Affordable Care Act Scene 2 - Insurance Premiums

Parent Cafe
5881

<p>Bay, a lot of people who buy on the individual insurance market are self-employed as I am, or else have employment with unpredictable hours and compensation. We don’t know how much money we will make in 2014, and we aren’t going to know until the end of the year. If we underestimate our income and take an advanced subsidy, we could be faced with a huge tax bill in 2014.</p>

<p>We self-employed also pay quarterly taxes, so it might make more sense for us to pay the full premium, but adjust the amount we pay in quarterlies to compensate if our income is lower than expected. That achieves essentially the same benefit for us, albeit on a quarterly rather than monthly basis. </p>

<p>I don’t think that most people who are at or near the 400% FPL cutoff would be unable to buy insurance without the subsidy – but it’s tight for us. But it makes a lot more sense for me to look at it as a cash flow issue than as a government entitlement, because my income can easily fluctuate a few thousand more or less from one year to the next. </p>

<p>I did opt to take a subsidy through the exchange - as I can also act on the assumption that I’ll make less, and then just bank the money to pay back IRS if more money comes in than anticipated at the low end – but I would have been just as comfortable paying full cost and dealing with the rest through adjustments to my quarterly tax payments. I mean, that’s another big bill I have to pay every few months that is a potential stress point – and it’s easy enough calculate what my anticipated ACA tax credit would be. (IRS doesn’t care – they are happy to take the money but they don’t monitor what is coming in via quarterlies – if I underpay, then of course I can face interest and penalties).</p>

<p>A lot of people are also simply happier with a refund rather than a bill at tax time.</p>

5882

<p>

</p>

<p>Yes, it does, for the individual market. </p>

<p>For 2014 only, some employer group plans are allowed to keep separate out-of-pocket maximums, if they have been using separate service providers to administer the medical vs. the prescription drug benefits. See “What’s Delayed?” at <a href=“https://www.bcbsnc.com/assets/hcr/pdfs/oop_max.pdf[/url]”>https://www.bcbsnc.com/assets/hcr/pdfs/oop_max.pdf&lt;/a&gt; for an explanation. But that wouldn’t apply to a newly purchased individual plan – that extension is allowed for a situation that exists because of difficulty coordinating information that is accounted for separately within the employer market.</p>

5883

<p>GP - so your answer is that you once used Cedars Sinai “many years in the past” for an issue that is unlikely to recur in the future? (Complication of pregnancy). </p>

<p>What about UCLA med? How far would it be for you in terms of driving time to get to UCLA?</p>

5884

<p>Calmom, it’s not far. Until I get it in writing from Anthem or I see it on their website (provider search tool), I am not going to assume UCLA is available to me. Also, I have checked with some of the doctors in my region and have found that the PDF provider list Anthem has disseminated is wrong.</p>

<p>As it relates to Cedar Sinai, we obviously perceive what a health insurance policy should offer its subscribers much differently. That’s okay. You have certain objectives; I have others. </p>

<p>My problem is when you or the folks at Covered Cal try to impose their values on me. At least you’re willing to enroll in an exchange plan, I wonder if Peter Lee or his fellow board members would voluntarily take one of their exchange plans for themselves. I doubt it.</p>

5885

<p>My son was shocked tonight when he logged on to healthcare.gov to choose his ACA policy. Over the past month he has been researching silver cost sharing reduction plans to figure out which one was best and had finally decided on the one he wanted. When he looked tonight at the premium for the policy he wanted, he was surprised to see that it had risen by $53. Turns out that the subsidy amount that the marketplace quoted to him 6 weeks ago has now been reduced!</p>

<p>He created an account back in October and received an “eligibility notice” from the Health Insurance Marketplace telling him that he is eligible for a tax credit of $232 per month. The available policies in the marketplace displayed premiums based on that credit. For example, a policy that is normally $271.10 per month was priced at $39.10 for him. </p>

<p>Since the last time he logged in to the marketplace (sometime within the last week or so), his subsidy amount changed to $179 and now all of the premiums are $53 higher than they were before. Does this mean that the original subsidy amount was calculated incorrectly because the website was broken? Maybe now that the tech team is fixing it, they’re finding errors in the formulas. The Kaiser subsidy calculator comes up with a figure much closer to $179 than $232 and I always wondered about the disparity but figured that the official eligibility letter was correct.</p>

