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who is paying for cost sharing subsidy?
Old 01-04-2014, 05:33 PM   #1
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who is paying for cost sharing subsidy?

If a person's income is below 250% FPL, then there is cost sharing subsidy on top of the premium subsidy. The fed government is paying for the premium subsidy, but who's paying for the cost sharing subsidy?

For the insurers, there is no difference between the premium they receive from a person making 500% FPL and a person making 150% FPL, because the fed government subsidies the premium for the person making 150% FPL. But for the same plan, the person making 150% FPL has much lower deductible and out-of-pocket maximum, a silver plan can be as good as or better than a gold plan, so the premium should theoretically be higher. Does the fed government pick up the tab by paying more to the insurer on top of the premium subsidy? Or does the insurer need to eat the cost themselves. If the latter is true, I would imagine that insurers will try hard in finding every way possible to deny issuing a policy to those making less then 250% FPL.
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Old 01-04-2014, 05:46 PM   #2
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The Affordable Care Act includes two different types of cost-sharing subsidies. In both cases, HHS will reimburse insurance carriers directly to reduce the insuredís cost-sharing...
The ACAís cost-sharing subsidies
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Old 01-04-2014, 05:56 PM   #3
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Thanks! So the amount that the insurers get reimbursed directly by HHS will depend on the applicant's income, and the states where the applicants live, and nobody really knows the exact amount.


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Old 01-04-2014, 06:51 PM   #4
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I wonder what happens if you thought you income was going to be under 250% PPL, but at the end of the year were actually at say 300%?

Your subsidy would be less than you expected and you'd either have to pay it back if you ask for it in advance.

However, what would happen to the copay subsidy? If you racked up some big medical bills that could be very expensive.
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Old 01-04-2014, 08:45 PM   #5
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If your actual income is higher than expected you are responsible for paying back the excess premium assistance you received, but not the cost sharing.

Here's a KFF brief with more detail. http://kaiserfamilyfoundation.files....13/01/8154.pdf
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Old 01-04-2014, 09:24 PM   #6
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If your actual income is higher than expected you are responsible for paying back the excess premium assistance you received, but not the cost sharing.

Here's a KFF brief with more detail. http://kaiserfamilyfoundation.files....13/01/8154.pdf
Hmm....I wonder if, in the interest of making things exceedingly simple, we just use your income from 2 years ago (i.e. 2013 taxable income for the calendar year 2015 policy?), or which would actually just be about 8 months before your policy starts on January 1, 2015?

Since your 2013 income isn't known until up to April 15, 2014 (or October 15, 2014 with extensions), wouldn't it be simpler to just use a known number for 99.9% of the people, rather than mess around with estimating your income, only to see things abruptly change at the last minute, with many (unhappy) surprises, people filing for refunds for cost sharing and subsidies because they ended up having less income, people having to pony up hundreds (perhaps thousands?) of dollars unexpectedly, all because of a few hundred dollars difference?

Talk about creating an unnecessary hardship and lots of stress and nervous waiting for December 31 to arrive for quite a few people, to see what their final income ends up being...

I hadn't read all of the various ACA threads - did a gov't agency ever say why they wanted to deal with having to estimate your current year income rather than going with a known number that everyone knows that's just 8 months old?
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Old 01-04-2014, 09:46 PM   #7
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Talk about creating an unnecessary hardship and lots of stress and nervous waiting for December 31 to arrive for quite a few people, to see what their final income ends up being...

I hadn't read all of the various ACA threads - did a gov't agency ever say why they wanted to deal with having to estimate your current year income rather than going with a known number that everyone knows that's just 8 months old?
It is really strange, seeing that al the rest of Obamacare was beautifully designed and executed.

Ha
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Old 01-04-2014, 11:34 PM   #8
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Thanks for the info Micheal

@Moorebonds Well remember the April 2013 number is for your 2012 income and they want you to estimate your 2014.

It is obvious starting (but giving up) on the ACA process, that system is designed for people with normal full jobs. But of course this is precisely the group of people who are most likely to have employee provided insurance and least likely to need ACA.

The folks that need ACA, are self-employed, folks with part time working looking for full-time, and early retired/investors.

