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New Taxes

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Starting in 2014, there are new charges on health insurance companies and on individual taxpayers to fund the ACA (PPACA or ObamaCare).

The first one is known as HIT – the health insurance tax.  This is an assessment on some health insurance companies based on their market share. Health insurers oppose the tax because it will lead to increased premiums, which is what health care reform wants to avoid.  A study by the consulting firm Oliver Wyman confirmed the tax will increase premiums by more than $2,800 per person and $6,800 per family over 10 years.

The second tax is on individuals making more than $200,000 and couples making more than $250,000.  They will pay a 3.8% tax on dividends and capital gains when they file their 2013 returns this year.  This income group also saw a 0.9% Medicare wage tax increase in 2013.

For the next three years, insurers will pay $63 per health insurance recipient; this is known as a reinsurance fee.  The $12 billion collected will be used to spread out risk so insurance companies that end up taking on the sick will be protected.

The penalty for being uninsured begins this year.  Individuals won’t have to pay it until they file their 2014 returns, the penalty this year is $95 or 1% of income, whichever is greater.  Next year, the penalty rises to $325 or 2% of income.

The last fee is on insurance companies that sell their health plans on healthcare.gov; they will pay a monthly user fee of 3.5% of the premiums for health plans sold on the website.

This information was taken from an email I received from Humana.

Updated Enrollment Numbers

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I read in some online publications today that President Obama’s administration finally released some enrollment numbers of citizens enrolling in medical insurance plans for January 2014. I have my own questions about these numbers.

Some of this information is taken from articles across the Web, but most of it is from Ezra Klein’s blog, which is linked here:

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/01/14/the-death-of-obamacares-death-spiral/

There are 2.2 million Americans that signed up for private insurance. Of these 2.2 million, roughly 25% are the desired age group of 18-34. According to Ezra Klein’s blog, the Obama Administration, along with others, wants 38%.

The next set of numbers show that 55% of the sign ups were between the ages of 45-64.

These numbers don’t include the state exchanges of Minnesota, Oregon and Nevada.

The most popular metallic level plans are the silver level, with 60% of enrollees selecting these.

Most of the people enrolled haven’t paid yet. In my opinion this is a big deal. If you sign up and don’t pay, you don’t have insurance. As of right now these numbers are just citizens that have signed up, not paid.

Lastly, no Medicaid numbers have been released yet. These should come later this month.

A question I have about these numbers, are they reflective of what the insurance companies thought they would get, which in turn directly impacts the premiums that they charge.

Of course there are two sides to each argument, one side stating that a “modest” increase of 2.4% could be in store for next year. The other side states that if more young and healthy individuals don’t sign up, then it could be much higher.

Only time will tell…

Some questions that come to mind –

  • How many were they expecting?
  • What did each insurance company expect to get?

Understanding ObamaCare

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Here is some information to help you navigate Obamacare.

1 – Does your current health insurance plan need to change?

If you have a grandfathered plan your going to be able to keep your plan (as long as the health insurance company you have your grandfathered plan with allows you to do so).

If you have what they call a “transitional plan” you’ll be able to keep that plan until your renewal date in 2014.  Once your renewal date hits in 2014, you will then be required to buy a plan that meets all of the essential health benefits.

If you buy a plan with an effective date of January 1, 2014, that plan will meet requirements.

2 – How will you pay for your health insurance in 2014?

Depending on your household income, you may be able to qualify for payment assistance that make insurance more affordable.  The only way you can obtain assistance, is if you purchase your plan from either the state or federal exchange.  If you buy a plan “off exchange” you will not received payment assistance or special discounts.

3 – What is the difference between on and off exchange plans?

In my opinion, the only reason you would go to either the state or federal marketplace (the government prefers this word, but it’s the fancy word for exchange) is if you qualify for payment assistance.  If your income is over the assistance limit, then going off exchange is the way to go.  I say this because you won’t have to prove your income, and answer all of the questions that the state and federal government require from you.

For example, here in Kentucky, Humana offers some plans that aren’t available on the state exchange.  These plans have a more comprehensive network, then the current on exchange plans have.

4 – What type of plans are available?

Networks, co-payments, deductibles, and out of pockets differ between all the carriers.  You must decide for yourself what is most important to you, and then work with an agent or broker (Zinser Benefit Service, Inc. would be one) who should be able to guide you to the right plan.

5 – When can you buy coverage?

The new open enrollment period for a January 1, 2014 effective date started in Oct 2013 and ends on December 23rd 2013.  Once this date passes, you’ll have dates similar all the way up through March of 2014.  If you miss during this time, you will have to have a qualifying event in order to enroll in a plan during 2014.  A qualifying event would be any of the following:

  • Loss of essential health coverage
  • Change of family structure – gain or become a dependent because of a marriage, death, birth, or adoption of a child
  • Change of citizenship status
  • Government error
  • Change in subsidy eligibility – so if you make more money or lose some of your income, this could trigger a qualifying event
  • Move to a new coverage area – state, county, etc.

This is just a brief overview.  I hope it helps!

PPACA Rollout

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On Friday President Obama held an event to tout the benefits of ACA, specifically to a large group of women.   The New York Times is also reporting that the administration confirmed that Kathleen Sebelius, the head of the health and human services, has been trying to raise money from the private sector to promote an education and outreach program raising the awareness of the benefits of PPACA.  Congress has repeatedly refused to fund this outreach program, and that’s why Ms. Sebelius is going to the private sector.

Speaking just for Kentuckians, I’m really skeptical that we’re going to see a decrease in premiums.  Just taking into account what the new policies are going to have to cover, that in and of itself will cause an increase in premiums.  For instance, maternity.  All policies (even men) will have maternity coverage. Right now, that costs about $100/mo more than a policy that doesn’t cover it.

The second factor that’s going to cause premiums to rise is the guaranteed issue aspect of the law.  When underwriting is taken away from the insurance companies, healthy individuals are going to be penalized even more than they are today because insurance companies can’t offset the amount on the older and/or sicker population.  So the older individuals more than likely have their premiums staying roughly the same, it’s the younger generation that’s going to see an increase.  The same young people that the President is targeting to enroll in this law.

I will give the President this, the individuals and families that receive a subsidy, may see a decrease in what they pay.  However, I think the insurance will still cost more.

We’re going to just have to wait and see in October when the premiums are made public just how much it will cost.

 

 

 

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