PPACA, Obamacare and General Comments

[Htown Harry]

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Originally Posted by Htown Harry I thought of another possibility. Perhaps the "under 26" provision only applies to an employer's policy. For the exchange policies, a dependency test applies?

After some research, I believe my hunch is correct.

As noted above in the various looks at the IRS rules, for calculating eligibility and subsidy for an exchange policy, the basic building blocks are the number of "taxpayer units" that make up a household (defined by dependent / exemption designations on Form 1040) and the aggregate MAGI on the tax returns filed by the members of the household.

This FAQ found on the Kaiser Family Foundation site makes it pretty clear the "Under 26" rule is applicable to insurance company policies through employers:
Frequently Asked Questions | The Henry J. Kaiser Family Foundation

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How will the new provision allowing young adults to remain on parent's insurance work? The health reform law contains a provision that requires private insurers to continue dependent coverage of children until age 26. Department of Health and Human Services regulations specify that a young adult can qualify for this coverage even if he or she is no longer living with a parent, is not a dependent on a parent's tax return, or is no longer a student. Both married and unmarried young adults can qualify for the dependent coverage extension, although that coverage does not extend to a young adult’s spouse or children. For employer plans that were in place prior to March 23, 2010, young adults can only qualify for dependent if they are not eligible for another employer-sponsored insurance plan. Insurers that do not offer coverage to dependent children will not be required to offer this coverage to young adults...

In this HHS regulation it is crystal clear that the applicability of the Under 26 rule is group plans and individual policies.
http://www.regulations.gov/search/Re...ontentType=pdf

[sheehs1]

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Originally Posted by Mulligan I am in the same boat as Sheesh. We all are a little motivated in our own self interests. I haven't seen any posters who are facing 300-500% increases getting on the soapbox and espousing the virtues of this new act. But, I am resigned to the fact that there will be winners and losers in all laws, and I am going to be a big loser. But on the other side, there will be some big winners who have suffered for a while, and are going to catch a break finally.

I spoke with two offices of U.S. Congressman (1 regional and 1 in Washington) today because I was/am bothered by the fact that there appeared to be no difference in premium payment on the exchange calculations I did between a household that makes $61,000 versus one making $200,000. They confirmed there is no sliding scale for premiums based on income. So someone making $61,000 pays a $750/month premium as does the one making $200,000.

When I said our premiums would double or triple it was assuming our private insurance company (Anthem) would come close to the exchange pricing but I don't know that for a fact .....yet. I'll assume the worst.

I don't mind if there are winners and losers but it looks to me like the losers are going to loose big time.

The office of this Congressman said, "the lack of a sliding income scale" needed to be fixed.

[Katsmeow]

ON a number of issues I found this FAQ dealing with the California Exchange interesting. It appears to be from a private company but addresses a lot of issues. The more recent questions and answers seem to be a lot more accurate than earlier once which were often more supposition.

Covered California Q&A

One thing that I found interesting for many is the definition of what is "affordable" coverage which can put some into a catch 22.

Basically if your employer offers affordable coverage, you can't get a subsidy by going through the exchange. You can reject employer coverage and buy from the exchange or on the non-exchange market but you can't get a subsidy.

The catch 22 is how "affordable" is determined. Basically if the employee's coverage only would exceed 9.5% of household income then coverage is not affordable. In that event, the employee and family can buy on the exchange and get a subsidy.

However, let's say the employer subsidizes the cost of coverage for the employee and the employee's premium is, say, $250 a month but the employer offers family coverage which is not subsidized and is $600 a month. Assume also that $250 a month is less than 9.5% of household income but $600 is more than 9.5% of monthly income. In that situation the employee is deemed to have "affordable coverage" so neither the employee nor the employee's spouse and children can get a subsidy for coverage. If the employee's spouse and children can't afford the $600 a month, they can try to find a cheaper policy elsewhere but no subsidy will be received. This can result in a situation where the employee and his/her family would be better off the employer didn't offer coverage at all since then they could all be eligible for a subsidy.

[sheehs1]

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Originally Posted by Mulligan I haven't seen any posters who are facing 300-500% increases getting on the soapbox and espousing the virtues of this new act. .

