Employers Must Make Changes Soon to Avoid O'care

[VolAgent]

I can see 9.5% of income for the family. While that is high in my opinion, you could conceivable pay it. But when it is 9.5% of income and that is just for the employee? That is just untenable. If the spouse doesn't work and there are children, you might be talking 20% of income or more just for insurance premiums.

 

[Ann H]

I can see 9.5% of income for the family. While that is high in my opinion, you could conceivable pay it. But when it is 9.5% of income and that is just for the employee? That is just untenable. If the spouse doesn't work and there are children, you might be talking 20% of income or more just for insurance premiums.

You're right. It's unaffordable. Many people (me included) think this should be changed. However.... it adds a huge amount to the taxpayer cost, causes CBO to recalculate, and is a political firestorm. It might end up being changed. After all, losing a subsidy for Mom & kiddos because Daddy has affordable employer coverage is not what reform advocates intended. It's just that the IRS and the Joint Committee on Taxation both ruled that the statutory language is that the employer's group plan is affordable if the self-only premium costs less than 9.5% (graded) of the family's MAGI. That's anti-family, and may well be changed. But doing so will add a huge cost to the subsidies & CBO calculation.

 

[Yagents]

I recall a seminar, I think Cigna's, where they gave an example of a family where the working spouse would take the employer coverage, the non working wife (and/or kids) would take subsidized exchange coverage, and the kids would qualify for medicaid.

 

[somarco]

300% of FPL chgs depending upon family size,

Family size and zip (or other geographic designation). 300% FPL in Boston is considerably more than 300% in Jackson MS.

When the true costs strike the community the first time (around September 2013 when premiums are revealed) there will be a big uproar.

That's for IFP. Most group plans won't see the changes until Nov - Dec and even then it is the employer who will be steamed, followed by employees during their open enrollment election period.

losing a subsidy for Mom & kiddos because Daddy has affordable employer coverage is not what reform advocates intended.

You say that as if you think those bozo's really thought this out.

 

[Ann H]

Following are a couple of good articles about this problem with the "self-only" premium.

Ambiguity in Health Law Could Make Family Coverage Too Costly - NYTimes.com

Below is a link to a good article by Avik Roy, which explains how this problem all came about, and what difficulty they are facing now if they want to change it (i.e. billions in extra cost). The nuts & bolts of this issue starts about halfway down the article under the subtitle How does Obamacare define "unaffordable" employer coverage? Read all the way to the bottom of the article that shows 5 updates, and you'll see that the IRS has confirmed the "self-only" premium rule.

Obamacare Bombshell: 4 Million People Who Thought They Were Gaining Coverage, Won't - Forbes

The last update to the article (update 70) says it best. (When it says the family does not qualify for a "tax credit" it means a subsidy):

UPDATE 4: Footnote 70 of the JCT's original March 21, 2010 report appears to correctly describe the narrow interpretation of the affordability provisions (emphasis added):

For example, if an employee with a family is offered self-only coverage costing five percent of income and family coverage costing 10 percent of income, the employee is not eligible for the tax credit in the Exchange because self-only coverage costs less than 9.5 percent of household income. The employee is not exempt from the individual responsibility penalty on the grounds of an affordability exemption because the self-only plan costs less than eight percent of income. Although family coverage costs more than 9.5 percent of income, the family does not qualify for a tax credit regardless of whether the employee purchases self-only coverage or does not purchase self-only coverage through the employer. However, if the family of the employee does not maintain minimum essential benefits coverage, the employee's family is exempt from the individual mandate penalty because while self-only coverage is affordable to the employee, family coverage is not considered affordable.​

Trust me, this is a bombshell problem, and I hope I'm wrong that it was changed and I didn't know about the change. But I've heard nothing about it being changed, just rumor that it is a huge problem.

 

[somarco]

Thanks for the link. Avik Roy is brilliant. Same for Michael Cannon at Cato.

The Roy article is from August, 2011 with a few updates as recently as April, 2012.

Not that this diminishes anything in the article but as you said in another thread, this is a moving target.

What was in the 2200 page law is different from the 13,000 (and counting) regs that have come out since then. Of course since Alibama was re-elected regs and edicts have been flying off the shelves like fresh doughnuts.

With regard to the discrepancies vs CBO, even though the CBO is allegedly non-partisan, when they are given a task they are not to think independently. They can only score what they are told to score and must follow the directions.

If the CBO is told to front load the revenue assumptions and backload the expenses (which they were) it makes Alibamacare look like it is revenue neutral . . . which of course is a joke.

This is a trillion dollar tax on almost everything that moves within the health care and health insurance arena combined with a $700 billion cut to Medicare and Medicaid funding.

But then it is not really a cut, it is projected savings by eliminating waste, fraud and abuse . . .

When Alibama and his 300 or so thieves (the Congress critters that voted for this mess) conceived this plan they didn't count on a lot of things that have resulted in a mine field.

They didn't count on 30+ states rejecting the idea of setting up an exchange.

They didn't count on SCOTUS telling the states they could opt out of Medicaid expansion.

They estimated about 16 million will initially buy from the exchange and the rest will keep what they have (especially employer group plans).

We can certainly speculate on how many group plans will be terminated, or employee hours reduced below the FT threshold making them ineligible for group insurance, but we won't really know until we get into the 1st or 2nd quarter of 2014.

Just like they underestimated the cost of PCIP, they have totally missed the mark on this thing. The one saving grace about PCIP is they also over-estimated participation, which is a good thing. PCIP is one of the few good things to come out of Alibamacare that no one knows about except mostly agents.

I have a feeling that folks who want to find something about the exchanges will be equally in the dark and the navigators answering the phones will be clueless.

Even with the exchange cloaked in secrecy, I would not be surprised to see 25 million+ seek coverage there.

The Hindenburg had a better chance of landing safely than this thing.

BOOM!

 

[hamben]

Has anyone heard how the premiums for the exchange plans will be paid and when clients will get the tax credit? I'm just wondering if the clients actually will be expected to spend $15,000 a year to get a $10,000 tax credit at the end of the Year.

 

[somarco]

Credits are supposed to be immediate and shown as a credit against the premium. My guess is it will work like Cash 4 Clunkers where the carrier will have to file a form to get the reimbursement from Uncle.

That is just a guess on the mechanics. If so, won't that be fun?

 

[Yagents]

When they apply for a plan, the subsidy will be known, and the carrier will be known. IRS will be sending the subsidy check directly to the carrier to match up with the client's additional premium. Nothing will be done on the clients tax forms.

 

[pcbinsurance]

I doubt the IRS would do this, but if someone owes the IRS for previous year's taxes, can they take the subsidy to help satisfy the past debt?