AP: With health law, workers ponder the I-Quit option

[gerntz]

But remember that workers in employer-based plans are not taxed on the employer subsidy portion of the premium, so they are also getting a government subsidy but in an indirect manner. The ACA subsidies merely try to even out this inequity.

But I wouldn't be subsidizing if they kept working, would I? It's not evening anything. It's just a payment to not work. What's reasonable is for there to be a deduction for every insurance payment or no deduction. I'm for none.

 

[gerntz]

Weren't health care premiums going up every year, faster than inflation, prior to the ACA?

What matters to one's finances is the premium & the deductibles. But what's important to the system is the overall cost of healthcare. My understanding is that is increasing faster now, but I can be corrected.

 

[scrabbler1]

But I wouldn't be subsidizing if they kept working, would I? It's not evening anything. It's just a payment to not work. What's reasonable is for there to be a deduction for every insurance payment or no deduction. I'm for none.

If they kept working and were receiving an employer subsidy which was not subject to income taxes, they you would be subsidizing them because their tax bill is lower. That's my point.

Elsewhere, I commented about the unequal tax treatment of health insurance premiums. I agree that the tax treatment should be equalized. The employer subsidy should be taxed as ordinary income and HI premiums should be an above-the-line deduction like IRA contributions, not subject to any 10%-of-AGI exclusion. Having none of it deductible would at least be consistent.

And your "payment not to work" statement is not necessarily true. In my last 17 months of working, I had become ineligible to remain in my company's group health plan because I had reduced my weekly hours worked from 20 to 12. I was on COBRA for those 17 months but had I kept working I would have had to buy my own insurance which I did just after I ERed. The ACA was not a law yet (this was 2008-09) but if had been I would have signed up through my state's exchange just I did after I ERed. So I would have been working and been receiving an ACA subsidy (my income back then is about the same as my larger investment income is today). Furthermore, many people receiving ACA subsidies were not workng to begin with, like us early retirees.

 

[wrigley]

Yes, I think costs go up to cover folks with pre-existing conditions. If the choice, however, is to cover or not cover people with pre-existing conditions, I'll go with covering them and paying more. You never know when it will by you or yours that falls in that category.

I never got the "younger, healthy" generation part of the ACA where college-aged students are being marketed to join the ACA. Now that parents can keep their kids through age 26 on their plans (even if they are married, employed, non-dependent, etc) I would think most of them are already covered and don't need to purchase their own plan. Most age 27+ folks I'm assuming have employer coverage. Or maybe not. Maybe there are a lot of employers that don't provide coverage.

In any case, I think there is very little in the ACA that will control the ever-escalating costs of healthcare that have been ongoing long before the ACA rolled around. There is zero political will on either side to address cost issues. There are far too many fingers in the healthcare pie and it is a complex, patchwork system across 50 states. It can't be fixed with a catchy soundbite solution. I admit that I have wondered if the mandate may be the catalyst that, at some future time, will force us all to figure out cost-control.

What usually seems to be left out in the discussion of keeping your children on your health insurance until age 26 is that it is NOT FREE! I am retired military and have Tricare health insurance. It would actually cost me more to keep my 23 year old son on my policy than it costs for him to get his own policy through his employer.

Also.....he is not even eligible to be placed on my Tricare policy.
　
You may [FONT=Times,Times][FONT=Times,Times]not [/FONT][/FONT]purchase TYA (Tricare Young Adult) coverage if you are:

　

　

1. Eligible to enroll in an employer-sponsored health plan as defined in TYA regulations
2. Otherwise eligible for TRICARE program coverage
3. Married

So not every health insurance policy allows you to keep your adult children on it until age 26.

Mike

 

[MBSC]

But I wouldn't be subsidizing if they kept working, would I? It's not evening anything. It's just a payment to not work. What's reasonable is for there to be a deduction for every insurance payment or no deduction. I'm for none.

Person #1 quits working on April 1st. Person #2 is hired to take their place. On March 31st you were subsidizing person #2. On April 1st you stop subsidizing person #2 and start subsidizing person #1 who now has more time to volunteer/travel.

