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?

Bombshell 2016

Obamacare premiums to JUMP in 2016

Sure there were always the obvious jokes about the Unaffordable Care Act (ACA). But under strict scrutiny, insurers are requesting rate increases. HUGE increases. These increases, unfortunately or fortunately, are in line with dramatic increases in spending on health care by the insurance companies.

Why?

Very simply, the ACA changed how health premiums get calculated. How dare you charge less to (healthy) people who use less health care! How dare you charge less for non-smokers (in California). How dare you charge more for people who have had elective cosmetic surgery (breast implants which notoriously leaked and caused all kinds of damage in the 1990s). In the old system, those people might have paid more or get put into the state major risk program.

The new regime says: Let's charge the same regardless of pre-existing conditions. Good health; doesn't matter. Smoker/non-smoker/drug use: doesn't matter. As a result, people using the exchange are older, sicker, and savvy-er about using their benefits. One official said there was 'pent up demand' for all these great new health benefits, thus showing how necessary and important Obamacare is. These rate increases are significant because they are based on the first full year of claims experience under Obamacare.

I have worked with a lot of families who simply can't afford ACA. They try to buy the lowest cost plan. But the deductibles and co-pays are so high, they can't afford to actually use the insurance. On top of a $5,000 deductible, the premium seems like a waste of money. On top of that, premiums are now expected to climb 25% to 40% for 2016 in some jurisdictions according to the NYT.

CNBC link to NYT story

Funny how the NYT didn't report the potential for miscalculation and over-utilization before the law was put into place. [Welcome to the party guys. You're only 4-5 years late.] But they do report with gusto that ONLY 15% buy ACA coverage on an unsubsidized basis. That means 85% buy it with subsidies; and that's before we add in the 50% to 100% increase in medicare (free) users.

I'm sure it's wonderful that so many people can now use the healthcare system.
The question is: who is going to pay for it. 
The answer is: you are.

Interesting fact: 

Did you know that EVERY individual health insurance policy (on-exchange and  off-exchange) sold in California has an monthly fee to support the CoveredCA exchange? The exchange has already spent ALL of that money plus over 90% of an additional Billion dollars from the federal government. AND... The ACA allows Covered California to charge assessments or participation fees to health insurance issuers to generate funding, to support its operations.

It's over in 8 days. We mean it this time!

The bureaucrats have changed their minds before. These are the last 8 days to buy health insurance for all those who 'didn't know' they would have to pay a penalty if they didn't have coverage. Smart, eh? Let the tax preparer tell you to go out and buy health insurance.

 

To answer the above question: Don't hold your breath.

The geniuses at Obamacare think they'll get more people covered by making it illegal to sell health insurance 305 days out of the year. 

Artificial scarcity. Usually, there are only 60 days in a year when people can buy individual/family health insurance. That is the 'open enrollment' period which runs from mid-October to mid-December. Unless political consequences get in the way and they move it (to avoid an issue with election fallout) or extend it (like they did the first year). Or re-open it as they did this year through April 30, 2015.

And there are about a dozen circumstances which allow for a 'special enrollment period' at other times of the year including my favorite: because we (the bureaucrats at the healthcare exchange) feel like it.

What happens if you don't buy health insurance?

For 2014, the penalty was $95 per person or 1% of yearly income per person (for the whole family) --whichever is larger.
In 2015, the fee increases to $395 per person or 2% of yearly income per person (for the whole family) --whichever is larger.
In 2016, the fee increases to $695 per person or 2.5% of yearly income per person (for the whole family) --whichever is larger.
The penalty is capped at the average yearly premium for a Bronze plan (the cheap plan), which is insurance that pays an average 60% of the cost of health care.
Children count half (each) and families are capped at 3x the above per-person numbers. So if it's a single parent with more than 4 kids... they're in luck!

So if you have a family with mom and dad and 3 kids... that's 2 x 2% (adults) + 3 x 1% (children) = 7%. That's 7% of their income. That's a huge chunk of money for a whole lot of nothing. Remember, that doesn't pay for coverage or anything else for them. It helps subsidize all those who get coverage for free or at greatly reduced cost.

Subsidies illegal in 37 states?

The Supreme Court will be hearing a case regarding subsidies in Obamacare. Turns out, the law says that state exchanges can offer federal subsidies. It does not say that the federal government can offer subsidies. Since 34 states use the federal government's portal (yes, the one that had so many problems last year), those states are at risk of losing subsidies for their citizens.