<p>He’ll be calling the marketplace help line tomorrow to try to get some answers but he’s not optimistic about getting that $53 back :(</p>

5886

<p>GP, I didn’t offer an opinion about , I asked you a question about UCLA medical. </p>

<p>You’ve answered my question anyway. Sometimes an evasive answer is as good as an admission: obviously you haven’t been using UCLA med or you would simply have answered “yes” rather than shifting the focus to our opinions. A fact is a fact: either you have been using a facility or its doctors or you haven’t. </p>

<p>ACA does not restrict insurance networks in any way.</p>

<p>I read an article that the reason that the insurance companies are restricting their networks is that they did market research and found out that is what the majority of their customers want: that is, consumers prefer a lower premiums/restricted networks over higher premiums/broad networks:</p>

<p>

</p>

<p>Insurance is a matter of shared risk and expenses. If more consumers want the lower cost, restricted networks, then you would end up with very high premiums for the expanded networks. It’s simple math: let’s say that Anthem decides to offer two policies, one with a restricted network and lower premiums, and another with a broader network and higher premiums. Let’s say that they have 10,000 customers, and 7,000 choose the lower cost premiums, whereas 3,000 choose to pay for the expanded network because they want access to higher cost providers. The per-patient costs are going to be more expensive, by definition, in the broad-network plan – since people selected it specifically because of access to high-cost providers – and there is a smaller pool among which to spread the risk, so in year #2, the premiums for the broad-network plan will go up, probably at a significantly higher rate than the narrow network plan. That will force some of the broad-network buyers to shift to the narrow network to simply save costs, driving up the broad-network entry price even more. </p>

<p>I mean, I’m thinking that you could see premiums for that broad network plan that would easily be triple the premiums set for the narrow network plan. The problem is that the chief motivation for buying the higher cost plan would be the availability of expensive, premium health care services, and no one in their right mind would pay those costs unless they intended to actually use those services. </p>

<p>I mean, you think that you want an insurance policy that would pay for you to get medical care at Cedars or UCLA if the need arises in the future; but what you would get is a policy that would charge you higher premiums to help many others who have the same plan get extensive care at Cedars and UCLA right now. (A very generous impulse on your behalf!)</p>

<p>Bottom line, if everything works as it should under ACA, then 80% of every premium dollar you pay goes to somebody’s care – if you aren’t getting sick and utilizing the benefits, then it’s going to someone else.</p>

5887

<p>patsmom, the math is the same – it’s based on your son’s income and the cost of the 2nd lowest cost silver plan in the market. Has your son been asked to submit additional income documents in the interim? Perhaps he understated his income and with the income verification process, the figures have been revised upward.</p>

5888

<p>calmom, I think that’s probably what happened. He expects his income next year to be way, way down. I assumed that the eligibility letter was the final word. So are you saying that it doesn’t matter what you state as your anticipated income because your subsidy will be based on your 2012 tax return income? Will his tax credit be recalculated when he files his 2014 return with a much lower income?</p>

<p>He has not been asked to submit any additional income documents.</p>

5889

<p>No, the subsidy is based on the 2014 income-- the 2012 income is just used to estimate the amount allowed. When he files his 2014 return in 2015 it will be reconciled – he’ll either get a credit back if his income is lower than expected, or perhaps he’ll owe money if he earns more than expected. </p>

<p>But they do a rough verification of whatever information he provided to qualify for the subsidy, based on current income. Here’s an easy way a person might make a mistake: perhaps someone enters their take-home pay as their monthly income, and is asked to submit a copy of their pay stub for verification. But the correct number is the gross pay-- let’s just say that someone makes $2000 a month with $153 taken out for FICA – so take home is $1847. So when filling out the form the person enters that number as their monthly pay. On an annualized basis, that’s the difference between earning $22,164 and $24,000. </p>

<p>I have no clue what the steps are for income verification on the exchange in your state (or your son’s) – so I’m just providing an example as to where an adjustment might be made. I haven’t seen a change to my own numbers, but I deliberately filled out the online form with my 2012 1040 in hand, so the numbers I gave would have been a close match to my return – hence, nothing to adjust.</p>

<p>If your son’s income is going down because of a specific event, like loss of work, then there should be a way for him to report a change of income with the exchange during the course of the year. But if your son is relying on Healthcare.gov, there probably are still some fixes to the web site that need to be made before that can happen, and the “report change of income” feature is probably not the top priority.</p>

