House "Affordable Health Care for America Act"

[M Paquette]

I've been reading through the House legislation released last week, trying to write a decent summary. Some folks over at politico.com beat me to it.

This is a good summary of the House legislation. I recommend reading it in preference to much of the editorializing and commentary already published out there. The content in this summary appears to accurately reflect what's in the legislation.

http://www.politico.com/static/PPM41_hcr_complete_summary.html

 

[Goonie]

That was a good read.....not a bunch of partisan poo! Thanks for posting it!

 

[Notmuchlonger]

Great read. Those who do not have for whatever reason. Will steal from those who do have to support them.

Instead of winning and trying to be the best. This country has switched to everyone gets a medal for drooling and showing up.

What a fantastic read! Im all for it since I drool.

 

[M Paquette]

Great read. Those who do not have for whatever reason. Will steal from those who do have to support them.

Instead of winning and trying to be the best. This country has switched to everyone gets a medal for drooling and showing up.

What a fantastic read! Im all for it since I drool.

Well, it concerns me, because I'm one of those people that doesn't get a retirement medical plan from an employer, is 9 years out from Medicare, and has been blackballed for HSA/high deductible insurance via the MIB. I really don't want to use the state high risk pool because I'm not high risk, there are a limited number of slots for those that REALLY need it, and it's pretty expensive. I'm on a COBRA continuation right now, and when that runs out, I am likely to have to move to a fairly expensive HIPAA continuation policy, probably around $16,000/year the way things look right now.

Now, those moves are all based on CURRENT law. If the law changes, I may be one of those people that fall through a crack, as in this case, I've retired early, before the proposed 55-and-over retirement coverage incentive might be in place, and I'm also too early for a proposed COBRA extend-til-Medicare change (outside this particular proposal, but in committee).

There's a chance I could find myself in the 4% they expect still won't be covered or coverable, while paying a 2.5%/Median insurance rate fine to the IRS for not being covered. I want insurance, but might not be able to get it at any price, depending on how the various proposals are combined. Early retiree issues are something the proposed legislation ignores. There's an expectation that you are either working, collecting unemployment, or on Social Security & Medicare.

I could also find myself in the unpleasant spot of being retired and paying about $23,500/year for coverage, while being fined for the only plan I am eligible for being a Cadillac plan, depending on other proposals.

That may explain my interest in the minutia of the various proposals. I'm not trying to 'cheat', unless early retirement is considered cheating, and I'm not looking for a handout.

 

[samclem]

This is a good summary of the House legislation. I recommend reading it in preference to much of the editorializing and commentary already published out there. The content in this summary appears to accurately reflect what's in the legislation.

http://www.politico.com/static/PPM41_hcr_complete_summary.html

Thanks. It means more when we read about all the things it will do.

- The Congressional Budget Office figures the House program will cost $1.055 trillion over a decade, which while far above the $829 billion net cost that Mrs. Pelosi fed to credulous reporters is still a low-ball estimate. Most of the money goes into government-run "exchanges" where people earning between 150% and 400% of the poverty level—that is, up to about $96,000 for a family of four in 2016—could buy coverage at heavily subsidized rates, tied to income. The government would pay for 93% of insurance costs for a family making $42,000, 72% for another making $78,000, and so forth. . . At least at first, these benefits would be offered only to those whose employers don't provide insurance or work for small businesses with 100 or fewer workers. The taxpayer costs would be far higher if not for this "firewall"—which is sure to cave in when people see the deal their neighbors are getting on "free" health care. Mrs. Pelosi knows this, like everyone else in Washington.

This is very bad legislation.

 

[youbet]

I was glad to see this:

Help for early retirees (temporary reinsurance program). [FONT=Calibri,Calibri][FONT=Calibri,Calibri]Creates a $10 billion fund to finance a temporary reinsurance program to help offset the costs of expensive health claims for employers that provide health benefits for retirees age 55-64. [/FONT][/FONT]

I currently get my med ins from my prior employer at a subdisized rate (pay about $330/mo for individual coverage). This provision might encourage my prior employer to continue the program rather than drop us like a hot potato as soon as we have other choices through the "reform."

