IRS Says, Boom!

[pahealthquotes]

I SURE HOPE THEY PAY US ON A PERCENTAGE OF PREMIUM RATHER THAN PER MEMBER PER MONTH!!! You can pay out a lot of commission on a 20% administrative margin of MLR when you're talking about premiums like that!

Since only the highly subsidized can afford this, I think I'll set up shop in the Wal-mart parking lot.

Bingo! Look for carriers to pay PEPM.
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One thing I dont think the carriers fully understand is how powerful we actually are. Think about how we can direct the flow of very health applicants to very sick ones.

 

[somarco]

One thing I dont think the carriers fully understand is how powerful we actually are. Think about how we can direct the flow of very health applicants to very sick ones.

They manage to get a lot of sick folks on their own without our help. At least for now, they waste a lot of time and resources on folks with 2 ht attacks and an O2 tank going direct and filling out applications.

Once GI is in play they will still have to take the folks that buy outside of the exchange, but they really don't want a sickie that is getting coverage for free or almost free.

Carriers aren't that smart, but they prefer to write business anywhere than on the exchange. That is why the exchange plans will be structured in a way that the policyholder will end up with a lot of out of pocket for wandering in to a non-par office and ordering an Rx that is not on the formulary.

By the time the dingo realizes his exchange plan is a piece of crap he has to keep it until the next open enrollment.

 

[AllenChicago]

Good Article out today at Forbes online. There are now NINE ways for individuals to be exempted from the ObamaCare mandate and the associated Penalty-Tax.

Story: HHS and IRS Release Proposed Regulations on Your 'Shared Responsibility' - Forbes

Some of those would be hard for the IRS to disprove...like a Religious exemption. Even though I will have group health insurance, I might file for an exemption just to keep from filling out another silly IRS form each year to prove that our family has Qualified Health Coverage.
-ac

 

[Ann H]

With every exemption a little piece is chipped away from the individual mandate's role as guardian of the incentive to buy insurance. I especially like the exemption for those who cannot find insurance that costs less than 8% of their family income, while the subsidy rules say up to 9.5% for the family, and the employer-responsibility pay or play penalties say up to 9.5% for self-only premium. Nutty math.

 

[AllenChicago]

With every announcement from the IRS, CMS, HHS, CBO, White House, etc., I become even more convinced that the Affordable Care Act is designed to make Americans BEG for Congress to make subsidized Medicare available to every American, from womb to grave. The +100% premium increases coming in 10 months will make "Medicare for All" a reality in quick order!

President Obama will be able to pull Bush's "MISSION ACCOMPLISHED!" banner out of storage and hang it on the front of the White House.
-ac

 

[Yagents]

With every exemption a little piece is chipped away from the individual mandate's role as guardian of the incentive to buy insurance. I especially like the exemption for those who cannot find insurance that costs less than 8% of their family income, while the subsidy rules say up to 9.5% for the family, and the employer-responsibility pay or play penalties say up to 9.5% for self-only premium. Nutty math.

You know, I've been thinking about this, and this 8% rule will mean many won't buy health insurance since they won't be penalized, and only the lower middle class will pay the penalty, or the super rich. Why?

1. If you're above 400% FPL, and a policy cost $15,000 a year for a family of 4, then someone making less than $187,000 won't have to pay the penalty.
2. If you make 250-399% of poverty level, and you get a subsidy, that brings it down to 9.5% of your income, you won't have to pay the penalty.

But someone making between 150-250% of FPL (low middle class), will get subsidized insurance down to 3-8% of their income. If they don't buy insurance, they WILL pay the penalty

Where am I going wrong?

 

[Ann H]

You know, I've been thinking about this, and this 8% rule will mean many won't buy health insurance since they won't be penalized, and only the lower middle class will pay the penalty, or the super rich. Why?

1. If you're above 400% FPL, and a policy cost $15,000 a year for a family of 4, then someone making less than $187,000 won't have to pay the penalty.
2. If you make 250-399% of poverty level, and you get a subsidy, that brings it down to 9.5% of your income, you won't have to pay the penalty.

But someone making between 150-250% of FPL (low middle class), will get subsidized insurance down to 3-8% of their income. If they don't buy insurance, they WILL pay the penalty

Where am I going wrong?