In 2008, I would have qualified for a small subsidy.
I could a plausible prediction that, we have bear market (I think the odds are at least 50%) that my tenants move out, and environmental concerns shut down pipelines. This combo would reduce my income to ~$25,000 or 200% FPL in Hawaii.

It sounds like there is no penalty for doing this, and when it actually turns out opps I have six figure income in the 2014, paying back my interest free subsidy, and pocketing the copay.

It is actually brilliantly designed system for smart people with a perhaps too much time on their hands to figure out legal ways to scam to system. For intended purpose not so much
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Old 01-05-2014, 01:11 AM   #9
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Thanks for the info Micheal

It is actually brilliantly designed system for smart people with a perhaps too much time on their hands to figure out legal ways to scam to system. For intended purpose not so much
Fortunately, there aren't so many of them. No matter what the system, there will always be a few people who enjoy the challenge of exploring it's boundaries.

Of course, Medicare for all would have been cheaper and better, but there was just no way politically to accomplish it. Reining in some of the excesses in of the insurance industry in the individual market was the best that could be done. The changes don't really affect that many people although they do disproportionately affect the FIRE community.
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Old 01-05-2014, 02:52 AM   #10
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Reining in some of the excesses in of the insurance industry in the individual market was the best that could be done. The changes don't really affect that many people although they do disproportionately affect the FIRE community.
In the interest of avoiding Porky I won't comment on the rest. I am also no fan of insurance companies, own no stock any (except for Berkshire and via index funds.)..

But this statement has always bother me. Every single health insurance policy in this country and every single rate has to be approved by a state insurance regulator. Contrary to popular opinion insurance companies can't arbitrarily cancel your policies, or jack up your rates if you get sick.
The 1996 Patient protection act made it illegal for insurance companies to do most of thing people understandable object to.


One of the interesting things about reading the ACA threads is that several people have gotten their state insurance office involved generally with positive results in getting stuff resolved. If insurance companies were really abusing people why didn't people demand more action from the state insurance regulators?

Finally, just FYI the combined 2012 profits of the top 5 healthcare provider were just over $11 billion or roughly what Apple makes in quarter.
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Old 01-05-2014, 07:08 AM   #11
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Michael B's link is not close, at least where I live. I did the calculator back in October and it showed my wife would only have to pay $165. I was thinking, oh this is going to be great. After many tries online and calls I finally reached a person on the phone. I give them the same information I entered at Michael B's link. They told us we did not qualify and my wife would have to pay $444.00 per month. Could anyone here explain this to me? Like I mentioned before she found insurance and it was over $100 per month cheaper. Maybe each state is different, not sure but I know this ACA has been a total disaster for us. I want to share stories from others also. I have a good friend who is almost broke. He lost his job a few years ago and has been in bad health. He made a total of $11,000 in 2012 and less than that last year. They told him the same thing, he would not qualify for any discounts. I wish someone could tell me exactly what's going on with this. Not the only person to tell me the same stories. Our state is not expanding Medicaid coverage? You people that post how wonderful this new law is going to be please tell me how you got it at the price you did? I have given up on my wife as she will be on Medicare in four months but I want to help others who ask me for assistance. Thanks, Oldtrig
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Old 01-05-2014, 07:23 AM   #12
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Michael B's link is not close, at least where I live. I did the calculator back in October and it showed my wife would only have to pay $165. I was thinking, oh this is going to be great. After many tries online and calls I finally reached a person on the phone. I give them the same information I entered at Michael B's link. They told us we did not qualify and my wife would have to pay $444.00 per month. Could anyone here explain this to me? Like I mentioned before she found insurance and it was over $100 per month cheaper. Maybe each state is different, not sure but I know this ACA has been a total disaster for us. I want to share stories from others also. I have a good friend who is almost broke. He lost his job a few years ago and has been in bad health. He made a total of $11,000 in 2012 and less than that last year. They told him the same thing, he would not qualify for any discounts. I wish someone could tell me exactly what's going on with this. Not the only person to tell me the same stories. Our state is not expanding Medicaid coverage? You people that post how wonderful this new law is going to be please tell me how you got it at the price you did? I have given up on my wife as she will be on Medicare in four months but I want to help others who ask me for assistance. Thanks, Oldtrig
Oldtrig, hopefully your DW won't give up on you.

