Discussion in 'Health Care Reform Forum' started by bluemarlin08, Mar 15, 2013.
Affordable coverage under PPACA, theoretically - Articles - Employee Benefit News
Sorry, but what are you confused about? Are you asking for help or making a comment?
Discussing this now is like debating which sport your unborn child will play in highschool.
Sit back, relax, and wait for the Gov't to spoon feed you info during your PPACA training.
In the words of one of my carrier reps "if PPACA was a plane, we're already powering down the runway, and they haven't bolted the wings on yet".
Well... with all due respect your carrier rep is being "spoon fed" the talking points all in an effort to keep you producing.... I call BS on that and have told my carrier reps as much.
We as agents and brokers have a responsibility to protect not only our clients but our own block of business
waiting round for CMS to "teach" us this stuff is comical... much like they release the MAPD docs to us 2 weeks b4 we start selling.... no, sorry... I choose to be proactive
You call BS on this law being in effect yet incomplete? It doesn't matter how proactive you are, right now you have to answer all questions with "as I understand", "until further notice", or "pending further rulings". nothing is concrete, and won't be until training starts. We can't even get our carriers to confirm if plans we write today will renew on 12/1 or their anniversary date.
I understand the confusion, Bluemarlin08, because that article was pretty poorly written. It is, however, accurate. If you review some of the subsidy rules, then go back and re-read the article, it will be less confusing.
To be eligible for a premium subsidy you must:
1) have income of 400% of FPL (Federal Poverty Level) or less
2) Not have adequate and affordable coverage from your employer, or be covered under another valid health plan like Medicare, Medicaid, etc.
So, what is adequate? It is a plan with the essential health benefits and minimum benefit levels, as defined by PPACA.
What is affordable?
1) For your employer's plan, it is based on the employee's share of the premium for the lowest-cost plan that the employer offers.
2) It is also based on the premium for the employee-only (called "self-only" by the Feds). The premium for family members doesn't matter for this particular calculation (note that it matters later for other calculations).
3) The employee's share of that premium must be less than 9.5% of income or else it is not considered "affordable".
3a) "income" technically means the entire family's AGI (Adjusted Gross Income), but in the article you linked they ignored this fact and took the "safe harbor" loophole that the IRS recently gave which says the employer doesn't have to know the entire family's AGI (Adjusted Gross Income), but only has to know the employee's income as shown on Box 1 of the employee's W2. Also note that the article mentioned that this "safe harbor" keeps the employer from "pay or play" penalties, but it doesn't apply to the employee. What that means is the employee still could technically get a subsidy if their full family AGI (not just box 1 on the employee's W-2) causes them to pay more than 9.5% of their family AGI for the employee's "self-only" premium. (Like, for instance if the spouse is self-employed and has a big loss that year, or if they have other deductions that cause their family AGI to be low.) But even if the employee gets a subsidy that way, it won't trigger a penalty for the employer, because of the "safe harbor" rule.
4) So..... if the employee's share of the premium for self-only (not counting the cost for dependents), for the lowest cost plan that the employer offers costs less than 9.5% of the employee's family AGI, then it is considered "affordable". And if it's less than 9.5% of the employee's income as shown in Box 1 of the W2, then the employer won't have "pay or play" penalties if the employee gets a subsidy.
Now, since we've defined "adequate" and "affordable", let's get back to subsidy eligibility.
1) If the employee has "affordable" coverage under his employer's group plan he is not eligible for subsidy.
2) His children are not eligible for subsidy either. It doesn't matter that the cost for the employee to add dependents to his group plan is expensive and maybe even is more than 9.5% of his family AGI. He's caught in the middle of a big PPACA mess.
3) His spouse MIGHT still be eligible for a subsidy. (Please forgive me for being sexist, but I will assume the employee is male and the spouse is female in my example below.)
This is an area where the article you linked didn't report quite accurately enough. If the spouse is ELIGIBLE FOR the group plan, she will not get a subsidy. If the employer decided to take another IRS loophole that was recently publicized and design their group plan so that spouses are not eligible, then the spouse might get a subsidy. This is where the article erred. In their example, they ASSUMED the employer group plan was not allowing spouses to be eligible. But, let's use their example and assume the employer will not allow spouses to be eligible for their group plan.So, in this example where the spouse is not eligible under her husband's employer's group health plan, then she can apply for subsidy. She just has to make sure she meets the other subsidy rules of being under 400% of FPL as based on full-family MAGI (Modified Adjusted Gross Income), and not being eligible for her own employer's group health plan which is both "adequate" and "affordable", or another valid plan such as Medicare, Medicaid, VA, Indian Health Services, etc. The article didn't reference this loophole, but the spouse who applies for subsidy still must pay her share of the premium, which is based on 9.5% of FAMILY income, not just her own income. That means she might technically be eligible for a subsidy, but get zero dollars from it.
Clear as mud?
Now, where does the other 9.5% and 8% figure come into play?
1) The other "9.5%" rule is the family's share of the premium when a subsidy is used. In the exchange, a family that gets a subsidy can be charged up to 9.5% of their family AGI for their share of the premium.
(Just to add to the confusion, note that this 9.5% rule is actually the top of a graded schedule that starts at 2% for low-income families and becomes 9.5% at the 300-400% of FPL level.)
And, to confuse a little more, this is where the total family AGI becomes important. Remember that in the employer plan calculation, above, 9.5% was based on the employee's income, but in the subsidy calculation this 9.5% is based on the entire family's AGI.
OK, let's confuse it a little more, it's technically the family's MAGI, which is Modified Adjusted Gross Income 2) The 8% rule is an exemption from the penalty/tax for the individual mandate that requires every American to carry health insurance. If the family (or any member of the family) decides to go without insurance, they don't have to pay the penalty/tax if the premium for the lowest-cost Bronze plan costs more than 8% of the family's AGI.
Well, actually, the spouse and children in the example above could have used another loophole in the law to be exempt from the individual mandate's penalty/tax that says they are exempt if they got dinged by the crazy PPACA rule that said "affordability" for the group plan was not based on the full family premium but on "self-only" premium for the employee.
Clear as mud in a Texas drought?
OMGGGG Ann and who is going to help people understand all this? The Great Community Organizer? This is a hell of a lot more confusing than the Medicare market and we are involved. They say no agent, this thing is DOA. Its so confusing its probably DOA anyway. How in the hell are agents, let alone the public informed on this? What a muther cluster F. This is what happens when a community organizer destroys a health market.
Naw... Health Insurance agents are toast, just like travel agents. This will be as easy as using Travelocity online.
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Actually, regarding subsidy eligibility, someone will probably come out with a computer program to calculate this for us. (Hello, Quotit and Norvax, are you listening?). For instance my husband is an accountant, and in yesteryear he had to practically memorize tax law, then use a pencil and calculator to process tax returns. Now he uses software, and just needs to keep very up-to-date on the law. It will be the same for us. Today's online calculators are too simplistic, but someone will design one that takes all the details into consideration, and allows us to enter the data and produce an accurate outcome. Then we can play with that data to see which way the client should go with subsidy application.
Thank you Ann, as usual, your posts make the mud a little clearer. I have spoken recently to two of my main carriers and for some reason I don't really believe their optimism regarding the agents role and compensation. One said comp is going to be the same as currently paid, but I agree with tater, they may just be parroting the company mantra
I don't know the market in your state, but in our state 80% of current business is agent driven, and the 20% of the "direct to carrier" applications don't stay on the books long anyway. They need us, at least for the short-run. I expect a 3 year term, and then we are tossed out.
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