Your math is spot on. And this rule, as well as the shocking premiums for those who are not richly subsidized will cause an unusual "uninsured class" that will no longer be the low-income folks.

I can now see why CBO says a small percentage of people will actually pay the penalty for not buying insurance.

Some of these things make me understand why insurers are treading cautiously about entering the exchange. Can you see the adverse selection thermometer reaching boiling point yet?

 

[timsip]

Because this seems too outrageous even for the Obama Administration, and before I share with others outside of this forum, I want to make sure I get this right....the tax subsidy for purchasing health insurance for those that fall under 400% of FPL is designed to ensure you don't pay more than 9.5% of your income toward health insurance, but under the rules released on January 31st, if your premiums cost more than 8% of your income even after subsidies, you can choose not to purchase health insurance because it has been deemed unaffordable by IRS rules thus in his own bill, he has stated that even with the Affordable Care Act, this isn't making insurance affordable and will exempt millions of people just like in today's market where health insurance isn't affordable to millions of people? Please tell me I am missing something because this is making my head hurt!

 

[Ann H]

Because this seems too outrageous even for the Obama Administration, and before I share with others outside of this forum, I want to make sure I get this right....the tax subsidy for purchasing health insurance for those that fall under 400% of FPL is designed to ensure you don't pay more than 9.5% of your income toward health insurance, but under the rules released on January 31st, if your premiums cost more than 8% of your income even after subsidies, you can choose not to purchase health insurance because it has been deemed unaffordable by IRS rules thus in his own bill, he has stated that even with the Affordable Care Act, this isn't making insurance affordable and will exempt millions of people just like in today's market where health insurance isn't affordable to millions of people? Please tell me I am missing something because this is making my head hurt!

Grab that aspirin, Timsip, because the headache won't go away. You are correct. However, there is one issue I want to research a little further. In some documents, it references 8% of self-only coverage. But for those in the exchange and not on a group plan, it does not reference self-only coverage. Let me give you an example from a document dated 7/2/2012 from the Congressional Research Service

http://www.fas.org/sgp/crs/misc/R41331.pdf - quote is from page 3.

Certain other individuals (and their dependents) may be exempt from the penalty, including any individual whom the Secretary of HHS determines to have suffered a hardship with respect to the capability to obtain coverage under a qualified health plan. In addition, individuals (and their dependents) whose household income is less than the filing threshold for federal income taxes for the applicable tax year will not be subject to a penalty, as well as those whose required contribution for self-only coverage 10 for a calendar year exceeds 8% of household income. After 2014, the 8% will be adjusted to reflect the excess rate of premium growth above the rate of income growth for the period.​

When you look at footnotes 10 it says:

Required contribution is defined as (1) in the case of an individual eligible to purchase minimum essential coverage through an employer (other than through the exchange), the portion of the annual premium that is paid by the individual
for self-only coverage, or (2) for individuals not included above, the annual premium for the lowest cost bronze plan available in the individual market through the exchange in the state in which the individual resides, reduced by the amount of the premium credit for the taxable year.​

So.... the footnote seems to say that the 8% is self-only coverage for employer group premium, but I'm unsure about the second part which is for individuals in the exchange or in the individual market. It doesn't reference families.

 

[somarco]

Some of these things make me understand why insurers are treading cautiously about entering the exchange. Can you see the adverse selection thermometer reaching boiling point yet?

The only motivation for offering plans on HIX is the ability to sell outside of HIX. But you can bet carriers, which as a group are not that smart, would rather not have anything at all to do with HIX consumers.

One thing that concerns me is the two tier system Alibamacare is creating. It almost reminds me of the welfare system which provides you a "path to economic security" for doing nothing, but as soon as you try to better your situation they cut you off. Not gradually, just BOOM.

Same with the "subsidy" program.

If you earn $X you can get "rich" subsidies, but go over that threshold and you get almost nothing. Earn even $1 over 400% of FPL and it doesn't matter if your coverage meets affordability guidelines or not. You are simply screwed.

Someone earning 200% or less of FPL qualifies for affordable coverage or they get a pass.

Someone earning xs of 400% is SOL.

Welcome to Amerika!