Potential major good news on ACA premiums

[Big_Hitter]

Well, the plan was to actuarily overcharge healthy people to subsidize others, particularly the preexisting condition folks. The healthy people figured this income redistribution scheme and decided not to participate.

the individual mandate penalty is what got nerfed; anyway my guess is that lots of folks will be in the aca plans going forward- 8.5% of taxable income will be a fraction of what some pay for silver plan coverage, it certainly is for me

 

[rodi]

Back to the topic of the OP (vs ACA good/bad).

If I'm on an ACA plan with a VERY small subsidy... will I automatically get a reduction in premium? Or do I get it at tax time? Do I have to re-sign up during this open enrollment, even if I like my plan? The article didn't seem to address this. Based on the figures in the article this is worth some $$ for us.

 

[Dtail]

Back to the topic of the OP (vs ACA good/bad).

If I'm on an ACA plan with a VERY small subsidy... will I automatically get a reduction in premium? Or do I get it at tax time? Do I have to re-sign up during this open enrollment, even if I like my plan? The article didn't seem to address this. Based on the figures in the article this is worth some $$ for us.

Larger subsidy for me, but was wondering the same concept and yes I keep my MAGI under 150% of FPL.

 

[Big_Hitter]

Based on the figures in the article this is worth some $$ for us.

big time - a 60 year old retiree who is over the aca cliff could save thousands on medical premiums, easily

 

[SecondCor521]

If I'm on an ACA plan with a VERY small subsidy... will I automatically get a reduction in premium? Or do I get it at tax time? Do I have to re-sign up during this open enrollment, even if I like my plan? The article didn't seem to address this. Based on the figures in the article this is worth some $$ for us.

Depends on which exchange you're on.

I have a state exchange, and they have not - as far as I know - yet announced their plans.

Other state exchanges and the federal exchange are working on plans to automatically adjust everyone's subsidy for them.

At the very least / latest, you would presumably get the difference back at tax time on your 8962, as always.

Separately from the ARPA changes, there is an open enrollment, so you can change your plan if you want, but if you do nothing you'll keep your current plan.

That's my understanding, anyway.

 

[cathy63]

Back to the topic of the OP (vs ACA good/bad).

If I'm on an ACA plan with a VERY small subsidy... will I automatically get a reduction in premium? Or do I get it at tax time? Do I have to re-sign up during this open enrollment, even if I like my plan? The article didn't seem to address this. Based on the figures in the article this is worth some $$ for us.

Covered CA has already said they are trying to automatically adjust premiums starting in May. You would have to get the additional Jan-Apr credits when you file your 2021 tax return.

 

[Calico]

It looks like you can change thru May 15th. However be careful as deductibles etc will start from $0 again so if you already use a lot you will start from scratch.

Update: It was announced earlier today that the special enrollment period has been extended to August 15, 2021.

 

[GLM]

materially increasing the size of the group may actually work to keep premiums down - originally, ACA's individual mandate was supposed to do that, but it got nerfed

Excellent point.

 

[Poopycat]

I'm sure there are a great many people who are glad they can keep their kids on their workplace insurance until age 26. That's also part of the ACA. And the whole not-getting-refused thing that enabled a lot of people to retire, when they otherwise could not because of pre-existing conditions.

Oh and the lifetime cap thing. So many provisions in the law, but everyone tends to equate the ACA with its marketplace plans, when that's really less than half of the legislation.

The inability to refuse coverage for people with pre-existing conditions is the reason I am able to consider retirement at age 52 instead of having to work into my 60’s just to receive employer-based insurance. I’m very grateful that the ACA was passed, regardless of its imperfections.

 

[ncbill]

now if they'd only fix the family glitch...

 

[dak2018]

Well, the plan was to actuarily overcharge healthy people to subsidize others, particularly the preexisting condition folks. The healthy people figured this income redistribution scheme and declined to participate.

I am confused - is that not how literally all insurance plans work? People who do not experience losses ( in this case health care costs ) pay for the people who do experience losses. Health insurance is a strange beast - there are very few people indeed that get through life with no medical expenses, compared with , say, people who never have their house burn down.

 

[scrabbler1]

The one way I believe there is a subsidy within the rating system is with age. I recall, and it has been discussed here before, is how the age curve has a limit of 3x for the oldest ages (~64) to the youngest age (~18). It was supposed to be 5x (and some states have an even lower cap). So in order to keep the total generated premium unchanged, the older people pay less while the younger people pay more to offset it.

 

[Dtail]

The inability to refuse coverage for people with pre-existing conditions is the reason I am able to consider retirement at age 52 instead of having to work into my 60’s just to receive employer-based insurance. I’m very grateful that the ACA was passed, regardless of its imperfections.

+1

 

[Big_Hitter]

Back to the topic of the OP (vs ACA good/bad).

If I'm on an ACA plan with a VERY small subsidy... will I automatically get a reduction in premium? Or do I get it at tax time? Do I have to re-sign up during this open enrollment, even if I like my plan? The article didn't seem to address this. Based on the figures in the article this is worth some $$ for us.

https://www.healthcare.gov/more-savings/

found some answers

 

[OldShooter]

I am confused - is that not how literally all insurance plans work? People who do not experience losses ( in this case health care costs ) pay for the people who do experience losses. Health insurance is a strange beast - there are very few people indeed that get through life with no medical expenses, compared with , say, people who never have their house burn down.

