Nice summary from Ways and Means on proposed changes to ACA released today...

[LARS]

https://waysandmeans.house.gov/wp-content/uploads/2017/03/03.06.17-Section-by-Section.pdf

 

[ownyourfuture]

Interesting, but I'll wait for the two thousand page version before judging it

 

[ER Eddie]

How would this compare to the ACA subsidies?

SECTION_15: REFUNDABLE TAX CREDIT FOR HEALTH INSURANCE
This section creates an advanceable, refundable tax credit for the purchase of state-approved, major medical health insurance and unsubsidized COBRA coverage. To be eligible, generally, an individual must not have access to government health insurance programs or an offer from any employer; and be a citizen, national or qualified alien of the United States, and not incarcerated.

The credits are adjusted by age:
• Under age 30: $2,000
• Between 30 and 39: $2,500
• Between 40 and 49: $3,000
• Between 50 and 59: $3,500
• Over age 60: $4,000

The credits are additive for a family and capped at $14,000. The credits grow over time by CPI+1. The credits are available in full to those making $75,000 per year ($150,000 joint filers). The credit phases out by $100 for every $1,000 in income higher than those thresholds.

 

[ERD50]

Thanks for posting, had not seen that. Seems pretty readable and concise. I guess a follow up that would help me is a few specific cases, like how a 25 YO single would be affected and what choices they have, and the same for a few different common ages and family sizes. From that document alone, I had a hard time putting the pieces of the puzzle together.

Maybe that will be out soon.

-ERD50

 

[pb4uski]

How would this compare to the ACA subsidies?

At first blush, it looks like it might be more beneficial for some, will likely reach further into the middle class than ACA subsidies and may be detrimental for those in high COL areas and more beneficial to those in low COL areas.

If it gets to the point of ever being scored by the CBO it will be interesting to see how the aggregate cost compares to Obamacare subsidies.

It'll definitely be simpler in that there will be no need to reconcile what you got based on your estimated income to what you should have got based on your actual income.

Off the cuff, I think I will come out way ahead. There are many here who are minimizing their income for ACA credits and they can junk that and move on to low-cost Roth conversions.

 

[zinger1457]

Did I read it correctly that the current ACA subsidies will stay in effect until 2020?

 

[LARS]

Did I read it correctly that the current ACA subsidies will stay in effect until 2020?

Yes.

 

[pb4uski]

Not in the link... but in news report on the proposal:

To encourage people to buy coverage, the plan allows insurers to charge a 30 percent penalty to people who let their insurance lapse, and then try to buy a new policy.

 

[LARS]

How would this compare to the ACA subsidies?

Depending on income, ACA subsidies are orders of magnitude higher.

 

[MRG]

Not in the link... but in news report on the proposal:

I think that is how this plan attempts to fix people jumping in and out of coverage. Seems to make sense.

I spent many years in MO. so I will wait for the rest of the story.

 

[scrabbler1]

Will the 30% penalty (along with the age-based tax subsidies) be as effective as the individual mandate to get the younger, healthier people to buy health insurance? Without enough of the younger, healthier people buying HI, premiums will be high, causing the healthier people in the system to drop out a.k.a. a death spiral.


Are age-based subsidies fairer than income-based subsidies? Younger people with lower incomes receive high subsidies today because of their income. They will receive lower subsidies under this proposal and give them more incentives to stop buying HI.

 

[daylatedollarshort]

How would this compare to the ACA subsidies?

We would lose about $10K in subsidies. And with a pricing band change of 5 to 1 instead of 3 to 1, our premiums would increase over $13K a year. So over a $23K hit to our retirement budget from those two items, plus any annual healthcare inflation or post ACA fallout type premium increases. We can potentially make up some of that with the HSA limit increase and tax savings on Roth conversions.

 

[Bamaman]

As a retiree, I don't like thinking about such complicated issues.

The ACA makes one glad if they've reached 65 and gone on Medicare with a good supplement.

 

[marko]

As a retiree, I don't like thinking about such complicated issues.

The ACA makes one glad if they've reached 65 and gone on Medicare with a good supplement.

I've got 72 days to Medicare!

 

[conversationalphrase]

I think this is an important point:

"SECTION_02: ADDITIONAL MODIFICATIONS TO PREMIUM TAX CREDIT
Under current law, qualified health plans must meet certain requirements for households to be eligible for the premium tax credit. This section amends those requirements to make available premium tax credits for the purchase of “catastrophic-only” qualified health plans and certain qualified plans not offered through an Exchange. "

If I'm reading it correctly it should bring back catastrophic only health insurance, something that is personally very attractive.

And this reads that a married couple, over age 60, with less than $150K income will get $8,000 per year tax credit:

"This section creates an advanceable, refundable tax credit for the purchase of state-approved, major medical health insurance and unsubsidized COBRA coverage. To be eligible, generally, an individual must not have access to government health insurance programs or an offer from any employer; and be a citizen, national or qualified alien of the United States, and not incarcerated. The credits are adjusted by age:
• Under age 30: $2,000
• Between 30 and 39: $2,500
• Between 40 and 49: $3,000
• Between 50 and 59: $3,500
• Over age 60: $4,000
The credits are additive for a family and capped at $14,000. The credits grow over time by CPI+1. The credits are available in full to those making $75,000 per year ($150,000 joint filers)."

