ACA Changes my Timeline?

[Tekward]

I'm on a glide path, recently down-shifted to a university j*b and prepared to work 4.5 more years. Looking at the ACA site, I may change my plans. I looked on the browsing side and HC costs for wife and I seem reasonable and would be subsidized if I RE. Two questions for opinions:

- Should I trust the example numbers and potential subsidies?
- What is perceived risk if more people stop pulling and get in the wagon?

 

[Sue J]

Should I trust the example numbers and potential subsidies?

I've found that our subsidy was very close to the estimate from the Kaiser subsidy calculator. But when it came to actual plans, I was disappointed. I went straight to the silver plans to see what my lower cost silver plans would be and the insurers for these were names I didn't recognize. So I did searches on those insurer's provider networks and was surprised at how few were local. Looking for our current insurer and another one that I recognized meant a big jump in monthly costs.

I'm hoping that as all this catches on and develops that these unfamiliar insurers will expand their networks and we will have wider choices. For 2014 we decided on a plan with our current insurer and stay with our current providers.

Remember, your costs are going to be based on the allowed amount. I know what many of our allowed amounts are through our current insurer and I checked that these should be the same with the ACA plan. I didn't want to take a plan with brand new insurer, change to new doctors and then find that the allowed amounts were much more than expected.

 

[47]

I take it you mean for future years. Numbers for 2014 are fixed already, and there is nothing left to guess.

My personal opinion is that the inefficiencies are going to be slowly, yet continually driven out of the system now that the death grip of the health care Mafia is broken.


On a related topic, the profile of an ER is ideally suited to exploit HSA compatible plans in the ACA.

The fact that you are an ER means a) you have some reasonable amount of wealth accumulated b) You probably qualify for subsidy as earned income has tapered off c) You can control your MAGI d) You are savvy enough to do ROI calculations e) You probably qualify for accelerated amount for HSA contribution.

Don't jump at the first silver plan you get your hands on. Compare your favorite silver plan with a HSA plan.

A sample trade off calculation for amount before your reach out of pocket max on either plans may look like this:

Premium difference at same MAGI: $1800
Premium reduction due to MAGI reduction: $300
Tax savings from HSA contribution: 800
Silver deductible: $2500
Silver copay to be paid anyway: ~1000

You are looking at around $6,400 which is about the same as the out of pocket max even on the Bronze HSA plan. You are better off taking the sure money savings provided, and even in the worst case you are really no worse off.

You have to run numbers to your specific case including your spouse etc, but the gist of the argument still is valid.

 

[ERhoosier]

IMHO- ACA is very much a work-in-progress & I would resist making ER decision until things settle out over next few yrs. With troubled roll out & HI market effects (e.g. cancellations of existing plans), some powerful members of both parties are already clamoring for 'fixes'. While HI premiums for '14 are set, future premiums are uncertain. Current early enrollment figures suggest a much higher % of Medicaid & lower % of "young invincibles" signing up. If that pattern holds, the net cost of ACA will be MUCH higher than projected.

Not tough to guess what would happen if too many "stop pulling & get in the wagon". Subsidies get cut & individual contributions (premiums/co-pays/OOPmax) rise.

I tend to agree with 47Percent that HSA compatible plans are a good fit for many FIREs, IF a reasonable such plan is offered in your region. Still looking into details, but in my area the only HSA-eligible Exchange Plans are unattractive (rel high premiums, limited provider network, etc.). I'm hoping this changes by 2015 when I'll be forced into either taking Exchange Plan or going back to FT employment.

 

[Gatordoc50]

We are just finding out about the diversities of our present system that have allowed businesses and unions to help control health care costs. For instance, very few people were aware that over 100 million people are covered by self insured businesses and unions. In fact , 60 % of large businesses and 80% of unions. The administration is trying its best to sever these business relationships which will have a major impact on the overall system going forward. In summary, I don't believe there is any possible way to plan for healthcare costs going forward.

 

[sengsational]

We are just finding out about the diversities of our present system that have allowed businesses and unions to help control health care costs. For instance, very few people were aware that over 100 million people are covered by self insured businesses and unions. In fact , 60 % of large businesses and 80% of unions. The administration is trying its best to sever these business relationships which will have a major impact on the overall system going forward. In summary, I don't believe there is any possible way to plan for healthcare costs going forward.

So companies and unions that have self-insured in the past because they had big pools of people are finding it harder to continue that now? Is that because they had crummy plans before and are now required to raise the quality of their plans? Or? Just curious, since I'd not heard about this push.

 

[Gatordoc50]

So companies and unions that have self-insured in the past because they had big pools of people are finding it harder to continue that now? Is that because they had crummy plans before and are now required to raise the quality of their plans? Or? Just curious, since I'd not heard about this push.