+1
Could it be because the increase in cost is an unexpected house payment?
So many citizens have not one clue yet.

[bUU]

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Originally Posted by Mulligan If I had known all of this was going to occur, I would have not done what I did. The rules of the game changed after I played.

I feel the same way about the bond market, long-term care insurance, and to some extent, annuities in general. I also feel that way about the industry I work in, and specifically the discipline I practice within the industry.

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Originally Posted by sheehs1 The office of this Congressman said, "the lack of a sliding income scale" needed to be fixed.

And that's really the proper direction, I feel: Let's fix what's broken. Most of what's broken is such because of the obstruction some folks presented when the changes were being made. When the ramifications of their obstinance become manifest as problems, then there will be enough support to overcome their obstruction and make changes to rectify those problems.

[sheehs1]

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Originally Posted by bUU And that's really the proper direction, I feel: Let's fix what's broken. Most of what's broken is such because of the obstruction some folks presented when the changes were being made. When the ramifications of their obstinance become manifest as problems, then there will be enough support to overcome their obstruction and make changes to rectify those problems.

Now...now....let's don't get too political on here, pointing fingers because others have a different view. The same can be said for the system we had. No need to have changed it - just tweak it to work. There was a lot that could have been done with that first, without this massive social change. But I digress before I get too political.

[Htown Harry]

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Originally Posted by sheehs1 The office of this Congressman said, "the lack of a sliding income scale" needed to be fixed.

I don't intend to sidetrack into the politics, but I found a chart that shows 33% of the U.S. population lives above the 400% FPL (In 2009, $43,320 for an individual, $88,200 for a family of four by one source).

A "fix" to increase subsidies / reduce payments from this subset of the insured pool will need a corresponding increase in premiums somewhere else in the pool to maintain the same premium / expenses balance for the pool as a whole. This will be a challenge for Congress. I think they will get there, but it will be difficult.

Distribution of the Total Population by Federal Poverty Level (above and below 400% FPL) | The Henry J. Kaiser Family Foundation

On the more optimistic side, Sheehs1, I don't understand why are you "assuming the worst" for your current policy, i.e. they will drop you or jack up your premiums. The HHS link in my Under 26 post above reminded me that lots of group and individual policies are "grandfathered" and allowed to remain in place.

Let's assume a retiree is receiving a favorable private policy premium because he is part of a pre-ACA, medically-underwritten pool of policy holders. A group of healthy people, basically, with some moderately less-healthy people in the pool paying higher premiums. (Most unhealthy people were excluded from the pool by pre-existing conditions.)

Let's assume the insurance company has properly priced the premiums across the spectrum of "healthiness" and risk within the pool. I see two subsets financially motivated to jump to exchange policies: those paying the highest rates and those who are paying way more than 9.5% of household income. (Lots of overlap in those two categories, of course).

After those folks jump to exchange policies, the insurer has a smaller, healthier pool, albeit one that is paying a lower average premium-per-insured person. It is not obvious to me that the IC would then be motivated to raise rates on those remaining policy holders. Why run people off from a profitable line?

Could your insurer jack your rates or dump you from a medically-underwritten individual policy? Yes, but absent evidence to the contrary, I don't yet see it as an automatic result of the new availability of subsidized exchange policies.

[pb4uski]

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Originally Posted by sheehs1 .....The office of this Congressman said, "the lack of a sliding income scale" needed to be fixed.

While I think Congress will want to smooth out the cliff I think it will be very difficult politically because the subsidy numbers will get huge and increase the federal deficit so much that no one will have appetite to do it. Even if you just kept the affordability at the 9.5% top rate of income for 400% FPL and higher if annual household premium was $10,000 that would sweep into subsidies households with incomes up to $105,000.

