's estimates are correct, I won't be because it all went to paying a much higher premium. In total seriousness though I am willing to stay calm and let this play out (like I have any choice, anyways). But here is my concern as someone who has been healthy and not used to paying high rates (relative term, I know).
Let's say I am fortunate and my plan is allowed to stay in place. 1) "Churn" occurs quickly in my "group" (individual policies can have a 40%-70% yearly turnover from what I have read) 2) Policy is dropped as new participants are not allowed to join. 3) Premiums are higher than healthy people are willing to pay in the exchange 4) Unhealthy people join the exchanges immediately 5) Insurance companies have to raise rates, to compensate as the penalties, even if paid wont cover the premiums of the healthy insured who didn't join. 6) A "death spiral" occurs of more people leaving, and so on..

Is this a legitimate concern of mine, or is it far fetched? I sure hope it is, but that is my concern. I do realize down the road, that the older people are limited to 3x the rate of the young, so that will eventually benefit me, I would hope. But does that pressure on young people's premiums in turn cause them to abandon the exchanges? Right, wrong, good, or bad, it certainly has my interest and full attention in the coming months.

 

[Texas Proud]

I have a similar plan Texas and am currently able to afford to go to the doctor, but if Kaiser's estimates are correct, I won't be because it all went to paying a much higher premium. In total seriousness though I am willing to stay calm and let this play out (like I have any choice, anyways). But here is my concern as someone who has been healthy and not used to paying high rates (relative term, I know).
Let's say I am fortunate and my plan is allowed to stay in place. 1) "Churn" occurs quickly in my "group" (individual policies can have a 40%-70% yearly turnover from what I have read) 2) Policy is dropped as new participants are not allowed to join. 3) Premiums are higher than healthy people are willing to pay in the exchange 4) Unhealthy people join the exchanges immediately 5) Insurance companies have to raise rates, to compensate as the penalties, even if paid wont cover the premiums of the healthy insured who didn't join. 6) A "death spiral" occurs of more people leaving, and so on..

Is this a legitimate concern of mine, or is it far fetched? I sure hope it is, but that is my concern. I do realize down the road, that the older people are limited to 3x the rate of the young, so that will eventually benefit me, I would hope. But does that pressure on young people's premiums in turn cause them to abandon the exchanges? Right, wrong, good, or bad, it certainly has my interest and full attention in the coming months.

I think that it was just political BS that was being put out that you would be able to keep your old plan.... as you state, the demographics will mean that almost all plans will eventually be pure Obamacare plans... the only way that would not be true is if some mega really wants to keep an old plan for some reason.... they have purchasing power that small firms do not have...

As I said, our plan became compliant the first year.... we did not have a choice to keep our old plan.... the insurance company did not even offer it to us... (when I say 'us', that is the company I work for)....

 

[bUU]

so, if people can not afford to go to the docs and buy prescriptions.... I do not think Obamacare will be changing that problem...

Like I said, we're just going to have to agree to disagree: There is a difference between eliminating something and reducing it.

 

[MichaelB]

I doubt it will.... the plan I have is compliant.... I pay $50 for each visit... I have a $5K deductible.... I have a $500 prescription deductible... I do not think that I my plan is out of the mainstream.... so, if people can not afford to go to the docs and buy prescriptions.... I do not think Obamacare will be changing that problem...

Individuals at or below 250% of the FPL will have much lower cost sharing built into the plan and in all likelihood find that they can afford the docs and the prescriptions.

 

[killingme]

Sorry to say but the phrase "if you think it's expensive now just wait until it's free" keeps ringing in my ears. Maybe I should go to the doctor and have that checked.

 

[ERD50]

Originally Posted by samclem
Is it legal for an automobile manufacturer to offer a car without seat belts? No, it is not. If the manufacturer did so after being told to stop, they would be subject to penalties under the law. It is exactly the same with the new standards for US health insurance.

Thank you for posting an excellent analog. Are you criticizing the government for passing those nasty laws requiring cars have seat belts?

Well, I'm sure some people would think the govt is going too far in mandating seat belts which makes it illegal to manufacture a car w/o seat belts. But there is a clear, demonstrable benefit to a seat belt mandate, and (in theory at least), the public supports this through their elected officials.

I fail to see any clear, demonstrable benefit to declaring high-deductible policies to be 'non-conforming'. I'd be willing to keep $5,000 in escrow if that was required to purchase a $5,000 deductible policy (or some equivalent proof that one could cover the deductible) - I think something like that would be reasonable. I think this is an over-sight and should be corrected, the only other explanation I can think of is worse.

-ERD50

 

[Mulligan]

Well, I'm sure some people would think the govt is going too far in mandating seat belts which makes it illegal to manufacture a car w/o seat belts. But there is a clear, demonstrable benefit to a seat belt mandate, and (in theory at least), the public supports this through their elected officials.

I fail to see any clear, demonstrable benefit to declaring high-deductible policies to be 'non-conforming'. I'd be willing to keep $5,000 in escrow if that was required to purchase a $5,000 deductible policy (or some equivalent proof that one could cover the deductible) - I think something like that would be reasonable. I think this is an over-sight and should be corrected, the only other explanation I can think of is worse.

-ERD50

While I am certainly in agreement with you, My guess is it was not an oversight. Lower deductible premiums naturally result in higher premiums collected. You force the healthy people to pay for insurance they don't need, so to help pay for those who need to use it.