NYC Mayor is a genius!

He solved the problem of health insurance.
For everybody.

Evidently it will SOLVE all the health insurance issues of the unemployed, self-employed, homeless... even undocumented immigrants!

New York City Mayor Bill de Blasio (D) announced Tuesday (1/8/2019) that the city will begin guaranteeing health care to residents, regardless of their immigration status or their ability to pay.

•  Plan would spend $100 million subsidizing individual insurance
•  
  Could reach 600,000 people, including undocumented immigrants

NYC to fund healthcare for all including undocumented
The program is intended to reach an estimated 600,000 city residents currently without health insurance. Half of that group can’t get health insurance because of their immigration status, de Blasio said.

Now here is the quick math.

$100,000,000 divided by 600,000 = $167 per person per year. That's less than $14/month!

For some perspective...

At Covered California, unsubsidized premiums tend to run SEVERAL hundred dollars per month per person. BTW, that is being generous to the program. I ahve seen a family of four whos premium is more than $1,800 a month.

In New York (according to NBC News):

An individual in Brooklyn, NY, for 2019 could buy a platinum plan for $847.95 a month for a plan with no deductible and out of pocket costs capped at $2,000 for the year, or they could choose a $420.55 a month bronze plan with a $4,000 deductible and all out of pocket costs capped at $7,600 for the year.

If you don't use it...
Usage at ZERO (just the premiums): 847.95 * 12 = 10,175 platinum | 420.55 * 12 = 5,046 bronze. How about $5,000 to $10,000 a year (per person) for NOT USING ANY medical care?!?!

If you actually use it...
Usage at full strength: 847.95 * 12 + 2000 = 12,175 platinum | 420.55 * 12 + 7600 = 12,646 bronze. Seems like it's $12,000 or $12,500 either way. But de Blasio can handle it for $167 a year!!

So working families have to pay $420 - $847 per person per month, but NYCare can provide benefits to all uninsured, unemployed and undocumented for less than $14? Not quite. NYC already provides a host of health and mental benefits for low income and unemployed citizens. The question is do they want to spend $600.000.000 per year to provide comprehensive care on those and on undocumented as well.

As with most politics, we probably can't get a straight answer. How much of the basic premium cost is subsidizing the other?

Getting health insurance through work now costs nearly $20,000

The question is: given a choice, do families want to spend $20,000 per year?
Should people be given a choice? Or should governments continue to mandate and control insurance?
Who gets to decide if they need to spend their money that way?

employer-health-insurance

Higher premiums on insurance are mostly masked.

• Masked by employers.
• Masked by Obamacare subsidies
• Masked by Medicare expenditures

Most people don't know what their own healthcare costs.

What they do feel are the higher exposures through higher deducetibles and copays.

"A quarter of all workers face deductibles of at least $2,000, up from 15% five years ago.

Employers have sought to limit premium increases by raising deductibles instead. But large deductibles are among Americans' main complaints about their health coverage."

ANOTHER WAY to mask the true cost: limited networks.
This was perhaps Obamacare's greatest bait-and-switch maneuver. Limited doctor networks to make the cost seem low, along with the infamous promise: "if you like your doctor, you can keep your doctor."

Overlooked solutions:

• Health Savings Accounts
• Telemedicine

Health Savings Accounts (HSAs)

A Super-IRA for your medical expenses. HSAs allow you to put money in TAX-DEDUCTIBLE and pull money out TAX-FREE for medical purposes. Any money you don't spend is yours to keep; and you can invest it just like an IRA. With this approach, every medical bill becomes a get-out-of-jail-free card for your money.

For many families, they DON'T SPEND MONEY 10 or 11 months out of the year. What if they could save it and use it later when needed?

Telemedicine

If a tree falls in the forest...

If companies provide telemedicine,
                  but nobody actually uses it...

More large companies are offering coverage for telemedicine visits with providers, such as through videoconferencing or remote monitoring. The share skyrocketed to 74% this year, up from 27% in 2015, according to the Kaiser study.

Employees, however, have yet to embrace the new technology. Only 0.51% of those in large employer plans had at least one telemedicine visit in 2016, the latest data available.