Finally with the higher contribution limits to an HSA, it seems a married couple can withdraw up to $13,100 from a tax deferred account, such as an IRA or 401k, deposit in an HSA and protect the withdrawal from taxation.

Disappointingly I don't read anything that fundamentally will reduce the cost of health care.

 

[DEC-1982]

What I don't get is what this bill is going to cost (in billions of dollars). And will the number of insured actually go up, stay the same or be reduced for whatever reason?

 

[MichaelB]

Just a clarification. This is not a bill, it's more like a blueprint to write specific bills for consideration, and that is currently underway. Specifics, coverage and cost analysis will become available once the bills are released and the CBO has an opportunity to look at them.

Edit to add - here's a copy of the bill https://www.dropbox.com/s/4f82iy7d92u0c3a/AmericanHealthCareAct.pdf?dl=0

It would be helpful to the discussion to keep out the snark and partisan political considerations.

 

[FIREmenow]

What I don't get is what this bill is going to cost (in billions of dollars). And will the number of insured actually go up, stay the same or be reduced for whatever reason?

Therein lies the problem. Nobody knows. If anyone says they know, they're lying. All that can be done is to try something, or several somethings, and hope it has a minimal impact and does minimal damage if it was the wrong approach.

 

[donheff]

Will the 30% penalty (along with the age-based tax subsidies) be as effective as the individual mandate to get the younger, healthier people to buy health insurance? Without enough of the younger, healthier people buying HI, premiums will be high, causing the healthier people in the system to drop out a.k.a. a death spiral.


Are age-based subsidies fairer than income-based subsidies? Younger people with lower incomes receive high subsidies today because of their income. They will receive lower subsidies under this proposal and give them more incentives to stop buying HI.

The danger here is that young people with little savings and little to lose will forgo HI, wait for years, and enroll in a top shelf plan if they develop a serious chronic illness with a minuscule penalty -- the 30% if for one year. Unfortunately the resulting risk segregation could drive up premiums for all or drive more insurers out of the markets.

 

[TimSF]

Helpful summary, but it is still too early in the process for me to get worked up about what might happen. However, when the details finally emerge and become law, I will know where to come for informed analysis on how the new law affects my ER and how to adjust my strategy going forward. Thanks very much to this community and to Early Retirement.org!

 

[scrabbler1]

The danger here is that young people with little savings and little to lose will forgo HI, wait for years, and enroll in a top shelf plan if they develop a serious chronic illness with a minuscule penalty -- the 30% if for one year. Unfortunately the resulting risk segregation could drive up premiums for all or drive more insurers out of the markets.

Yup. That's called Adverse Selection. I agree the penalty is vastly insufficient to get the younger, healthier people to buy HI while they are younger and healthier. You end up with a risk pool of older, sicker people paying very high premiums.

 

[donheff]

The scariest thing to me (from an ER "what will be available perspective") is that this isn't likely to go anywhere so more uncertainty will result. There is no question that this is a tweak - probably because it is limited by the budget reconciliation process - so many members will reject it out of hand. The pressure to get something dramatic done may force the resurrection of the idea of a plain vanilla all out repeal bill with a plan to replace within X months. And that would leave the entire individual HI market in chaos.

 

[Taxman59]

I thought it was interesting that there was about 3 pages on what a State can do to terminate a Lottery winner from the State subsidized Medicaid rolls. Is that really a big problem in the overall scheme of things? Based on the summary, I stand to lose about $6k of subsidy and significant cost sharing $$. We shall see what happens. I expect that this will take effect in about 5 years (politics being what they are) and I will only have to deal with it for about 3 years.

 

[GalaxyBoy]

By the end of the month I need to decide between my three choices for insurance. DW can add me to her retiree policy (most expensive), I can go COBRA and kick the can down the road (a bit cheaper), or buy a policy on the exchange and deal with the uncertainty (by far the cheapest option).

So thanks for posting the link. I have a lot of homework to do and this will help.

 

[ERD50]

The danger here is that young people with little savings and little to lose will forgo HI, wait for years, and enroll in a top shelf plan if they develop a serious chronic illness with a minuscule penalty -- the 30% if for one year. Unfortunately the resulting risk segregation could drive up premiums for all or drive more insurers out of the markets.

But isn't that happening now, because the 'penalties' are so light?

I don't know if this 30% approach is better or worse than the current penalty process, I'm not sure if anyone can know, and maybe even the CBO report won't tell us - that 10 year outlook doesn't capture longer term effects, which aren't even that long term when some provisions are phased in over years to begin with.

And is the 30% surcharge for one year only? That's what people say in this thread, but that isn't clear to me one way or the other in what I've read so far. Anyone have a link?


-ERD50