 

[Martha]

Well, it concerns me, because I'm one of those people that doesn't get a retirement medical plan from an employer, is 9 years out from Medicare, and has been blackballed for HSA/high deductible insurance via the MIB. I really don't want to use the state high risk pool because I'm not high risk, there are a limited number of slots for those that REALLY need it, and it's pretty expensive. I'm on a COBRA continuation right now, and when that runs out, I am likely to have to move to a fairly expensive HIPAA continuation policy, probably around $16,000/year the way things look right now.

Now, those moves are all based on CURRENT law. If the law changes, I may be one of those people that fall through a crack, as in this case, I've retired early, before the proposed 55-and-over retirement coverage incentive might be in place, and I'm also too early for a proposed COBRA extend-til-Medicare change (outside this particular proposal, but in committee).

There's a chance I could find myself in the 4% they expect still won't be covered or coverable, while paying a 2.5%/Median insurance rate fine to the IRS for not being covered. I want insurance, but might not be able to get it at any price, depending on how the various proposals are combined. Early retiree issues are something the proposed legislation ignores. There's an expectation that you are either working, collecting unemployment, or on Social Security & Medicare.

I could also find myself in the unpleasant spot of being retired and paying about $23,500/year for coverage, while being fined for the only plan I am eligible for being a Cadillac plan, depending on other proposals.

That may explain my interest in the minutia of the various proposals. I'm not trying to 'cheat', unless early retirement is considered cheating, and I'm not looking for a handout.

I have no retiree health insurance either. I am on the risk pool, but it is the best one in the nation. There is a fair chance that I will be worse off under any plan, except that I may actually be able to move to another state and get insurance.

Sounds like that you and I would buy insurance through the exchange and depending on our income, we might get a subsidy. Possibly, if our income is low enough we could end up on medicaid, which would not have an asset test under the house bill Generally, the summary sounds much like the senate proposals. One weirdness for the ERs is our potentially fluctuating income. When would income be determined? I have big variances in taxable income from year to year. One year pay the full freight, next year on Medicaid?

I only skimmed. I am having a hard time keeping up my interest in the politics of the proposals and ERs are not a group on anyone's radar so it is hard to see how it will effect the "asset rich-income poor" group.

 

[M Paquette]

I... One weirdness for the ERs is our potentially fluctuating income. When would income be determined? I have big variances in taxable income from year to year. One year pay the full freight, next year on Medicaid?

I only skimmed. I am having a hard time keeping up my interest in the politics of the proposals and ERs are not a group on anyone's radar so it is hard to see how it will effect the "asset rich-income poor" group.

I know we're off the radar. I've thought about writing to our local congresscritter to enquire about the situation for pre-existing ERs, but I suspect that all I would accomplish would be to have the income test turned into an Earned Income + Assets test.

 

[clifp]

Looking at the link, it looks reasonably likely that I might be slight better off. The lifetime medical cap has always worried me a bit. Still I have to admit there is a temptation to drop my existing (fairly affordable) program which I virtually never use, knowing that in the event of a serious illness I can purchase insurance, despite whatever diseases I may developed.

Also I'd like to give a shout out to all those nice folks making a $1 million+ who are helping to fund my Hawaii retirement, keep working hard we need you to pay the extra 5.4% on the income...

 

[W2R]

Very interesting article.

I can't figure out what the impact will or will not be on me. I have a very expensive plan that is going up in price every year by double digit percentages. I am happy with it since the government will pay for most of it as part of my federal retirement benefits.

If it eventually costs enough that the provider pays a 40% tax on this plan, wouldn't they be likely to trim down this medical plan to avoid that tax? Then they would provide less reimbursement, lower catastrophic limits, and higher deductibles, so that they could keep the plan under $8,000/year for singles and $11,000/year for couples.

I know, I should probably read it again. I think I have a mental block when it comes to insurance.

 

[Gotadimple]

Very interesting article.

I can't figure out what the impact will or will not be on me. I have a very expensive plan that is going up in price every year by double digit percentages. I am happy with it since the government will pay for most of it as part of my federal retirement benefits.

If it eventually costs enough that the provider pays a 40% tax on this plan, wouldn't they be likely to trim down this medical plan to avoid that tax? Then they would provide less reimbursement, lower catastrophic limits, and higher deductibles, so that they could keep the plan under $8,000/year for singles and $11,000/year for couples.