"Lots of companies are paying for telemedicine, but very few employees are using it," said Matthew Rae, senior health policy analyst at Kaiser.

Interest Growing in HSAs as Retirement Resources

The triple tax benefit is very attractive.

Health savings accounts are hot.

Financial advisors, plan consultants and the news media are recommending the HSAs as a potentially important element in planning for retirement healthcare costs. Plan sponsors also appear to be getting on the bandwagon. Consider this eye-opening stat: The Plan Sponsor Council of America’s 2017 report, “Health Savings Accounts and Retirement Plans,” found that 75 percent of companies “regard the HSA as part of their retirement benefits.”

Growth Estimates Vary

HSAs’ popularity makes sense. Workers worry about retirement healthcare expenses. Employers want to control healthcare costs, and high-deductible health plans that are HSA-eligible can provide immediate savings. The convergence of these factors has led to the idea that HSAs can serve as longer-term savings vehicles, notes Patrick Delaney, vice president, DCIO Marketing with T. Rowe Price Investment Services Inc. in Baltimore. “It’s the triple tax benefit that everyone grabs on to that makes them a viable long-term savings vehicle.”

Estimates of HSAs’ usage vary. A recent survey from Devenir Research reported continued strong growth in the number and size of accounts with 22 million accounts (up 11 percent from 2016) holding about $45.2 billion in assets (up 22 percent from 2016) as of year-end 2017. But a February 2018 Employee Benefit Research Institute study finds reduced recent growth rates: “In 2017, enrollment estimates in HSA-eligible health plans vary considerably from 21.4 million to 33.7 million policyholders and their dependents. But there is one consistency between the enrollment estimates—most sources show that growth appears to have slowed in 2017, especially when looking at the market share of HSA-eligible health plan enrollment.”

Challenges

If growth has slowed, structural obstacles could be one reason. Gregg Levinson, senior director, retirement with Willis Towers Watson in Philadelphia, points out that HSAs were never intended to be longer-term investment accounts. Instead, they were designed as short-term savings vehicles that worked in tandem with high-deductible health plans.

That’s how account owners appear to be using the plans. Delany notes that the vast majority of HSA owners don’t use the accounts as longer-term savings vehicles either because of awareness, education or financial wherewithal. They instead are using them for contributions in and distributions out for qualified expenses in the same year. Another EBRI report for years through 2016 supports that assertion: “On average, account holders appear to be using HSAs as specialized checking accounts rather than investment accounts … most account holders appear to be using the accounts to cover current expenses, such as deductibles, coinsurance and copayments, rather than fully taking advantage of the tax preference by contributing the maximum. … Very few account owners invested their HSA balance in investments other than cash despite the tax saving possibilities. In 2016, 4 percent had investments other than cash.” That pattern might be changing as account longevity increases, however, Devenir Research found higher investment account usage of almost 15 percent at year-end 2016 and 18.4 percent by year-end 2017.

HSAs must evolve to gain wider acceptance like that enjoyed by 401(k)s and other defined contribution plans, Levinson maintains. In contrast to 401(k) plans, HSAs are not subject to ERISA fiduciary standard and the market has only recently started to get a degree of due diligence scrutiny on account fees and investment plan lineups. Morningstar’s 2017 survey of 10 of the largest HSA plan providers concluded that only one plan looked “compelling for use as a spending vehicle and an investment vehicle, suggesting there is much room for improvement across the industry.”

Starting the Conversation

HSAs aren’t yet a compelling business story from an assets perspective and it’s not immediately obvious how advisors can monetize them, says Delaney. But he maintains that plan sponsors’ growing awareness of and interest in the accounts likely will generate inquiries whether or not the advisor wants them. Delaney suggests that advisors become “at least conversant” with the plans’ features and benefits, otherwise sponsors will have those conversations with other vendors.

Advisors and consultants can also bring balance to the discussion. T. Rowe Price has examined HSAs’ pros and cons and Delaney cautions that HSAs are not the optimal solution for everyone. Employees’ financial circumstances and medical expenses differ, which means that their ability to use HSAs as longer-term investments will vary. Instead he maintains that “the best path forward for Americans to save for health care is probably not just an HSA, but it’s probably a combination of employer-sponsored savings like pretax or Roth contributions in conjunction with an HSA if it’s available.”