In states that passed the Medicaid expansion, people are eligible for Medicaid if their income falls below 133% of the FPL. That would be $15280 for a house of one, or $20600 for a couple. If their income is above that number they would be eligible for exchange policies and subsidies.

In states that did not pass the Medicaid expansion, if their income falls below $11490 for one or $15510 for a couple, they are not eligible for either Medicaid or an exchange policy with subsidy. If their income is above that number they are definitely eligible for a policy with subsidy.

The amount of the subsidy begins at 100% of a "silver level" and declines as one's income rises, and the cutoff (for a couple) is $60040.

The application process has been difficult and confusing, but it is still open. The exchanges have employed some people , called "navigators", whose job is to help folks enroll and determine eligibility for subsidies. Maybe they can help.
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Old 01-05-2014, 08:17 AM   #13
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Thanks , I will give those people a call and see if maybe they can shed some light on what's going on. I do understand that any thing this big is going to have some problems. I have asked to speak to a supervisor more than once when calling. I bet I called 20 times and each time I was told a different story. For some people to get insurance for $444 a month would be acceptable. Here in my state that number is not, as it is way to high for the money some make per year. That's where I got lost. I thought this was supposed to be affordable? That number would be 1/2 of some of my friends total income. . Like I have said it makes no difference to us as my wife goes on Medicare in a few weeks. I am spending lots of my time helping others get though this. They call on me for some reason . Most do not have computers and very little knowledge of what's going on with all of this. You have to understand some of these people do not even have cars and they told them when they called they would have to drive 50 miles to one of the help centers. It has caused a lot of stress for some of these older people who do not qualify for Medicare yet.
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Old 01-05-2014, 10:09 PM   #14
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The mechanics of the cost sharing subsidy appear to be pretty simple from what I've seen. For each silver policy (only silver qualifies for cost sharing) there are three sub-policies, one for each of the cost sharing levels determined by income % of poverty level. The government pays the premium subsidy which is determined by household income plus an additional amount based upon the reduced deductible and out of pocket maximum amounts of the applicable sub-policy. The silver sub-policies I've seen carry a suffix of CSR1, 2 or 3,' each with its own deductible and OOP maximum.
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Old 01-05-2014, 11:12 PM   #15
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Oldtrig: The ACA was written so that all states would expand Medicaid. People making less than 138% of the poverty level were to enter Medicaid which the federal government would pay for. People making 138-400% of the PL would receive a sliding scale subsidy to purchase private insurance through the exchange. In 2012 the US Supreme Court decided that the states could opt out of Medicaid expansion and your state chose to do so. Therefore, your friend, like approximately 5M others, got left out of insurance by the decision of your legislature.

Your friend can, however, go on the exchange and estimate his income for 2014 as just above the cutoff for Medicaid. This will allow him to get a subsidized exchange plan. He will also qualify for cost sharing. It will cost him just a little (Medicaid would have been free). There is no penalty for overestimating income.

Otherwise, since he lives in a non-Medicaid expansion state, he will not have to pay a penalty for not having insurance.

I went to Kaiser's calculator and put in $16000 income for a family of 1 in a non-expansion state. Annual cost is $539 for the premium with 94% cost sharing. That's a premium of $45 per month with your friend being responsible for 6% co-pay. It's not as cheap as Medicaid, but better than going without.

http://kff.org/interactive/subsidy-calculator/
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Old 01-05-2014, 11:41 PM   #16
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Thanks, that is some good info Alldone. I just talked to a friend of mine today who has a daughter age 26. She is going off her parents insurance in one month and last week she found out she has Crohn's disease. In her case this new insurance law will save her from going broke and maybe she can get treatment that she can afford. The more I read and hear about people who could not get coverage because of pre-existing condition's the more I like this. I was lucky enough to have made it all those years my son was young and we had no insurance that would cover his illness . Thanks again, Oldtrig
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Old 01-05-2014, 11:43 PM   #17
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Oldtrig: I don't know what happened with your wife's subsidy calculation, but my guess is that you used her income, rather than your family income for the estimate. I have to say that even $440 per month for a 64 year old seems very low.
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Old 01-06-2014, 12:01 AM   #18
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In the interest of avoiding Porky I won't comment on the rest. I am also no fan of insurance companies, own no stock any (except for Berkshire and via index funds.)..

