Obamacare Fines: How to Escape a Hefty Penalty If You Really Can’t Buy Insurance

Already, the fear-mongers are sounding the alarm: If you don’t purchase exactly the type of health insurance that the Affordable Care Act (ACA) requires, come tax-time the IRS will slap you with a stiff penalty.

As I explain in the post below, the ACA mandates that if you’re not already covered, you must buy insurance that includes “essential benefits” such as hospitalization, maternity and newborn care, and mental health services. Ignore the mandate this year, and you will be fined when you file your taxes next year.

                                 How Much Would You Owe?

If  you opt out of purchasing insurance that covers you and your family in 2015, the penalty will equal Either:

“Whichever is greater” means that wealthier taxpayers will be required to pay 1% of their income, and as a result can easily wind up owing significantly more than $285. This doesn’t mean that millionaires would be fined tens of thousands of dollars. An affluent family’s penalty also is capped, at the average cost of bronze plans sold in state Exchanges nationwide.

In  2014, nationwide, the average bronze plan premium was $2,448 per individual and $12,240 for a family with five or more. This year, across the nation, average premiums were slightly higher, so a family of five earning more than roughly $145,000 would have to fork over a little more than $12,240.

                         If This Sounds Complicated, Turbo-Tax Makes it Simple

If, at this point, your eyes are glazing over, the good news is that you can calculate your penalty, quickly and easily, on Turbotax’s online calculator. Just type  in your income, zip code, and  the size of your household, and in about three minutes, TurboTax will tell you  the size of your fine—and, most importantly, whether you might qualify for an exemption to the penalty.

                                 How You Might Escape the Fine

The  chances that the IRS will fine you are slim. What the fear-mongers rarely mention is that, thanks to the many exemptions built into the law, only about 10 percent of the uninsured will owe a penalty. The Congressional Budget Office (CBO) estimates that in 2016,  just 4 million uninsured Americans will face fines, while 26 million will qualify for waivers. 

Recently, I wrote a piece for Consumer Reports listing some of the most common exemptions:

  •  if the lowest-priced coverage available to you, even after applying  a government subsidy, would cost more than 8 percent of your household’s income, the fine is waived;
  • –if you earn less than $10,150 (or $20,300 for a married couple) and so are not required to file income taxes you owe no fine and don’t even have to apply for a wavier;
  • if you were uninsured for less than 3 consecutive months, you will not be fined.

(As I explain in the post below,  this means that if you sign up for 2015 coverage by February 15 you will be insured as of March 1, and will not owe a penalty for 2015.) 

                       Little Known “Hardship Exemptions”               

On the Consumer Reports website, I also point out that late in 2013, the government added 14 new waivers

 

for people who have experienced personal hardships such as domestic violence, substantial property damage from a fire or flood, from a fire or flood, the death of a close relative, a utility cut-off, or bankruptcy.

Perhaps most importantly, the government is offering a one-year waiver to people who don’t qualify for Medicaid because they live in a state that has refused to expand the program under ACA rules.

To learn more about the hardship exemptions, how to apply for any exemption, and information on how you might escape the penalty, but still buy catastrophic insurance, read the rest of the post on Consumer Reports.org.

 

 

 

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It’s not too late to sign up for Obamacare- But if you wait much longer you could face a fine

 Note to HealthBeat readers: I have recently begun writing posts about healthcare and healthcare reform for Consumer Reports. Below, an excerpt from my latest post. M.M

It’s still not too late to sign up for insurance in your state’s marketplace. Open enrollment for Obamacare continues until Feb. 15. Meet that deadline, and you will be insured on March 1, with no penalty.

And if the plan you purchased in 2014 was automatically renewed on Jan. 1, you can still change your mind, comparison shop, and pick a new policy in February. There are lots of good reasons to shop around, as plans change from year to year.

Even better news: It’s not too late to apply for a tax credit that can help slash premiums. This year, nearly 9 out of 10 people who purchased insurance in state marketplaces have qualified for financial assistance. Last year, tax credits cut the average premium by 76 percent—to just $82 per month. Almost half of those who received subsidies wound up paying $50 or less. See if you might qualify for a subsidy.