Here is an article from the WSJ. Food for thought .http://m.us.wsj.com/articles/SB10001424127887324886704579053042138004388?mobile=y

 

[47]

One way to nudge/coax people who find themselves in a narrow window of time when they would benefit by staying out of Obamacare in their self-interest is to stipulate the following penalty if and when they want to join the mainstream and obtain a ACA compliant policy (inside or outside the exchange, i.e. out in the real world outside of their walled ERISA garden), or Medicare:

for EVERY year they choose to stay out of Obamacare,
a) forego any subsidies under Obamacare for THREE years.
b) Pay a surcharge of 30% on other insurance for THREE years.
c) If they haven't paid their full penalty as above by the time they are 65, delay medicare eligibility by ONE year for every year that hasn't been offset as above.

The logic of the above is hard to argue, as all the prices of ACA policies and Medicare reflect the savings obtained by everyone in the group participating -- healthy or otherwise. If you want to carve yourself out when you are healthy, and then join the pool at your convenience, there's got to be a penalty.

you know.. exactly like the pre-existing condition exclusion/waiting period we had before ACA. Just that in this case, it is a pre-existing condition of selfishness.

And then again, what the hell do I know. I don't have a megaphone like Wall Street Journal.

 

[Gatordoc50]

One way to nudge/coax people who find themselves in a narrow window of time when they would benefit by staying out of Obamacare in their self-interest is to stipulate the following penalty if and when they want to join the mainstream and obtain a ACA compliant policy (inside or outside the exchange, i.e. out in the real world outside of their walled ERISA garden), or Medicare:

for EVERY year they choose to stay out of Obamacare,
a) forego any subsidies under Obamacare for THREE years.
b) Pay a surcharge of 30% on other insurance for THREE years.
c) If they haven't paid their full penalty as above by the time they are 65, delay medicare eligibility by ONE year for every year that hasn't been offset as above.

The logic of the above is hard to argue, as all the prices of ACA policies and Medicare reflect the savings obtained by everyone in the group participating -- healthy or otherwise. If you want to carve yourself out when you are healthy, and then join the pool at your convenience, there's got to be a penalty.

you know.. exactly like the pre-existing condition exclusion/waiting period we had before ACA. Just that in this case, it is a pre-existing condition of selfishness.

And then again, what the hell do I know. I don't have a megaphone like Wall Street Journal.

A pool of 100 million self insured people represents the general population well. Heck, it almost IS the general population. The funny thing is, is that we could pay for those with no insurance and preexisting conditions by writing a check for 50 billion and be done with it. That's like ten bucks a month per taxpayer. And you can keep your insurance AND your doctors. Who needs a megaphone now?

 

[47]

A pool of 100 million self insured people represents the general population well. Heck, it almost IS the general population. The funny thing is, is that we could pay for those with no insurance and preexisting conditions by writing a check for 50 billion and be done with it. That's like ten bucks a month per taxpayer. And you can keep your insurance AND your doctors. Who needs a megaphone now?

Let us assume, in a population of 320 million, probably 20 million use up 90% of the healthcare dollars. The numbers may be off a bit, but there is no doubt about the lopsided nature of use; it is well known and documented.

I would safely guess that your "sample" of 100 million will not include anywhere close to (100*20/320=6.25) 6.25 million, i.e. proportionate representation, of those very sick people.

Your sample size may seem large at 100 million, but it is not a representative sample. There in lies the fallacy in your logic.

If there is guy going through stage 4 cancer treatment and going on his 3rd year in treatment, it is more than likely he is not working for a small business delivering pizza. But it is entirely possible he *was* delivering pizza when he was healthy until he keeled over.

Alternatively, we can round up all those 20 million people who are costing the country a lot of grief and money and shoot them, or put them in a large barge ship them off to Siberia.

 

[Gatordoc50]

Let us assume, in a population of 320 million, probably 20 million use up 90% of the healthcare dollars. The numbers may be off a bit, but there is no doubt about the lopsided nature of use; it is well known and documented.

I would safely guess that your "sample" of 100 million will not include anywhere close to (100*20/320=6.25) 6.25 million, i.e. proportionate representation, of those very sick people.

Your sample size may seem large at 100 million, but it is not a representative sample. There in lies the fallacy in your logic.

If there is guy going through stage 4 cancer treatment and going on his 3rd year in treatment, it is more than likely he is not working for a small business delivering pizza. But it is entirely possible he *was* delivering pizza when he was healthy until he keeled over.

Alternatively, we can round up all those 20 million people who are costing the country a lot of grief and money and shoot them, or put them in a large barge ship them off to Siberia.

We can easily afford to pay for their care in a number of ways without dismantling the entire system. But the cost should be shared and not put on the backs of young healthy workers. One might argue that the young will get even by screwing the next generation but that is small thinking. Our economy needs younger people with high disposable income and the ability to form capital. That's what drives growth. Not quitters like us trying to spread out our wealth over as many nonproductive years as possible.

