Employers Must Make Changes Soon to Avoid O'care

[AllenChicago]

Has anyone seen this article on the states who refused the exchange?

Dislodging Obamacare | Michael F. Cannon | Cato Institute

This article contains so much new (to me) information that I'm not sure if it's stating fact, or just "what if's". If Mr. Cannon's assumptions are TRUE, then the major ACA 2014 provisions will never become reality. Obamacare will be no more than what we have today. -ac

 

[bluediamond]

This article contains so much new (to me) information that I'm not sure if it's stating fact, or just "what if's". If Mr. Cannon's assumptions are TRUE, then the major ACA 2014 provisions will never become reality. Obamacare will be no more than what we have today. -ac

That's the way I felt after reading it. I received from a health insurance forum on linkedin, but I have never heard of this before.

 

[somarco]

The full Monty of Obamacare is not yet a reality. I believe there are more legal, technical and financial hurdles before we get to 1/1/14

 

[SportsNut]

But, if you use REAL numbers, it doesn't work out this clean. The numbers you used were made up to make your story work.

If you take a 30 year old single adult that makes $35K a year, rerun your numbers, you'll find the individual gets screwed. Its better for the EE if the ER keeps coverage.

Why is this important?

Someone making $25K has never been a good candidate to sell health insurance to anyway. If they have coverage through work, it is probably a very limited plan. Someone making $35K is probably more the norm, at the beginning of being able to afford a health policy on their own and actually is falling off of subsidies (depending on age).

Now, can you make a commission selling a plan on the exchange that involves subsidies?

Dan

My thoughts EXACTLY... in fact, if you escalate the income from 35K to 50-60-70- or 80K and rerun the what-if's... is really the scenario that I was describing, not the 25K annual ioncome or even the 35K income either.

Still way too much unknown here but there doesn't appear to be one group of folks that benefit here other than the lower incomes. While maybe noble, it will be EXPENSIVE and will either dillute coverage of others, or possibly eliminate some that are currently covered and convert them into the new uninsured class... The 50-80K income (non-subsidized) individual that may decide to pay the fine because they can't afford the new cost of coverage. Just a hunch here.

*These current 50-80K income folks who are now receiving ER paid coverage with a relatively low oop matching for family coverages... and eff 1/1/14 the matrix will change for them. Also, consider the impact on the economy overall when the discretionary income of middle America is changed due to greater oop for health ins coverage for those that pay. If it turned out to be 1-2K more oop per family for health ins, what immediate impact would this be on their spending habits...? The new fiscal cliff-hangover is coming 1/1/14, IMO.

 

[djs]

Actually, it won't happen 1/1/4 for families. The average family will need something that causes an issue, such as a broken bone on a weekend with one of the kids.

Their current group plan might cover that with a few hundred out of pocket. Their new exchange plan will cover it at 60% acturial value (whatever that actually means), leaving them a few thousand dollars out of pocket, most likely.

I'm stuck on exchange plans. I haven't figured out how they actually work yet. I haven't put anytime into figuring them out, since anything now isn't likely to be much of reality by implementation, but, its such a moving, undefined target.

Let me ask, is there an OOP cap on an exchange plan?

Dan

 

[somarco]

*These current 50-80K income folks who are now receiving ER paid coverage with a relatively low oop matching for family coverages... and eff 1/1/14 the matrix will change for them.

$50 - $80k gross = $25 - $40k AGI x 9.5% = $2375 - $3800 max they can pay before HHS says plan is "unaffordable".

So . . . does the employer up their contribution to make the plan affordable or just drop it?

 

[Ann H]

$50 - $80k gross = $25 - $40k AGI x 9.5% = $2375 - $3800 max they can pay before HHS says plan is "unaffordable".

So . . . does the employer up their contribution to make the plan affordable or just drop it?

I agree that this is a moving target as another poster said, and it's hard to even quote premiums and subsidies when so many factors are still undecided.

My husband is an accountant, so I went to him to make sure of my facts before stating them here.

The subsidies are based on Modified Adjusted Gross Income (MAGI), so a few people will have some amounts to add back to AGI, but most people won't.

The calculation of AGI will be pretty straightforward, and most people who are not self-employed have very few deductions to determine AGI. Most of the deductions people have on their 1040 are itemized deductions that come AFTER AGI is calculated. Therefore, on a $50,000 income, most people would have $45-$50,000 AGI, and on $80,000 income, most people would have $70-$80,000 AGI. Self employed people fare better with AGI because you get to deduct about 1/2 of the self-employment tax, and you can get a self-employed health insurance deduction, which will be the largest of the deductions that determine AGI. And, of course, there are deductions that apply before determining the gross income, but most non-selfemployed people with incomes of $50 to $80K won't have many of those deductions either.

So, for the most part, you start with gross income, deduct the following items, then you have AGI. Itemized Deductions and Personal Exemptions come after AGI. Following are the deductions from the gross that determine AGI:

Education expenses
HSA deduction
Moving expenses
Deductible part of self-employment tax
Self-employed health insurance deduction
Penalty on early withdrawal of savings
Alimony
IRA deduction
Student loan interest deduction
Tuition and fees
Domestic production activities deduction.

 

[somarco]

Thanks Ann.

My mouth said AGI but my brain was thinking taxable.

Even still, this is information the employer will not know unless they ask each employee for a tax return.

Won't that be fun?

So let's take that $50k employee with AGI of $45k, BUT . . . net take home pay is $30k ($2500/mo).

9.5% of $45k divided by 12 = $356 per month.

That is 14% of take home. Not many employees will pony up that amount and very few employers will be willing (or able) to make health insurance . . . affordable

 

[djs]

Is the 9.5% based on the bronze plan coverage or the platinum? Or does it matter?

I figure its bronze, but then, I will admit, I don't know.

Dan

 

[SportsNut]

So let's take that $50k employee with AGI of $45k, BUT . . . net take home pay is $30k ($2500/mo).

9.5% of $45k divided by 12 = $356 per month.

That is 14% of take home. Not many employees will pony up that amount and very few employers will be willing (or able) to make health insurance . . . affordable

Here is what is being overlooked...

Affordable Healthcare is defined [paraphrased] as the lowest ER offered plan to EE (only) the EE oop prem must be 9.5% or lower of the HOUSEHOLD INCOME. So almost any plan will be deemed affordable, wouldn't you think?

Your calculations aren't addressing what happens when this EE has a family... or when he wants the better plan (Platinum). His effective oop spending for family covg could place him well over 22% or more oop of net income. Tilt... ding, ding, ding... the machine is broken.

"U.S. Treasury Department in August 2011 would deem an employer's offer affordable if the employee's share of the premium for the cheapest self-only plan available to them represented 9.5% or less of the employee's annual household income." Link here **Admittedly this info dates back 18 months so not sure if there has been a revision or not, but it sounds like what I have heard echoed of late.