Who has to pay fines?

Even if you don’t have insurance in January and February, you won’t have to pay a fine as long as you have health insurance in place by March 1.

How much will you owe?  Compare penalties to premiums in your zip code

Turbotax has created an online calculator that tallies the fine if you don’t buy insurance by Feb. 15.

To compare the fine to the cost of coverage, after subsidies, use the Kaiser Family Foundation’ premium calculator.

You will find links to both when you read the rest of this post on Consumer Reports.org.

 

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How Much Will You Pay for Health Care in 2015? What You Need to Know About Healthcare Inflation-Part 1

 

Probably you have seen headlines like this one: “O-Care premiums to skyrocket.”

The warning, which was posted on The Hill, seemed designed to cheer conservatives distraught by Obamcare’s enrollment numbers. It began by announcing that next year, “premiums will double in some parts of the country. The sticker shock will likely bolster the GOP’s prospects in November and hamper ObamaCare insurance enrollment efforts in 2015.”

Where did the reporter get her information?  The story is based on interviews with “health insurance officials.”

Why would they issue such dire predictions? Perhaps they are trying to soften us up so that when insurance rates rise by “only” 7% to 10%, we’ll be surprised and grateful? (This is just a thought.)

The truth is that there is absolutely no reason to believe the same old, same old, fear-mongers who claim that in 2015, rates will spiral “by 200% to 300%.”

But what about those who predict double-digit hikes?  Wellpoint, the biggest commercial insurer in the Exchanges, recently told Bloomberg that it may ask for “double-digit plus” increases when it proposes 2015 rates sometime next month.

Wellpoint can propose whatever it wishes, but I very much doubt that state regulators would accept such stiff increases. A combination of regulation and competition will keep a lid on premiums both in the Exchanges, and off-Exchange, just as it did this year.

My guess is that, in most states, rates will rise by no more than 2% to 4%. Meanwhile, government subsidies will climb to cover those increases for most who buy policies inside the Exchanges. (This year 80% of shoppers who purchased insurance in the state marketplaces received tax credits to help with premiums.) Folks who purchase coverage off-Exchange won’t receive subsidies, but carriers selling policies to individuals outside the government’s online marketplaces will have to compete with prices inside the Exchanges.

Why am I so optimistic?

The Underlying Cost of Medical Care Is Slowing

Americans have become so accustomed to hearing about “runaway health care inflation” that most do not realize that we have finally “broken the curve” of rising health care costs.

Granted, for most of this century, rates soared: “From 2000 to 2009, health insurance  premiums climbed 84%,” Zeke Emanuel, a former White House healthcare adviser and author of Reinventing American Healthcare: How the Affordable Care Act Will Improve Our Terribly Complex, Blatantly Unjust, Outrageously Expensive, Grossly Inefficient, Error Prone System., recently told NBC’s “Meet the Press.”

By contrast, “for the past three years, health care cost growth has dramatically slowed and is just about even with growth in the economy. Some of this is due to lingering effects of the recession in 2008,” he added. “But a part of it is undoubtedly due to the ACA.”

Drew Altman, president of the Kaiser Family Foundation, points out that, despite the aging of the population, ”the Congressional Budget Office projects that Medicare will cost significantly less in the future than previously thought,in part because of the ACA’s changes to Medicare’s payments. “  (As I have explained, those cuts do not reduce benefits, but they do force hospitals to cut waste and provide better value for our Medicare dollars.

Both in the public sector and in the private sector, “Overall health spending is growing at the slowest rate in 50 years,” Altman observes,  (dating back to when the government first started tabulating health expenditures.)”

“The key for the future is not to eradicate premium increases entirely,” Emanuel adds. The goal “is to make sure [that these increases] aren’t Excessive.”

He stresses that there is still much to be done to rein in healthcare spending. But for the moment “the exchanges are stable,” says Emanuel. “Premiums are likely to rise a little but not excessively.”

