PPACA, Obamacare and General Comments

[FinanceDude]

More like life itself. A real first world problem. The information is there, lots of folks waiting for it to arrive on a platter.

Like ACA, retirement, and life in general, there are NO instruction manuals...........

 

[youbet]

I think that would be it. No income required to support a mortgage lowers your MAGI.

Only if you can turn off some of the income by, for example, reducing IRA withdrawals. If you income is more defined, such as a monthly pension check, whether you're using part of it to pay a mortgage or using that same money to buy beaver cheese futures makes no difference.

Makes for an interesting situation for folks with a pension just over the 4X poverty level........

 

[pb4uski]

Having a big ol pension may be a lot less valuable to ER unless you have employer provided/subsidized retirement health care too if the pension income disqualifies you from Obamacare HI subsidies.

 

[Htown Harry]

Here's a well-written article by Michael Kitces, a blogger / financial planner.

How Coming Health Insurance Exchanges Will Drastically Impact Career And Retirement Decisions - Kitces | Nerd's Eye View

The emphasis is the topic covered here E-R.org in so many ways: separation of health insurance availability from employment and health status will be a game-changer for many.

There's nothing new for the keen-eyed readers of threads like this one, but I enjoyed it nonetheless.

Clients who are considering retirement no longer need to wait until age 65 and Medicare eligibility to ensure health coverage in retirement, which research finds is still a significant factor in the timing of retirement. Although in theory an individual who previously had health insurance through an employer could continue it through COBRA and then HIPAA to ensure ongoing individual coverage, the reality was that HIPAA policies were often significantly more expensive than employer-based health insurance. Now, those who want to stop working can do so and be assured of health insurance coverage that is priced substantively the same as what they already had while working (although premiums may still rise with age), with the exact same availability of benefits and no worry of limitations due to pre-existing conditions or future health changes.

 

[oldphd]

Ohio, who was one of the original dozen or so states speculated to be facing "rate shock". Well it appears the original speculation may be true. Of course it all depends upon subsidies, etc. They are estimating an 88% increase based on rates submitted. They are currently under review by the state. The press release below explains it more.

Ohio Department of Insurance

I question the use of the 88% increase, they started from a monthly rate of $223 which seems low. I would certainly like to buy a good policy for this amount! For comparison, Ohio’s retirement systems have MUCH higher premiums than that. Perhaps this is not a good apples to apples comparison.

From the press release:

“Estimates from a Society of Actuaries study released in 2013 showed Ohio’s current average cost to cover medical expenses for an individual health insurance plan is $223. Based on the proposals submitted to the Department, the average to cover those costs in 2014 is $420 representing an increase of 88 percent when compared to the Society of Actuaries study.”

State Teacher’s Retirement System of Ohio health insurance premiums range from $518 to $1,036 for those without medicare.

https://www.strsoh.org/pdfs/2013premiums-nomed.pdf

The Ohio Professional Employees Retirement System offers only the “Cadillac” version where the base premium is on the order of $1K, IIRC. I looked for supporting documentation but didn’t find it quickly, they don’t make it as easy as STRS. I recall this figure from a year or two ago when I was looking into it.

STRS subsidizes retirees with certain amounts of time in the system while allowing those with less and dependents to pay full price. OPERS has more generous subsidies if you qualify, but if you don’t, fuhgedaboutit. They have also recently raised the bar to qualify for HI and are eliminating spousal coverage. Interestingly, on the OPERS blog when this was discussed, multiple suggestions were made to do something more like STRS. First, offer a cheaper option with higher deductibles, etc. Second, offer spouses who will be eliminated and those without enough experience to qualify to pay full price but be in the group plan. The reply was that the premium did not cover the total cost and they would be losing money… ?!?! Never did understand that line of thinking, if it’s the TOTAL cost then it’s not subsidized, right?

 

[Mulligan]

I question the use of the 88% increase, they started from a monthly rate of $223 which seems low. I would certainly like to buy a good policy for this amount! For comparison, Ohio’s retirement systems have MUCH higher premiums than that. Perhaps this is not a good apples to apples comparison.

From the press release:

“Estimates from a Society of Actuaries study released in 2013 showed Ohio’s current average cost to cover medical expenses for an individual health insurance plan is $223. Based on the proposals submitted to the Department, the average to cover those costs in 2014 is $420 representing an increase of 88 percent when compared to the Society of Actuaries study.”

State Teacher’s Retirement System of Ohio health insurance premiums range from $518 to $1,036 for those without medicare.

https://www.strsoh.org/pdfs/2013premiums-nomed.pdf

The Ohio Professional Employees Retirement System offers only the “Cadillac” version where the base premium is on the order of $1K, IIRC. I looked for supporting documentation but didn’t find it quickly, they don’t make it as easy as STRS. I recall this figure from a year or two ago when I was looking into it.