<p>He probably should just call in and maybe the person can tell him whether there was an adjustment made and why that was. I have found that if I call Covered California they key into my account right away from my phone number, and they can see all the transactions that have logged to my account. But outside California, I don’t know how efficient the system will be.</p>

<p>However, I also read that the Healthcare.gov site made a lot of errors on subsidy calculation – I think the Kaiser Foundation calculator result is probably the right one. So it might just be that a glitch in the software that reported higher subsidy than he was entitled to has now been fixed. The Kaiser calculator is working off the same underlying data, so I’d consider it pretty reliable.</p>

5890

<p>Calmom, post 5887. It is funny that a poster complains the premiums are too high and then wants the most expensive hospitals in his network. </p>

<p>I think what you wrote in post 5887 is how things would play out. </p>

<p>Great post.</p>

5891

<p>Post 5887, exactly. It would be a textbook illustration of adverse selection.</p>

5892

<p>“ACA does not restrict insurance networks in any way.”</p>

<p>Calmom, I can’t believe you said this. You have really drunk the Kool-Aid.</p>

<p>“I read an article that the reason that the insurance companies are restricting their networks is that they did market research and found out that is what the majority of their customers want”</p>

<p>If this is the case, why haven’t they already done it. Why now? If the majority of consumers were clamoring for restricted networks and lower premiums, it would have happened a long time ago. </p>

<p>No, the real reason is because these ACA plans would have cost too much without restricting the networks. In order to provide all their so-called Cadillac essential benefits and to cover the over-representation of sick people on the exchanges, they eliminated most of the providers. If the Administration had told the American people in 2010 this is what they would end up (including the high deductibles), there is not a chance in h*ll this would have ever passed.</p>

5893

<p>BTW, I had an Obamacare Thanksgiving today. We went to a very expensive restaurant, where you had to pay an ungodly sum of money for a 5-course meal. There were no a la carte options. If you didn’t want the dessert or appetizer, you had to buy it anyhow. Unlike Obamacare, at least I had the option of going to another restaurant.</p>

5894

<p>

</p>

<p>Isn’t that exactly what calmom said?</p>

5895

<p>Read the rest of my post</p>

5896

<p>"(A very generous impulse on your behalf!)"</p>

<p>If the Administration had explained Obamacare to the American public the way you did in your post, Calmom, do you think the law would have passed in 2010? This is not what the majority of people wanted. </p>

<p>Lately, anonymous Administration insiders have admitted that Obamacare is a redistribution-of-wealth scheme from the middle class to the poor. Again, if the American people had understood this, there is no way we would have Obamacare today.</p>

5897

<p>GP, when you blame ACA you assume it’s like this for everyone- it is not. You are in a big state where the insurers can do their dance. If Obamacare were to blame, wouldn’t everyone, across the nation, be seeing restricted networks?</p>

5898

<p>Lookingfoward, I don’t know about “everyone” but I think you are seeing restricted networks across the nation.</p>

5899

<p>Another fact about California is its high cost of living. If the absolute difference between medium-priced health care and high-priced health care is big, then customers who aren’t presently using much health care are going to be more interested in big savings now than in more access, maybe, later. </p>

<p>Say the difference between a wide network that has Forest Resort Hospital and Casino and lots of other pricey providers, and a narrower network that just has Nice Community Hospital, is $4000 a year for me. That’s a lot of money! If I’m healthy right now, am I willing to pony up $4000 right now for the option to go to Forest Resort if I happen to get sick? Or will I say, hmmm, Nice Community Hospital is a good hospital and I’ll be fine there if I happen to get sick, and besides I’m not sick and I could use that $4000 for a vacation?</p>

<p>If I live in a lower-cost area, and the difference between premium plans and midrange plans is considerably less, then I might be more willing to buy the access to premium. </p>

<p>But people are likely to go for the lowest cost. I’d love to know which plans people are buying on the exchanges. $10 says that they’re buying the lowest price and second lowest price in a metal level, the vast majority of the time.</p>

5900

<p>I am not seeing restricted doc networks. All my local hospitals are covered. Maybe MSK isn’t (I didn’t pursue that one,) but it’s in NY. Dana Farber is covered.</p>

<p>CF, also, when people want, say, Cedars, based on past experience, I think it’s important to know if that sort of procedures is now excellently handled at Nice Hospital. Things change.</p>