Article written by Ed McCarthy | Jun 12, 2018

Unable to buy health insurance!!

Why are they unable to buy health insurance?

A family with 3 kids wants to buy health insurance.

But... and it's a big but... they waited too long. Yes, friends, they decided to get serious AFTER January 31, 2017. No more OPEN ENROLLMENT effective dates until 2018!

I tried calling a few carriers. NONE of them will entertain issuing a policy until next year.
They could get an interim policy, but still be exposed to penalties and no advance premium tax credit (APTC) to reduce the cost.

I can understand why they can't get APTC.
You snooze, you lose. BUT, to not be able to purchase ANY health insurance until next year?!?!

How did we end up in a place where health insurers refuse to issue policies 11 months out of the year. Even to healthy people.

Fact and Fiction

A big challenge for Obamacare: separating fact from fiction

Fact or Fiction?
     A) It impacts only 15% of the population.
     B) 20 million people got coverage
     C) It is affordable. (the Affordable Care Act)

A) 15% of the population

So many people get coverage through their employer, through Medicare, Medicaid, VA and other benefit programs, that ONLY A SMALL portion of the population has to worry about Obamacare. BTW, 20 million people is way less than 15%  of the population of the US. About 6.1%*.

B) 20 million people

The BIG NUMBER tossed about is hard to digest. OVER HALF aren't on an ACA program... they are on EXPANDED MEDICAID. Even Covered California (the website) is a joint venture with Medi-Cal (the California version of Medicaid). So HALF of the people get expanded Medicaid for free (in some states), the other half get HEAVY SUBSIDIES from the taxpayers. BTW all of this pricing tends to favor older people at the expense of the younger -- the very group needed to keep Obamacare solvent. Which leads to the next issue...

C) Affordable

If you qualify for FREE Medicaid or HIGHLY SUBSIDIZED ACA coverage (in some cases $1 per month premium per person), maybe it's affordable. Of course, that $1 per month premium pays for a BRONZE family health plan with an $11,000 deductible. I have had numerous people tell me that the SILVER plan just isn't worth the extra expense (unless you are already sick).

*The current population of the United States of America is 325,681,133 as of Wednesday, March 1, 2017, based on the latest United Nations estimates. 

Medicaid Expansion

BTW: remember when people talked about MEDICAID EXPANSION? Why wouldn't ALL states adopt it? Only mean, ignorant, backward states (conservative states) failed to adopt it. After all, the federal government pays for ALL of it for a number of years. Then they pay for most of it.

California learned the hard way: that ain't necessarily so...
You see... people who qualified under the old rules, are NOT part of the new reimbursement regime. Which means California is ON THE HOOK for ALL of the pre-ACA expenses for those people who took interest in hearing about Obamacare, but who actually qualified under the old program.

AND if it is such a budget-buster at the state level, should we simply ignore the fiscal impact at the federal level?

Repeal and Replace?

Headlines are panicking.

Immediate repeal of Obamacare, but they won't have a replacement for years. Oh no!!!!!

The reality...
There were programs before Obamacare.
Much of the 'success' in Obamacare coverage is
     1) driven by Medicaid/MediCal (over half of new enrollees pay ZERO premium)
     2) are HEAVILY subsidized (80% of Covered California insureds get 80% + subsidies
     3) LIMITED to 15% of the population that buys individual coverage

So to try to impact 15% of the population, many of which would have gotten it for free anyway, Obamacare turns the entire medical system upside-down. BTW, many of the 15% (almost half) refuse coverage that is free or heavily subsidized in the current scheme. Think about that.

Even in REPEAL, it may take several years to UNWIND what has been done. I doubt it will disappear completely and immediately with the stroke of a pen.

BTW, one of the big bugaboos about ACA is the guaranteed issue provision (GIP).
GIP means you get NO CREDIT for maintaining a healthy lifestyle.
In California, that means SMOKERS and NON-SMOKERS pay the same rate.
As do plastic surgery fanatics. As do felons with lifelong drug abuse issues.