I know, I should probably read it again. I think I have a mental block when it comes to insurance.

W2R
The way I read this there will be no impact to you. I, too, have employer provided retiree coverage. As long as the employer is providing coverage that meets the minimum coverage limits, nothing should change. In addition, those employers providing coverage for 55-65 year olds can also benefit from a reinsurance program to help offset costs.

Question: How does the Federal government reinsure the FEHP in this case? Oh, Wait! I know -- the U.S. Treasury!

By provider above, I think you mean insurer. The insurer might choose to do two things:

1. Pass the tax on in the rates to the employer or individual for the plan they selected. Generally, higher premium plans have broader coverage as you indicated. In many states, insurers are required to pay a tax on the premium they collect to the state insurance commissioner; it's built into the rates.

2. Increase deductibles and co-pays as you suggest to reduce the premium.

Ideally, the bill includes the potential for lower premiums without doing anything as the risks will be spread among more people, and coverage is designed to encourage preventative health that theoretically should result in lower medical costs.

Note the words underlined.

-- Rita

 

[W2R]

Rita, thank you for your reply. Yes, I meant insurer. You can see that reading insurance related articles is not my strong point!

I do hope that my (FEHB BCBS Standard) deductibles, co-pays, and maximum coverage don't deteriorate as a result of this and give me less of a health care plan than I would like.

I can handle higher premiums (won't like them, but can handle them) but don't want to be told some day (should I become severely ill) that I have reached the limits of my insurance. So, this bill may affect me by essentially pushing me into a lesser health plan kicking and screaming.

Maybe, as you mention, reinsurance will help.

 

[lets-retire]

W2R--Have you looked at the Basic plan. It is a bit cheaper and costs for treatment aren't really that much more. The DW has seen the doctors a lot this past year and the largest bill we receive was from a week long stay in a monitoring unit that cost $300. The in-laws didn't like the cost of the Standard plan and went to one of the high deductible plans. They are changing back this year because they had to pay so much out of pocket.

 

[W2R]

Yes, of course I have looked at the less expensive plans offered by FEHB, including BCBS Basic. My point is that I really like having the OPTION to get a more inclusive (and expensive) plan like BCBS Standard, and the majority of federal employees agree with me and carry it.

W2R--Have you looked at the Basic plan. It is a bit cheaper and costs for treatment aren't really that much more. The DW has seen the doctors a lot this past year and the largest bill we receive was from a week long stay in a monitoring unit that cost $300. The in-laws didn't like the cost of the Standard plan and went to one of the high deductible plans. They are changing back this year because they had to pay so much out of pocket.

 

[DeborahB]

Thanks, very interesting article. The big question in my mind is how is the final bill (that might actually pass?) going to look. I kind of skimmed the Medicare provisions. I want to retire in June 2010 at 62 - no retiree health plan other than 18 months of COBRA. I'm hoping there wil be a plan available in 2 years (when I will need it) that doesn't consider pre-existing conditions.

The house passed a bill a few months ago (the senate did not, so it didn't go into effect) that allowed you to stay on COBRA longer. I know everyone bitches about the cost, but my cost for 2010 will be $442/month for individual, and it's pretty comprehensive coverage. I can afford that. It will be painful but I've factored a lot of medical expense into my plans for the years prior to Medicare at 65. Hope I can get insurance after COBRA runs out...

 

[ziggy29]

That was a good read.....not a bunch of partisan poo! Thanks for posting it!

I just wanted to see the phrase "partisan poo" again. Love it!

 

[Goonie]

I just wanted to see the phrase "partisan poo" again. Love it!

Yeah, I thought it had a better ring to it than 'political male bovine excrement'.

 

[TromboneAl]

The big question in my mind is how is the final bill (that might actually pass?) going to look.

Right. I always try to wait until something passes until I read it.

Concerning early retirees being off the radar -- this kind of thing almost always comes out in our favor, since asset-rich, income-poor folks are usually lumped in with poor folks. The concept of saving money is not something legislators can understand.

 

[DeborahB]

Saving money, not spending everything you make, investing wisely... shouldn't be hard concepts and yet...!