STRS subsidizes retirees with certain amounts of time in the system while allowing those with less and dependents to pay full price. OPERS has more generous subsidies if you qualify, but if you don’t, fuhgedaboutit. They have also recently raised the bar to qualify for HI and are eliminating spousal coverage. Interestingly, on the OPERS blog when this was discussed, multiple suggestions were made to do something more like STRS. First, offer a cheaper option with higher deductibles, etc. Second, offer spouses who will be eliminated and those without enough experience to qualify to pay full price but be in the group plan. The reply was that the premium did not cover the total cost and they would be losing money… ?!?! Never did understand that line of thinking, if it’s the TOTAL cost then it’s not subsidized, right?

There are low prices out there if you were healthy and had an underwritten policy in "low cost states". I wouldn't be surprised if they are using that basis as the point of comparison, which definitely is not valid for the people who did not meet the qualifications. I have a $5500 deductible, $0 cost after deductible which is close to a Bronze plan, and I pay $76 a month for a 49 year old.

 

[oldphd]

There are low prices out there if you were healthy and had an underwritten policy in "low cost states". I wouldn't be surprised if they are using that basis as the point of comparison, which definitely is not valid for the people who did not meet the qualifications. I have a $5500 deductible, $0 cost after deductible which is close to a Bronze plan, and I pay $76 a month for a 49 year old.

As you say, there were health qualifications that put you in a lower cost group. I believe that would imply that the new rates which are available to all might be compared to something that wasn't. Not trying to pick sides here, just wondering if the comparison in the press release is valid.

 

[Gotadimple]

Having a big ol pension may be a lot less valuable to ER unless you have employer provided/subsidized retirement health care too if the pension income disqualifies you from Obamacare HI subsidies.

I am confused by this statement. Obamacare is not the broadest coverage available. You can still buy that in the marketplace. Obamacare offers reasonably good coverage and for those with limited finances it also offers to subsidize the cost, but it is not free health insurance (there is another program for that).

Why would one want to trade a good annuity (the pension) for average health insurance where the cost is subsidized by tax dollars? What are you really giving up in terms of clothing, entertainment, food, and shelter? Is it worth giving that up for subsidized health care?

I don't understand the tradeoff people are willing to make.

-- Rita

 

[Buckeye]

I question the use of the 88% increase, they started from a monthly rate of $223 which seems low. I would certainly like to buy a good policy for this amount! For comparison, Ohio’s retirement systems have MUCH higher premiums than that. Perhaps this is not a good apples to apples comparison.

From the press release:

“Estimates from a Society of Actuaries study released in 2013 showed Ohio’s current average cost to cover medical expenses for an individual health insurance plan is $223. Based on the proposals submitted to the Department, the average to cover those costs in 2014 is $420 representing an increase of 88 percent when compared to the Society of Actuaries study.”

State Teacher’s Retirement System of Ohio health insurance premiums range from $518 to $1,036 for those without medicare.

https://www.strsoh.org/pdfs/2013premiums-nomed.pdf

The Ohio Professional Employees Retirement System offers only the “Cadillac” version where the base premium is on the order of $1K, IIRC. I looked for supporting documentation but didn’t find it quickly, they don’t make it as easy as STRS. I recall this figure from a year or two ago when I was looking into it.

STRS subsidizes retirees with certain amounts of time in the system while allowing those with less and dependents to pay full price. OPERS has more generous subsidies if you qualify, but if you don’t, fuhgedaboutit. They have also recently raised the bar to qualify for HI and are eliminating spousal coverage. Interestingly, on the OPERS blog when this was discussed, multiple suggestions were made to do something more like STRS. First, offer a cheaper option with higher deductibles, etc. Second, offer spouses who will be eliminated and those without enough experience to qualify to pay full price but be in the group plan. The reply was that the premium did not cover the total cost and they would be losing money… ?!?! Never did understand that line of thinking, if it’s the TOTAL cost then it’s not subsidized, right?

After I resigned from my job in Ohio, we purchased a HDHP (max deductible) for about $250 per month. It was good while it lasted but the company went bankrupt. Hope they are not using our premium as a data point!

 

[Sue J]

I question the use of the 88% increase, they started from a monthly rate of $223 which seems low. I would certainly like to buy a good policy for this amount! For comparison, Ohio’s retirement systems have MUCH higher premiums than that. Perhaps this is not a good apples to apples comparison.

From the press release:

“Estimates from a Society of Actuaries study released in 2013 showed Ohio’s current average cost to cover medical expenses for an individual health insurance plan is $223. Based on the proposals submitted to the Department, the average to cover those costs in 2014 is $420 representing an increase of 88 percent when compared to the Society of Actuaries study.”

State Teacher’s Retirement System of Ohio health insurance premiums range from $518 to $1,036 for those without medicare.

https://www.strsoh.org/pdfs/2013premiums-nomed.pdf

The Ohio Professional Employees Retirement System offers only the “Cadillac” version where the base premium is on the order of $1K, IIRC. I looked for supporting documentation but didn’t find it quickly, they don’t make it as easy as STRS. I recall this figure from a year or two ago when I was looking into it.