If you don’t believe Emanuel and Altman, take a look at the graph below, comparing outlays for all medical services (the orange line) to the PCE (personal consumption expenditures–the blue line) from 2009 to 2014. As you can see annual spending on healthcare services is now growing by well under 1% a year. (For a larger version of the graph, click on the link above.)

ifi0rzbQK9cU   bloomberg chart

Bloomberg News used the graph earlier this week, to illustrate a story that lays out some critical and little-known facts:

Prices “for medical services, which make up the biggest share of health care costs, have eased in the past two years. From February 2013 to February 2014 physician fees edged up just “0.2 percent–down from a 1.6 percent rise 2012,” Bloomberg reported, and “the cost of nursing home care rose by only 0.3 percent,” compared with “1.8 percent two years earlier.”

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Obamacare Enrollment Hits 7 Million, Putting Downward Pressure on 2015 Premiums; Word-of-Mouth Spreads the Truth

(Updated March 31)

As the “train wreck” called Obamacare pulls into the station it’s becoming clear that some 7 million Americans are signing up to purchase insurance in the Exchanges. Ten days ago I went out on a limb and predicted that we would hit 7 million, if not by March 31, by early summer. Now it appears that we’ll break through that target by midnight.

Seven million was the Congressional Budget Office’s (CBO’s) initial estimate, but when the roll-out proved rocky, the administration lowered its expectations to 6 million. Reform’s opponents groused that this still was too optimistic, and before long the consensus estimate fell to 4 to 5 million. (Conservatives, who had helped lower the consensus, then accused Democrats of moving the goal-post to make it easier to claim success.) 

                             Younger Americans Join the Pool

Who are these last-minute shoppers? According to the Wall Street Journal,carriers are beginning to report that many are under 40.  Today, more insurers confirmed the trend. This should come as no surprise.

We always knew that people in their 50s and 60s would join the Exchanges first. Healthy 20-somethings and 30-somethings who rarely see a doctor would be in no rush to sign up. Why begin paying premiums before you have to? 

                                          Momentum Builds

Now, younger Americans are  jumping into the pool, and, most importantly, the pace of enrollments is building. Friday, March 28, Charles Gaba, the “numbers Geek” who has correctly predicted earlier enrollment milestones, wrote: “We’re in uncharted territory. . . Things are moving VERY quickly now, and events are quickly overtaking my ability to keep up.”  Yesterday (Saturday, March 29), Gaba hiked his March 31 estimate to 6.7 million, up from 6.22 million earlier in the week.

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How A CBS Video About An Obamacare Victim Misled Millions- Part 2 (What the “Victim” Revealed in Our Final Interview)

“Woman Battling Kidney Cancer Losing Company Health Plan Due To Obamacare.”

That was the headline on a story that CBS’ Washington Bureau sent to its affiliates last fall.

CBS correspondent Susan McGinnis narrates the piece: “During the 10 years that Debra Fishericks has worked at Atkinson Realty, the company has provided group health insurance with manageable premiums,” McGinnis explains –“until owner Betsy Atkinson learned the policy would be terminated because it doesn’t meet the requirements of the Affordable Care Act.

“Debra has scoured the website looking for a new policy,” McGinnis adds, referring to healthcare.gov, but “so far, she cannot afford the premiums.”

“They just keep going up higher and higher when there is a pre-existing condition,” says Fishericks.

McGinnis wraps up the story: “Debra hopes that eventually she will find a plan that fits her budget so that she can still makes trips to Indiana –to visit her grandson.”

The camera then turns to Fishericks, sitting at her desk, looking at a photo of her grandson.  “If I can’t go to see him—that’s the worst,” she says.  And she begins to cry.

I was astonished: I thought most people understood that, under the Affordable Care Act, insurers can no longer charge a customer more because she suffers from a pre-existing condition.

Later, when I interviewed Fishericks, I realized that she honestly believed she was going to have to pay more for coverage because she had been diagnosed with cancer. Like a great many Americans, she didn’t understand how the ACA would protect her. Given how hard Obamacare’s opponents have worked to obscure the law’s benefits, I probably shouldn’t have been surprised.