Not exactly.

To oversimplify* a bit, underwriters will split clients into classes and actuarially estimate what the the claims from that class will be. From that they will add a fudge factor for uncertainty in the estimate and will add a profit factor to come up with a price. Basic term life insurance is a good example. A 25YO will get a lower price than a 65YO buyer because the actuarial risk of his/her dying during the year is lower.

What you're thinking of is that since the price is based on probabilities, all the members of that class are sharing the risk of a loss. If one of the 25YO dies, the premiums paid by the other 25YOs are the money the insurance company uses to pay the dead guy's beneficiaries. If the underwriters have done their job precisely, the total of all the money paid in for that insurance will be greater than the amount paid out by the amount of the planned profit.

The thing the ACA tried to do is to add an extra charge the healthiest customers' premiums and use that overcharge to subsidize other customers' risk premiums. In the term insurance example, it would be like the 25YO being overcharged and the 65YO being charged less than his risk calculation would call for. Much of this discount was due to accepting customers with preexisting conditions without making those customer pay the real cost of their insurance. There really is a free lunch for those folks. The actuarially healthier folks at the next table paid. Or at least that was the plan.

Now you can argue whether this kind of cross-subsidy is desirable or not but the fact is that the cohort that the government planned to overcharge figured out the scam and refused to play the game.

-----------------------
* the insurance companies also earn interest on the premiums paid because the payouts happen after the payments come in. That float has been a big upper to insurance companies' P&Ls, but not so much lately with bond interest at zero.

 

[4legsgood]

I'm sure there are a great many people who are glad they can keep their kids on their workplace insurance until age 26. That's also part of the ACA. And the whole not-getting-refused thing that enabled a lot of people to retire, when they otherwise could not because of pre-existing conditions.

Oh and the lifetime cap thing. So many provisions in the law, but everyone tends to equate the ACA with its marketplace plans, when that's really less than half of the legislation.

+1, my 24 yo daughter and most of her same age friends are on parental insurance.

I really like the removal of the cliff. I think it will help a lot of lower and middle wage working families.

 

[Time2]

I recommend checking your math. You may need to move the decimal point a couple of places.

Originally Posted by Time2

Ok, so it's 0.0345% vs 0.0242% of the entire US population that is covered
with an ACA policy. That small amount of people could have been taken care of better with less money rather than this massive program.

Yes my math was correct, but I didn't adjust when I made it a percentage.
3.45% vs 2.42%, so a lot of nonsense went on to provide for a very small
percentage of the population. My point still stands.

 

[anothercog]

Wow. I hadn't heard of this change until now. This could have a big impact on me though who knows what the law will look like in another 6 years when I'm ready to retire. I'm still holding out hope they will lower Medicare eligibility to age 60.

 

[Librarian]

OK...DH is retiring this year; I have 2 yrs. I will keep our current insurance as our 2 youngest can still be on it.
I believe our BC/BS retirement rate is about $1100/mo. after the kids drop off (we expect that in 2 years). Our deductibles aren't too bad. (sry, exact numbers escape me)
If there is an 8.5% cap, that puts us at under $650/mo--but what kind of deductibles could we be looking at?
We have had BC/BS our whole lives with zero issues. Are ACA providers as good to work with?

 

[scottpush]

+1, my 24 yo daughter and most of her same age friends are on parental insurance.

I really like the removal of the cliff. I think it will help a lot of lower and middle wage working families.

It sure helps me a ton. No worrying about the damn cliff anymore.

 

[USGrant1962]

OK...DH is retiring this year; I have 2 yrs. I will keep our current insurance as our 2 youngest can still be on it.
I believe our BC/BS retirement rate is about $1100/mo. after the kids drop off (we expect that in 2 years). Our deductibles aren't too bad. (sry, exact numbers escape me)
If there is an 8.5% cap, that puts us at under $650/mo--but what kind of deductibles could we be looking at?
We have had BC/BS our whole lives with zero issues. Are ACA providers as good to work with?

In most states BC/BS is one of the major ACA providers. Unfortunately, ACA plans generally have big deductibles compared to corporate/COBRA plans.

Anyway, you need to shop your own state's marketplace to see what's what.

 

[gooddog]

I'm from the government and here to help. What could go wrong.

 

[SecondCor521]

My state just announced that they are auto-adjusting the APTC starting April 1st, no action needed by the subscriber. Nice.

 

[Packman]

What I still don't understand is what happens when only one of the two married people filing a joint tax return needs the ACA insurance. Does only one person still pay 8.5% of MAGI, whereas if both parties needed the insurance it would still be 8.5%?

 

[GLM]

Yep

What I still don't understand is what happens when only one of the two married people filing a joint tax return needs the ACA insurance. Does only one person still pay 8.5% of MAGI, whereas if both parties needed the insurance it would still be 8.5%?

That's what I am seeing as DH starts Medicare this fall.

However the impact is somewhat lessoned as we use bronze plans and the % is based on the second lowest cost silver plan.