We used to have a Major Risk Medical Insurance Program. MrMIP. People who didn't qualify for underwritten policy could purchase a policy on the MrMIP exchange. All insurers were required to participate.

A growing issue with ACA

If you have a large subsidy, you might pay $100/mo on a $1000/mo program. If the cost goes up 24% (like 2017 renewals), the new cost is $1240. With the same $900 subsidy, the new net premium is $340. So while the gross premium increased only 24%, the net increased over 200%. That's major  for someone who doesn't have a lot of money.

Another issue...
If your employer coverage (for ONE) costs less than 9.5% of you total pay, you get NO ASSISTANCE to cover the rest of the FAMILY. ACA, is designed to have a family of 4, devote almost 28% of their pay to health coverage. How is that affordable?

Fair?
A divorced many was required to pay for his wife's health coverage. Because they are no longer married and pay separate returns, she qualifies for LARGE subsidies. So he is able to shift his obligation to TAXPAYERS.

BTW, the picture above is a storefront for Covered California, located in a shopping mall in Southern California. The pic was taken in 2015. The sign says the location is temporarily closed, but will be coming back. Like many things related to Obamacare, that turned out to be not true.

COBRA bite -vs- Medical IRA

Got a call yesterday from a client. 2 years ago, she dropped ACA coverage when her husband got a job that offered employer-paid health insurance. That’s the way it’s supposed to work. Now he is making a change and they along with their 4 kids have COBRA coverage. With COBRA , they pay 102% of what his employer-paid plan costs: about $2000 a month.

ACA silver coverage would cost them about $1450 a month. With a $950 a month subsidy, that nets out to $400 a month. Not bad!

But the real question: Do you go to the doctor a lot? Any chronic illness (like diabetes)? Many prescriptions? No, no, no.

Have you considered a Health Savings Account (HSA)? 

At one time the husband had a Flexible Spending Account (FSA) through his employer. FSA is “Use it or lose it” with only a small amount that can carry over from year to year.

With HSA, what you don’t use is YOURS TO KEEP. And you can save/invest it just like an IRA.

The key benefit

Money goes Tax-Deductible IN, Tax-Free OUT for medical purposes (even if they aren’t covered by your major medical plan). At retirement age, the money can be used for any purpose just like an IRA.

HSA is a Medical IRA. It is SUPERIOR to the typical IRA. Why? Typical IRAs only provide a one-sided tax benefit. Either they are Tax-Deductible IN (traditional IRA for those who qualify) or Tax-Free OUT (Roth IRA, but only when the account has been established at least 5 years AND the client is over 59 1/2).

HSA has 3 tax advantages...

     1) Tax-Deductible IN (regardless of income levels that would disqualify typical IRAs) and
     2) Tax-Free OUT (immediately, no 5 year wait like Roth IRAs) and
     3) Qualified medical expense acts as a Get-out-of-jail-free-card for your money. (Now or later)

For item 3: You can use it right away, or use it to make a tax-free withdrawal years into the future. AND recognized medical use includes things like premiums for Long Term Care insurance, mileage expense and lodging for medical, orthodontia, vision, etc.

But to get these benefits, you need a High-Deductible Health Plan (HDHP). Conveniently, these usually have HSA somewhere in their name. Unfortunately, Covered California usually only has 1 or 2 HDHP choices in its lineup.

The cost?

In this case, the bronze 60 HSA-compatible plan costs $4.30 per month... for the whole family.
They can take a PORTION of their COBRA premium and stash it into their HSA. With their HSA, they can see any doctor. (One of the big bugaboos for ACA has been the restricted doctor networks.) If a doctor’s visit costs $100 or so (cash discount available for the asking), they come out ahead even if their usage is 20x what it has ever been. They will save up the whole ANNUAL deductible for their bronze plan in a matter of months.

Typical story. High cost COBRA: $2000/mo. Lower cost individual plan: $1450/mo. Net ACA cost: $400/mo. or $4.30/mo and SAVE THE DIFFERENCE.

BTW, I have clients who have used HSA for over 10 years. Some have balance of $50,000 or more. What is the long-term potential?