But what shocked me is that no one at CBS’s Washington Bureau seemed to realize that what Fishericks had said just wasn’t true: not the correspondent who narrated the story, not the reporter who went down to Virginia Beach and interviewed Fishericks, not the person who edited the video.

Fifty-eight CBS stations aired the piece. Newspapers and bloggers ran with it. Nationwide, millions of Americans were left with the impression that under Obamacare, cancer patients may not be able to afford insurance.

How had this happened?

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Why Are So Many Americans Confused About Obamacare? How a Video Produced by CBS’ Washington Bureau Misled Millions –Part 1

For nearly four years, poll after poll has shown that the majority of Americans remain flummoxed by Obamacare.  Many are confused; some are afraid. They don’t know what the Affordable Care Act (ACA) says, and they don’t know how it will affect their lives

From the beginning, many in the media have blamed the White House.

Early in 2011, when a CBS poll showed that only 56% of Americans said the bill’s impact had not been explained well—or even “somewhat well”– CBS senior producer Ward Sloane summed up the prevailing view: “To me, that is a Monumental Failure by the Obama Administration. . . . [my emphasis]  And it opens up a big hole for the Republicans which they have driven through with, you know, several tanks.

Because Democrats had botched explaining the legislation, Sloane argued, Republicans “can say whatever they want about the healthcare bill … whether it’s true or not, and  . . . it will resonate . . .  People are afraid. People are afraid of things that they don’t understand and they don’t know. . . The Republicans are playing to this fear and they’re doing a masterful job.”

Sloane slid over the role that reporters might play in helping the public understand an enormous—and enormously important– piece of legislation.  If Republicans were spreading disinformation, shouldn’t news organizations like CBS try to separate fact from fiction?

Network and cable news shows are in our living rooms every evening. President Barack Obama and Health and Human Services Secretary Kathleen Sebelius are not. In speeches and in press conferences Obama and Sebelius can address a handful of questions, but they cannot explain the hundreds of interlocking details that will benefit millions of Americans. The public needs an independent, informed press that will dig into the major provisions of Obamacare and explain them, not once, but again and again.

There was just one problem: As Sloane suggested, the Republicans were doing “a masterful job” of misleading the public. What he didn’t take into account is that journalists are part of “the public.”

                      The Networks Spread Fear and Confusion

Fast forward two years to the fall of 2013.

Little has changed; most Americans still don’t understand the Affordable Care Act, and many are convinced that they have been betrayed by the president they elected.

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The Media’s One-Sided Coverage of Obamacare

Why does the media continue to insist on promoting the conservative meme that “Obamacare is a disaster”? Today Bloomberg ran a story headlined “Health-Care Law Support Hits New Low, Poll Shows

The piece begins: “Support for President Barack Obama’s signature health-care law has reached its nadir, according to a CNN/ORC International poll released today. The survey shows 62 percent of Americans opposing the law, the highest total since CNN began polling on the issue in March 2010. Just 35 percent favored it. The health-care law has been plagued by a faulty website, hindering efforts to log in and buy insurance, and by the revelation that millions of Americans could not keep their health insurance as Obama originally promised.”

It would be more accurate to say: “Support has been plagued by a faulty website—and a media determined to bury the good news while exaggerating the bad news.”

The very next sentence of the Bloomberg piece illustrates what I’m talking about: “Of those opposing the law, 15 percent said the legislation didn’t go far enough.” (If you actually look at the poll, you will find that pollsters were more explicit: 15% said the law was “not liberal enough.)  Bloomberg continues: ““Another 43 percent said the measure was too liberal based on Republican proposals such as the health-care measure championed by then-Gov. Mitt Romney in Massachusetts.”

Here is a more accurate, cleaerer  lead:  “50 percent of those polled either like the law (35% ) or think that it isn’t liberal enough (15%).”