On the one hand it seems clear that the ACA was rushed due to undeniable political opposition, and this oversight is one of the consequences. On the other hand, it seems ridiculous that the court won't rule that the federal government has the authority to 'stand in the place of' the very states who are authorized to dole out the subsidies.

The reality is... ACA has changed the face of health insurance in this country. Good health is no longer a factor. Citizenship status is paramount. Costs are either ridiculously low (due to subsidies) or completely unaffordable. Meanwhile their are a lot of questions (like this one pending before the court).

FACT: If you spent the last 20 years as a drug user, then spent a stint in prison smoking several packs a day...you qualify for health insurance at the SAME RATES as those who have taken care of their health.

FACT: For moderate- and low-income families, if the cost of insurance seems too high they just need more dependents. That way the qualify for more subsidy.

FACT: ACA models are based on INCOME, not ASSETS. So if you are a multimillionaire with multiple homes and a muli-million dollar income, BUT you have solar tax credits that exceed your income... you know qualify for low- or no-cost insurance.

FACT: Immigrant children (born here as citizens) get free coverage through medicaid. Their parents, however, don't qualify for subsidies. So a paid policy for 2 people in their 20s costs $420/mo for bronze (with a $10,000 deductible: 2x $5000) or $490 a month for platinum. Both unaffordable.

What you may not realize is that insurance companies also have new procedures. So insurers who cover mostly healthy people now have to pay the government, which in turn gives the money to insurers who cover sicker people. It's a rather odd gave of chicken where insurers get multi-hundred-million-dollar checks to cover sicker (but not too sick in a costly way) people.

NY Times: what-ending-health-subsidies-means

Open or Not Open (health enrollment) / UPromise INFO

Can I get health insurance?

I'm still helping clients understand WHETHER OR NOT they can get health insurance, now that OPEN ENROLLMENT has closed. The health insurance companies are telling everyone 'no': Closed until November for 2015 enrollments.

But the truth is quite different. It turns out there are quite a few EXCEPTIONS. One of those exceptions is whether your income has changed. If you are Native American, you can change plans EVERY MONTH! So the rules are different depending on who you are, and whether you belong to a tribe.

That's because the geniuses at the federal government thought that the best way to get MORE people to buy MORE insurance was to RESTRICT WHEN it can be purchased. That's right; only 6 weeks out of the year. Unless you have one of several exceptions. Confused? You're not alone.

Businesses, of course, can buy health insurance any day of the year (it seems like only a few months ago that consumers could buy health insurance year-round too). The limitation is only on INDIVIDUALs. Businesses also get a delay on the mandate to buy insurance; individuals do not get a delay.

UPromise info [ <--Click here ]

Join the millions of families who have already earned $850,000,000 with Upromise®.

Now you can save faster just by doing the things you already do. With Upromise, every time you shop online, buy groceries or fill up your tank, you could be earning savings for the more important things in life. Best of all, it's free to join.

Open enrollment is...

Open enrollment is... 

still open in California. 

Just talk to a Certified Insurance Agent. Your agent can even help you find a plan that is off-exchange. But only for the next 13 days!!

The Government figures that the best way to get fewer uninsured is to make it IMPOSSIBLE to get health insurance 10½ months out of the year.

But Certified Enrollers--including Certified Insurance Agents--have until April 15th to get you enrolled.

April 15th is a good day. Nothing else is happening that day that is government related.
So, what genius at CoveredCA decided that that was the day to have another crush of sign-up activity?

Go figure.

If you qualify for subsidies, this is the last chance this year to cash in. If you don’t qualify for subsidies, you still have the same deadline even for policies that are not on the exchange. Genius alert: let's make it ILLEGAL to buy private health insurance EXCEPT during an open enrollment period. What a terrific idea?!?!

On Monday, May 31st (the ostensible deadline), there were hundreds of people lined up, taking off work, waiting for hours, to get their government health care taken care of. If only they would have known that have the whole first half of April to take care of it. Could at least some of them have managed to fit in the enrollment without disrupting their work schedule???

Speaking of geniuses in government...

The Administration says that 90% of people who “enrolled” in Obamacare have paid their premium. Really?

 

What kind of dream world do they live in?

It calls into question all the other unbelievable things they have been saying. Yet again.