 

[MichaelB]

Keep in mind the largest tax subsidy in the US is paid to employers for the health care deduction, which is much greater than the subsidy paid on the exchanges. In addition, individuals using the exchange, not receiving subsidy and who itemize taxes just saw the deduction for medical expenses decline.

 

[scrinch]

I just finished reading all the posts here, but I wasn't quite able to figure out the consensus. Did we agree that if a person voluntarily leaves a job and retires early because s/he is "Financially Independent", then the taxpayers should pay 50%-60%-70%-80% of the health insurance premiums for that person if s/he can live off of assets and avoid declaring too much current income? I know the current law reads that way, but did we decide that we like it that way? I'll soon be faced with the decision about whether to take this subsidy, while holding assets of almost $5M. It doesn't seem right to me that I should qualify for a government subsidy of over 1/2 of my HI premiums when I am in the top few percent in terms of wealth.

 

[donheff]

I just finished reading all the posts here, but I wasn't quite able to figure out the consensus. Did we agree that if a person voluntarily leaves a job and retires early because s/he is "Financially Independent", then the taxpayers should pay 50%-60%-70%-80% of the health insurance premiums for that person if s/he can live off of assets and avoid declaring too much current income? I know the current law reads that way, but did we decide that we like it that way? I'll soon be faced with the decision about whether to take this subsidy, while holding assets of almost $5M. It doesn't seem right to me that I should qualify for a government subsidy of over 1/2 of my HI premiums when I am in the top few percent in terms of wealth.

It is what it is. This is similar to the question of whether I should have voluntarily given money back to the Treasury because I was opposed to the Bush tax cuts when DW and I were earning mega-bucks. To me the answer was no since doing so did not make a systemic change to the system which is what I believed would help. My recommendation is that, if you feel your subsidy is unjust, use the extra money for some targeted charity that achieves goals you approve of.

On the general question of subsidies, I am torn. It seems like it would have been (and certainly currently would be) impossible to get enough consensus to end deductions for employer HI, let alone do away with the employer based HI concept in general. The proposal to extend deductions for individual (non-work linked) HI payments has merit but is problematic for low income people. For them a subsidy works better since it reduces premiums immediately rather than reimbursing them at the end of the year or involving a hard to compute change in W2 withholding thus the subsidy makes it more likely they would be able to afford to get the HI in the first place. Maybe an alternative (good luck getting anyone to negotiate on this) would be to make all HI deductible (above the line) but reduce the deduction dollar for dollar by any subsidy the filer got.

 

[pb4uski]

...It appears both Sebelius & industry exec's agree HI premiums will be higher next year, though there is disagreement on how much....

Weren't health care premiums going up every year, faster than inflation, prior to the ACA?

Yes dlds, they were. In the two years since retiring that I have had an individual HI plan, my premiums went up 13% from 2012-2013 and 9% from 2013-2014. And my group plan contributions had increased dramatically each of three years prior to my retiring.

Which is why any prediction that HI premiums will be higher next year is a perceptive glimpse of the obvious and in some cases just more fear-mongering by the anti-ACA crowd.

 

[wrigley]

Yes dlds, they were. In the two years since retiring that I have had an individual HI plan, my premiums went up 13% from 2012-2013 and 9% from 2013-2014. And my group plan contributions had increased dramatically each of three years prior to my retiring.

Which is why any prediction that HI premiums will be higher next year is a perceptive glimpse of the obvious and in some cases just more fear-mongering by the anti-ACA crowd.

Premiums rising faster than eight years before Obamacare | The Daily Caller


Health insurance premiums have risen more after Obamacare than the average premium increases over the eight years before it became law, according to the private health exchange eHealthInsurance.

The individual market for health insurance has seen premiums rise by 39 percent since February 2013, eHealth reports. Without a subsidy, the average individual premium is now $274 a month. Families have been hit even harder with an average increase of 56 percent over the same period — average premiums are now $663 per family, over $426 last year.