 

[ziggy29]

Concerning early retirees being off the radar -- this kind of thing almost always comes out in our favor, since asset-rich, income-poor folks are usually lumped in with poor folks. The concept of saving money is not something legislators can understand.

I tend to agree. As long as the trends toward means testing and taxation continue to focus on income rather than total assets, it seems like many of us (current and aspiring) asset-rich, moderate-income LBYM FIRE-types could get the best of both worlds. I just hope we remain few enough in number to not appear on that radar as a group that's probably getting a better deal than most other folks.

When I look at what I think is coming, I know I'm trying to arrange things so we are in the high asset/moderate income range when we FIRE. The best way I know to do that is to live simply, own your home outright and have no debt. That way you don't need an income that's likely to put a bullseye on your chest.

 

[FUEGO]

When I look at what I think is coming, I know I'm trying to arrange things so we are in the high asset/moderate income range when we FIRE. The best way I know to do that is to live simply, own your home outright and have no debt. That way you don't need an income that's likely to put a bullseye on your chest.

Put me in your's and T-Al's camp. I think this health care legislation will greatly benefit aspiring ER's. Asset tests haven't really been discussed seriously by the multitude of plan proponents. It looks doubtful they will sneak their way in to the final version. As T-Al says "The concept of saving money is not something legislators can understand".

I agree, the way to play this game under the current versions is to live simply, own your home and have no debt. This may put an end to the pay off mortgage early debate. For moderate income folks, the premiums you pay may end up being capped at 9-11% of your income, which is an effective tax. Add that to a 15% federal tax and possibly 7-8% state tax for some, and you have a very hefty marginal tax burden even for rather low income individuals. We'll have to see how the health insurance debates are ultimately resolved, but this could also mean Roth IRA's and Roth 401ks become more favorable. As would muni bonds.

 

[samclem]

For moderate income folks, the premiums you pay may end up being capped at 9-11% of your income, which is an effective tax. Add that to a 15% federal tax and possibly 7-8% state tax for some, and you have a very hefty marginal tax burden even for rather low income individuals. We'll have to see how the health insurance debates are ultimately resolved, but this could also mean Roth IRA's and Roth 401ks become more favorable. As would muni bonds.

I think another group of retirees/ERs who might be affected are those with employer-sponsored/employer-assisted health care. The proposed House legislation (as I read the summary) allows employers to cut the health care benefits they provide retirees if they do the same to their current workers. Employers can cut benefits to current workers if they pay the "fine." Paying this fine (8% of payroll) looks like it will be cheaper than providing insurance, certainly it will be as health care costs escalate. Employees left without employer insurance will have to buy their own, but most will get the subsidy (from taxpayers). If employers need to increase compensation to keep their employees, they'll increase pay. So, the employee will be fine. Not so with retirees--the employer won't be paying them anything extra (since they aren't employees). They'll just be getting a big health care bill. Sorry!

Regarding Roth IRAs and Roth 401Ks--I think it's interesting that we are talking about lots of "changed promises" (means testing SS, changed tax rates, very large new taxes on everyone, including those earning much less than $250,000 ) and yet there's precious little discussion of a new income limit or asset limit on Roth tax exclusions. I think it's possible the "fat cats" (and we'll see who THAT is) will be paying taxes on Roth withdrawals, too. In the name of fairness.

 

[youbet]

I think it's possible the "fat cats" (and we'll see who THAT is) will be paying taxes on Roth withdrawals, too. In the name of fairness.

I agree. It won't be an income tax but rather Roth withdrawals and possibly muni bond interest will count towards income for determining health care premium subsidies and that sort of thing.

 

[youbet]

Concerning early retirees being off the radar -- this kind of thing almost always comes out in our favor, since asset-rich, income-poor folks are usually lumped in with poor folks. The concept of saving money is not something legislators can understand.

I guess that means starting SS and pensions as early as possible as a trade-off for having a bigger portfolio and lower taxable income later. That is, collect SS and pensions early to avoid/minimize portfolio withdrawals early in retirement.

 

[Martha]

I agree. It won't be an income tax but rather Roth withdrawals and possibly muni bond interest will count towards income for determining health care premium subsidies and that sort of thing.

Nothing wrong with that. Should be the same with tax exempt interest.