[sheehs1]

Htown Harry...my post were to give people "examples" as much as anything else so perhaps those reading will try the calculators.
I'm not worried about loosing my health care at the moment. I am worried about the "cost of premiums" for what I consider low to high middle America. I don't see how a couple making $70,000 per household can easily afford an $18,000 net of tax expense on the exchanges if that is their only choice.
Katsmeow's link was very informative and I see where all small businesses with less than 50 people will simply drop the benefit of heath care for their employees so they can go to the exchanges and get the subsidy. I also see and have read where major companies have found a loop hole and are offering only "skinny" policies ( no hospitalization, etc). Those employees will be unable to go to the exchanges.
For myself personally? I have tried not to use my heath care coverage for years due to the high deductibles we had to adopt due to already high premium cost. It is bothersome that those that get it for free or get subsidies may not use theirs judiciously thus driving up cost further. There should be a yearly cap for non-emergency situations.

I'm a worry wart about some things. This being one of them considering what it may do to peoples lives and to our country.

[MichaelB]

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Originally Posted by Htown Harry Let's assume the insurance company has properly priced the premiums across the spectrum of "healthiness" and risk within the pool. I see two subsets financially motivated to jump to exchange policies: those paying the highest rates and those who are paying way more than 9.5% of household income. (Lots of overlap in those two categories, of course). After those folks jump to exchange policies, the insurer has a smaller, healthier pool, albeit one that is paying a lower average premium-per-insured person. It is not obvious to me that the IC would then be motivated to raise rates on those remaining policy holders. Why run people off from a profitable line? Could your insurer jack your rates or dump you from a medically-underwritten individual policy? Yes, but absent evidence to the contrary, I don't yet see it as an automatic result of the new availability of subsidized exchange policies.

One way the insurer drove profitability was to push people out of policies when they became ill, or raise rates. They can't push them out any longer - that is not allowed. Raising rates on individuals is uncertain, but also looks like it may not happen. The insurance company would only respond by raising rates or shutting down the entire group.

It is not clear that these low cost underwritten policies are going away this January, but they are not likely to stay for long, because there is too much risk for the insurer now.

[sheehs1]

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Originally Posted by pb4uski While I think Congress will want to smooth out the cliff I think it will be very difficult politically because the subsidy numbers will get huge and increase the federal deficit so much that no one will have appetite to do it. Even if you just kept the affordability at the 9.5% top rate of income for 400% FPL and higher if annual household premium was $10,000 that would sweep into subsidies households with incomes up to $105,000.

I need to look into that calculation further. That 9.5% may be a pre-tax percentage. So say someone has premiums of $10,000. They had to make $13,000 or more to pay the net premium so the "real" affect, if you will, is a higher percentage.

ummm...wonder what that might do to the mortgage industry loan calculations for people trying to qualify for loans Since it is required and a huge expense, i bet they modify that calculation to include health care cost.

[sheehs1]

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Originally Posted by MichaelB One way the insurer drove profitability was to push people out of policies when they became ill, or raise rates. They can't push them out any longer - that is not allowed. Raising rates on individuals is uncertain, but also looks like it may not happen. The insurance company would only respond by raising rates or shutting down the entire group. It is not clear that these low cost underwritten policies are going away this January, but they are not likely to stay for long, because there is too much risk for the insurer now.

Yes and the rate increases on those old grandfathered policies will be unaffordable by anyone's standard. In the past, not only did they push them out of the group if they became ill but as they developed newer, more profitable policies (for them) they raised rates. Probably had nothing to do with the overall heath status of the groups. They simply wanted more profit and the newer policies were more profitable for them.

[misanman]

Hope this isn't too far off topic but I had a discussion with a friend that owns a small company (70 employees). They currently provide health insurance for their employees but plan to drop coverage when PPACA goes into effect. He gave two reasons for the decision: 1) it will be less expensive overall to pay the fines and 2) despite the fact that they have brought in consultants and went to numerous training sessions, they have not been able to get a good handle on what they need to do to implement PPACA. They are thinking it will be much simpler to drop out.

I have no idea if this is widespread or not but I think there's at least a possibility that the exchanges will shortly become the dominant means for securing health insurance.

[sheehs1]

misanman...I think you are right. Our family business has less than the 50. I just shot off an email to my siblings saying we needed to discuss this issue at the Board Meeting in August. My vote? To drop the benefit. It is in our employees best interest to drop it so they can get the subsidy. (Based on the link Katsmeow provided) We, of course will probably try to increase their salary to some percentage of what their out of pocket premium may be or find some way they are close to a zero net change based on their subsidy. Can't say for sure.