STRS subsidizes retirees with certain amounts of time in the system while allowing those with less and dependents to pay full price. OPERS has more generous subsidies if you qualify, but if you don’t, fuhgedaboutit. They have also recently raised the bar to qualify for HI and are eliminating spousal coverage. Interestingly, on the OPERS blog when this was discussed, multiple suggestions were made to do something more like STRS. First, offer a cheaper option with higher deductibles, etc. Second, offer spouses who will be eliminated and those without enough experience to qualify to pay full price but be in the group plan. The reply was that the premium did not cover the total cost and they would be losing money… ?!?! Never did understand that line of thinking, if it’s the TOTAL cost then it’s not subsidized, right?

DH is retired from OPERS (Ohio Public Employees Retirement System) and that is where we get our health care coverage. As of 01/2013 they eliminated 2 out of the 3 options for lower cost levels of insurance and we all have to be on the same high cost/low deductible plan. The cost of this is currently $814 per person. They still provide a very generous subsidy to both of us based on DH's years of service. DH's subsidy is currently $727 and mine is $525, so out of a monthly cost of $1628 we pay $376.

Between 2016 and 2019 they will be eliminating all subsidies for the spouse and lowering the subsidy for the retiree, in DH's case he will eventually pay 25% of whatever the cost is. They may allow spouses to pay the full rate after 2019, but we will move to an Obamacare exchange before I'd pay that amount.

It's astounding that for the huge number of retirees that they cover they couldn't find a lower cost plan. This is far better insurance than I ever cared to pay for (I liked the low cost/high deductible version just fine) but this is all we are offered so we are taking advantage of the super low co-pays ($0/$10/$20/$40) and fully paid prescriptions for generic medications for certain common conditions like high blood pressure, cholesterol, etc.

Crazy, crazy system, but for 2013 that's our only option. I'm following all the news and calculators for Obamacare. We may not move to an exchange next year, but later when our subsidies start dropping I'll seriously consider it.

 

[No_Such_Reality]

That $824 at retirement age might be pretty close to what the exchange will cost you for likely a much better plan.

I've been pricing plans in SoCal and $693/month for silver which is $2000 deductible, $45 co-pays and a high out of pocket limit.

 

[pb4uski]

I am confused by this statement. Obamacare is not the broadest coverage available. You can still buy that in the marketplace. Obamacare offers reasonably good coverage and for those with limited finances it also offers to subsidize the cost, but it is not free health insurance (there is another program for that).

Why would one want to trade a good annuity (the pension) for average health insurance where the cost is subsidized by tax dollars? What are you really giving up in terms of clothing, entertainment, food, and shelter? Is it worth giving that up for subsidized health care?

I don't understand the tradeoff people are willing to make.

-- Rita

I think you are reading way too much into my post. All that I was saying was that people that had a big ol pension but were on there own for health care are at a disadvanatge under Obamacare because their high pension income will likely cause them to not be eligible for Obamacare HI subsidies. Many of us who do not have big ol pensions were envious of those that did because they are such a great benefit - it is just that they will be less great once Obamacare is effective IMO.

 

[oldphd]

DH is retired from OPERS (Ohio Public Employees Retirement System) and that is where we get our health care coverage. As of 01/2013 they eliminated 2 out of the 3 options for lower cost levels of insurance and we all have to be on the same high cost/low deductible plan. The cost of this is currently $814 per person. They still provide a very generous subsidy to both of us based on DH's years of service. DH's subsidy is currently $727 and mine is $525, so out of a monthly cost of $1628 we pay $376.

Between 2016 and 2019 they will be eliminating all subsidies for the spouse and lowering the subsidy for the retiree, in DH's case he will eventually pay 25% of whatever the cost is. They may allow spouses to pay the full rate after 2019, but we will move to an Obamacare exchange before I'd pay that amount.

It's astounding that for the huge number of retirees that they cover they couldn't find a lower cost plan. This is far better insurance than I ever cared to pay for (I liked the low cost/high deductible version just fine) but this is all we are offered so we are taking advantage of the super low co-pays ($0/$10/$20/$40) and fully paid prescriptions for generic medications for certain common conditions like high blood pressure, cholesterol, etc.

Crazy, crazy system, but for 2013 that's our only option. I'm following all the news and calculators for Obamacare. We may not move to an exchange next year, but later when our subsidies start dropping I'll seriously consider it.

Thanks to Sue J for the correct info. I'm currently working in a position covered by OPERS after a career in industry, so I won't have a big pension, but I've vested and will get something. Prior to the recent changes, I would be within 2 years of qualifying for health care at this point, and was targeting ER when I got there. Not only eligible, but with a nice subsidy thanks to having worked as an undergrad my "start date" was in the late 70s. The recent changes increased the requirement by 10 years, which means I'll be eligible for medicare before OPERS health care. Not planning to work that long in either case, so I'm much more interested in ACA, though I do still have the option of purchasing STRS health care (DW is retired STRS).

Been running the numbers, and I have a bit of a hurdle at the end of this calendar year. Beyond that, nothing for quite a while. The cuts make me more likely to stop, no carrot out there.

FWIW - I'm with Sue J, it is a crazy system. The claim that paying the "full cost" causes them to lose money makes no sense. If you're losing $$$, then it's not the full cost, right?