But this statement has always bother me. Every single health insurance policy in this country and every single rate has to be approved by a state insurance regulator. Contrary to popular opinion insurance companies can't arbitrarily cancel your policies, or jack up your rates if you get sick.
The 1996 Patient protection act made it illegal for insurance companies to do most of thing people understandable object to.

One of the interesting things about reading the ACA threads is that several people have gotten their state insurance office involved generally with positive results in getting stuff resolved. If insurance companies were really abusing people why didn't people demand more action from the state insurance regulators?

Finally, just FYI the combined 2012 profits of the top 5 healthcare provider were just over $11 billion or roughly what Apple makes in quarter.
+1

I am no shareholder of any insurer here, nor affiliated with any in any capacity other than being client of one.

People like to beat up on insurers because that's where they send their money to, and they do not know about the money that the insurers are paying out. Similarly, my own mother keeps complaining about all the Medicare supplements that she has to pay. I am tired of reminding her of the several 100Ks that Medicare paid for my late father numerous hospital stays (I lost counts!).

One dubious advantage of having a private HI policy is that I can see all the invoices that my insurer is paying, and by myself too for my $10K deductible. My family doctor and my surgeons are not paid nearly as well as I thought. The place that drew my blood for some routine tests gets paid as little as less than $20. It's the hospitals and clinics that charge so much, and I have no idea why it is so high. Everything else is quite reasonable.
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Old 01-15-2014, 12:52 PM   #19
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Oldtrig: The ACA was written so that all states would expand Medicaid. People making less than 138% of the poverty level were to enter Medicaid which the federal government would pay for. People making 138-400% of the PL would receive a sliding scale subsidy to purchase private insurance through the exchange. In 2012 the US Supreme Court decided that the states could opt out of Medicaid expansion and your state chose to do so. Therefore, your friend, like approximately 5M others, got left out of insurance by the decision of your legislature.

Your friend can, however, go on the exchange and estimate his income for 2014 as just above the cutoff for Medicaid. This will allow him to get a subsidized exchange plan. He will also qualify for cost sharing. It will cost him just a little (Medicaid would have been free). There is no penalty for overestimating income.

Otherwise, since he lives in a non-Medicaid expansion state, he will not have to pay a penalty for not having insurance.

I went to Kaiser's calculator and put in $16000 income for a family of 1 in a non-expansion state. Annual cost is $539 for the premium with 94% cost sharing. That's a premium of $45 per month with your friend being responsible for 6% co-pay. It's not as cheap as Medicaid, but better than going without.

Subsidy Calculator | The Henry J. Kaiser Family Foundation
To be clear here: If your friend estimates his 2014 income as just above 100% of FPL, and then it turns out his income is below 100% of FPL, he will have to pay back the premium subsidy to the IRS when he files his 2014 tax return. The savings your friend would realize on co-payments (for example, the reduction in the amount he pays for a visit to the doctor) do not have to be paid back if he guesses his income incorrectly, but the premium susbsidies do have to be paid back to the IRS. The resulting tax bill could come to thousands of dollars depending on the plan chosen and the premium amount, so I'd be very careful about claiming the subsidy if there's a chance your friend's income will fall below 100% of FPL (which is $11,490 for an individual).
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Old 01-20-2014, 02:59 PM   #20
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To be clear here: If your friend estimates his 2014 income as just above 100% of FPL, and then it turns out his income is below 100% of FPL, he will have to pay back the premium subsidy to the IRS when he files his 2014 tax return. The savings your friend would realize on co-payments (for example, the reduction in the amount he pays for a visit to the doctor) do not have to be paid back if he guesses his income incorrectly, but the premium susbsidies do have to be paid back to the IRS. The resulting tax bill could come to thousands of dollars depending on the plan chosen and the premium amount, so I'd be very careful about claiming the subsidy if there's a chance your friend's income will fall below 100% of FPL (which is $11,490 for an individual).
Untrue. There is no penalty for over estimating. The only requirement for paying back a subsidy is when income is greater than the estimate.
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