[Mulligan]

[QUOTE="sheehs1;1322048"]

Yes and the rate increases on those old grandfathered policies will be unaffordable by anyone's standard. In the past, not only did they push them out of the group if they became ill but as they developed newer, more profitable policies (for them) they raised rates. Probably had nothing to do with the overall heath status of the groups. They simply wanted more profit and the newer policies were more profitable for them.[/QUOTE
I have read about what you had written about concerning these individual policy "groups". From what I understood before purchasing my plan individuals couldn't be kicked out by law, but they could raise the rates so high that the healthy ones would drop and underwrite again to get a better rate while the sick ones were left holding the bag. But that has not happened to me for some reason with my policy. I read recently that there is a lot of "churn" in the present market. Turnover can be over 50% a year, as many it seems do not keep the insurance for very long.

[Texas Proud]

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Originally Posted by sheehs1 I spoke with two offices of U.S. Congressman (1 regional and 1 in Washington) today because I was/am bothered by the fact that there appeared to be no difference in premium payment on the exchange calculations I did between a household that makes $61,000 versus one making $200,000. They confirmed there is no sliding scale for premiums based on income. So someone making $61,000 pays a $750/month premium as does the one making $200,000. When I said our premiums would double or triple it was assuming our private insurance company (Anthem) would come close to the exchange pricing but I don't know that for a fact .....yet. I'll assume the worst. I don't mind if there are winners and losers but it looks to me like the losers are going to loose big time. The office of this Congressman said, "the lack of a sliding income scale" needed to be fixed.

I am just curious why you think that health insurance premiums should be on a sliding scale On average, doesn't someone consume the same amount of health care when they earn $61K as someone who earns $200K

[sheehs1]

[QUOTE=Mulligan;1322073]

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Originally Posted by sheehs1 Yes and the rate increases on those old grandfathered policies will be unaffordable by anyone's standard. In the past, not only did they push them out of the group if they became ill but as they developed newer, more profitable policies (for them) they raised rates. Probably had nothing to do with the overall heath status of the groups. They simply wanted more profit and the newer policies were more profitable for them.[/QUOTE I have read about what you had written about concerning these individual policy "groups". From what I understood before purchasing my plan individuals couldn't be kicked out by law, but they could raise the rates so high that the healthy ones would drop and underwrite again to get a better rate while the sick ones were left holding the bag. But that has not happened to me for some reason with my policy. I read recently that there is a lot of "churn" in the present market. Turnover can be over 50% a year, as many it seems do not keep the insurance for very long.

That's interesting Mulligan as it has happened to me. I have changed policies twice over the last 7 or so years due to the insurance provider jacking up the rates on my existing private policy. I'm not talking about small increases. As an example: several years ago my premium was going from roughly $400 a month to over $700. I bet the people left in that plan are now paying well over $1000 a month or more.

[Texas Proud]

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Originally Posted by sheehs1 Katsmeow's link was very informative and I see where all small businesses with less than 50 people will simply drop the benefit of heath care for their employees so they can go to the exchanges and get the subsidy.

Let's not say all... I work at a small firm and we are not dropping our healthcare insurance... as of right now I do not think even most firms who already provide health insurance will drop it... if they did not provide, I do not think they will add it either...


Also, we provide dental, vision, STD, LTD, AD&D and death... none of which is required...

[travelover]

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Originally Posted by sheehs1 ......... They confirmed there is no sliding scale for premiums based on income. So someone making $61,000 pays a $750/month premium as does the one making $200,000. ..........

Shockingly, my neighborhood Home Depot has the same one price policy.

[MichaelB]

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Originally Posted by Mulligan I have read about what you had written about concerning these individual policy "groups". From what I understood before purchasing my plan individuals couldn't be kicked out by law, but they could raise the rates so high that the healthy ones would drop and underwrite again to get a better rate while the sick ones were left holding the bag. But that has not happened to me for some reason with my policy. I read recently that there is a lot of "churn" in the present market. Turnover can be over 50% a year, as many it seems do not keep the insurance for very long.

It did happen to us. The plan we had just closed, with 30 days notice, and we were all invited to get new policies elsewhere. Our new plan cost about 40% more IIRC.