 

[Cedar]

But the cost should be shared and not put on the backs of young healthy workers. One might argue that the young will get even by screwing the next generation but that is small thinking. Our economy needs younger people with high disposable income and the ability to form capital. That's what drives growth. Not quitters like us trying to spread out our wealth over as many nonproductive years as possible.

I am retirement age and pay over $6,000/year in real estate taxes. Approximately 80% of my taxes, I pay, goes to schools, which I have no children attending. The older generation is highly subsidizing the younger generation when it comes to real estate taxation. Some might not think this arrangement is fair either. I don't mind the present structure of ACA.

 

[photoguy]

The older generation is highly subsidizing the younger generation when it comes to real estate taxation. Some might not think this arrangement is fair either. I don't mind the present structure of ACA.

This is very state dependent. In CA with prop 13, it's the opposite -- newer homebuyers (who are usually young) are subsidizing older homeowners who've owned for decades.

 

[47]

This is very state dependent. In CA with prop 13, it's the opposite -- newer homebuyers (who are usually young) are subsidizing older homeowners who've owned for decades.

In someways the above statement is true. But it is not as clear cut as it first seems.

When someone buys a home, they know exactly what the future liabilities are in terms of property tax (around 2%, within reason) and are supposed to fold that into the cost of the home. Keep in mind, they too have the Prop 13 protection after purchase as much as the old geezers.

The reason prices are going up are because there are many people who want to buy houses there.

Average Silicon Valley home tops $1 million - San Jose Mercury News

Prop 13 was passed in 1978. It is not a new phenomenon. May be 80-90% of the people living now are post-prop-13 purchasers. It is just a predictable system to work with as opposed to the property taxes going up 100% over night just because Twitter went public.

It is somewhat similar to long term capital gains getting a preferential treatment. You can say what is different from holding a stock for 360 days and 370 days. But a line needs to be drawn somewhere. Similarly they needed a way to fix the unpredictable volatility of property tax.

 

[sengsational]

Here is an article from the WSJ. Food for thought .Review & Outlook: The Attack on Self-Insurance - WSJ.com

Sounds like it's a threat that they might try to pass a law that would remove or reduce the ability of organizations that self insure to purchase stop loss policies. The really big organizations probably don't use stop loss policies, but the smaller ones would, I guess.

 

[foxfirev5]

Personally I'm taking a wait and see approach. Originally I planned on exiting next year but the future is questionable beyond the norm. I am seeing a mess for the next few years which will require a leap of faith at some point. I just don't know when.

 

[photoguy]

47Percent -- I don't disagree with your comments on Prop 13 and certainly anyone buying a home in california should be familiar with this law and what it implies for their property taxes.

My point though is that prop 13 creates winners for those who've owned their homes for 10, 20, and 30+ years. These folks are necessarily older and may be paying very little property tax (e.g., 1/4 or 1/3) of what they would pay in a market value approach. The people who have to "pick up the slack" are new homebuyers which would include all young first time purchasers.

Prop13 does give predictability to property taxes at the cost of widely varying tax bills for equivalent homes.

 

[aja8888]

47Percent -- I don't disagree with your comments on Prop 13 and certainly anyone buying a home in california should be familiar with this law and what it implies for their property taxes.

My point though is that prop 13 creates winners for those who've owned their homes for 10, 20, and 30+ years. These folks are necessarily older and may be paying very little property tax (e.g., 1/4 or 1/3) of what they would pay in a market value approach. The people who have to "pick up the slack" are new homebuyers which would include all young first time purchasers.

Prop13 does give predictability to property taxes at the cost of widely varying tax bills for equivalent homes.

Having lived in CA and owned a few homes in the 1980s and 1990s, I know the system, but most (if not all) other states do not have Porp 13 rules.

And I do remember that my property tax was held at 1.25 % of my purchase price in CA, but one must not forget that your tax statement is cluttered with additional charges in the form of bond repayments. And these additional charges were not insignificant.

 

[meierlde]

Having lived in CA and owned a few homes in the 1980s and 1990s, I know the system, but most (if not all) other states do not have Porp 13 rules.

And I do remember that my property tax was held at 1.25 % of my purchase price in CA, but one must not forget that your tax statement is cluttered with additional charges in the form of bond repayments. And these additional charges were not insignificant.

More states have a plan that essentially freezes the assessment the time you turn 65, so your property taxes don't go up except for tax increases. As compared to Ca however you can't transfer the value to an heir which from my understanding you can do in Ca.

 

[Milton]

property taxes don't go up except for tax increases.

?

 

[meierlde]

?

By that I mean that the assesed value of the property is frozen. It can't increase when property values increase. Better put except for tax rate increases the property taxes are frozen.

 

[Milton]

Thanks for the explanation.