Between 2005 and 2013, average premiums for individual plans increased 37 percent and average family premiums were upped 31 percent. So they have risen faster under Obamacare than in the previous eight years.

Mike

 

[pb4uski]

I just finished reading all the posts here, but I wasn't quite able to figure out the consensus. Did we agree that if a person voluntarily leaves a job and retires early because s/he is "Financially Independent", then the taxpayers should pay 50%-60%-70%-80% of the health insurance premiums for that person if s/he can live off of assets and avoid declaring too much current income? I know the current law reads that way, but did we decide that we like it that way? I'll soon be faced with the decision about whether to take this subsidy, while holding assets of almost $5M. It doesn't seem right to me that I should qualify for a government subsidy of over 1/2 of my HI premiums when I am in the top few percent in terms of wealth.

While I think many here would concede that it is a silly result that someone with $5m in assets would qualify for a subsidy, the fact is that Congress designs these programs based on income rather than wealth. IMO it is because to design these programs based on a combination of income and/or wealth would make them even more hopelessly complex. We have had other threads debate the morality of "taking advantage" of such benefits. I know in my case I paid mucho taxes (much more than average) during my earning years so if there are legal loopholes that benefit me I'm not losing too much sleep about taking them. That said, I am not taking the subsidy as I have concluded that Roth conversions up to the top of the 15% tax bracket are more beneficial to me than limiting my income to get a subsidy benefit.

 

[pb4uski]

Premiums rising faster than eight years before Obamacare | The Daily Caller


Health insurance premiums have risen more after Obamacare than the average premium increases over the eight years before it became law, according to the private health exchange eHealthInsurance.

The individual market for health insurance has seen premiums rise by 39 percent since February 2013, eHealth reports. Without a subsidy, the average individual premium is now $274 a month. Families have been hit even harder with an average increase of 56 percent over the same period — average premiums are now $663 per family, over $426 last year.

Between 2005 and 2013, average premiums for individual plans increased 37 percent and average family premiums were upped 31 percent. So they have risen faster under Obamacare than in the previous eight years.

Mike

That data is very different from my personal experience. My 9% increase from 2013 to 2014 was the least of the last 5 years (1 year private HI and 4 years group HI). But in any event , the debate was future increases (2015 and beyond) not 2014 compared to previous years.

 

[daylatedollarshort]

I just finished reading all the posts here, but I wasn't quite able to figure out the consensus. Did we agree that if a person voluntarily leaves a job and retires early because s/he is "Financially Independent", then the taxpayers should pay 50%-60%-70%-80% of the health insurance premiums for that person if s/he can live off of assets and avoid declaring too much current income? I know the current law reads that way, but did we decide that we like it that way? I'll soon be faced with the decision about whether to take this subsidy, while holding assets of almost $5M. It doesn't seem right to me that I should qualify for a government subsidy of over 1/2 of my HI premiums when I am in the top few percent in terms of wealth.

The ACA is a tax credit. Do you take other legal tax credits or deductions? Home mortgage interest? Personal exemptions? 401K deductions? The zero tax bracket on capital gains? Would you feel bad having municipal bond interest? How many people in the U.S. benefit from that tax break?

If you look at the average savings across America, how many people really benefit greatly from 401K deductions? Or the difference in mortgage interest deductions if you have a $600K house versus an $80K house? Would you feel guilty having a nicer house and getting a bigger mortgage interest deduction than the average person?

I know for the last decade or so we paid more in income and SS taxes than the median U.S. household makes in a year. I never complained about that and have always voted in in favor of candidates and propositions (CA) to raise taxes to fund social programs. I am also not going to complain now. For our family with still dependent kids even with the ACA I still budget around $9K a year for dental and medical costs for premiums, co-pays and deductibles. Pre ACA our medical costs were $50K (COBRA conversion policy, premiums, co-pays, deductibles, out of network, etc.) last year due mainly to a single surgery. Few people could ever ER, start a mom and pop business or even work part time with those kind of costs, which adds to the unemployment rate.

 

[W2R]

Thanks, all.

Porky Pig Cartoon Ending "That's All Folks!" - YouTube