It also is worth noting that the percent of people who think the ACA isn’t liberal enough is rising: in May 11% said the law wasn’t sufficiently progressive; last month 14% voiced that complaint. In other words, as more people learn about the details of Obamacare, more think that it’s too conservative.)

That’s quite different from the lead the reporter chose: “The survey shows 62 percent of Americans oppose the law.” Most readers would assume that means 62% are opposed to reform, when in fact 50% either support reform or would have liked a more progressive bill.

A balanced story would emphasize that the country remains deeply divided about the overhaul of our health care system. That should have been the headline: “Half of all Americans Support Legislation Sixteen percent thought they would be “better off” while 40% said they expected to be about the same.”Designed to Make U.S. Healthcare Better, More Equitable, and More Affordable.”

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Under Obamacare, Will Out of Pocket Spending Be Higher?

Not long ago, the Fear-Mongers were warning that under the Affordable Care Act, insurance premiums would spiral, causing “sticker shock.” Then the rates were published, and it turned out that, thanks to transparent markets in the exchanges, insurers had to compete on price, and premiums are lower than expected.  

But don’t worry, reform’s opponents haven’t run out of talking points. (I expect that long after most of the country has begun to enjoy the benefits of Obamacare, out-of-touch conservatives still will be muttering to themselves – rather like Japanese officers who held out in the jungles of the Philippines after WW II ended, unable to accept the fact that they had lost the war.)

In search of a new meme, they have latched onto the idea that, in the exchanges, customers will face “Staggering Out-of-Pocket Costs.” Sure, premiums may look low they say,, but wait until you try to use the policy and find yourself laying out $6,000. . Not long ago, Fox News summed up the argument: If the policy you bought in the individual market is cancelled because it doesn’t conform to the ACA’s rules, and you are forced to purchase coverage in an exchange, co-pays and deductibles will soon make you realize that the ACA is really “The Unaffordable Care Act.” 

Fox picked up the theme from a Bloomberg News story that went viral:“Obamacare Deductibles 26% Higher Make Cheap Rates a Risk,”  the Bloomberg headline screamed. As evidence, Bloomberg pointed to a survey of seven states, done by HealthPocket Inc., that compares the average deductible a consumer will face if he purchases a Bronze Plan in an Obamacare exchange to the average deductible in the private-sector market where 5 percent of Americans have been buying their own coverage. (These are the policies that are disappearing because they don’t meet the ACA’s standards.)

It turns out that the survey greatly exaggerates out-of-pocket spending in the Exchanges by focusing only on Bronze plan.  Meanwhile, the media ignores the most important number: what is the Maximum that an insurer can ask you to pay out of pocket?

The problem with many of the policies that are now being cancelled is not just that they were studded with holes  (some didn’t cover hospitalization; some didn’t cover chemo), but that in many states, a family could be asked to pay $30,000—or more—in co-pays and deductibles. . In a few states, there was no cap on the a patient’s liability.I This is how families lose their homes.

I’ve written about this here on healthinsurance.org. Read the entire post and, if you like, come back here to comment.

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Did You Know That 6 to 7 Million Americans Will Qualify for “Free” Health Insurance In the Exchanges? “Affordability May Not Be a Roadblock” to “Signing Up 7 Million” in 2014 –Credit Suisse

If you know someone who is uninsured, or buys her own insurance in the individual market– and lives in Texas, North Carolina, Missouri, Oklahoma, Louisiana, Mississippi, or Alabamachances are greater than 1 in 3 that under Obamacare she will qualify for health insurance that will cost her nothing. That’s right—her government tax credit will cover the entire premium.

It gets better. After shopping the state Exchanges during the first two weeks of October, McKinsey & Co, a leading global management consulting firm, discovered that people who are currently uninsured (or who buy their own insurance) in Florida, Wisconsin, Georgia, South Carolina, Tennessee, Virginia, Maine, Indiana, Kansas, Nebraska, Utah, Idaho, Montana or Alaska– stand a 1 in 4 chance of qualifying for a $0 policy.

How can that be? McKinsey explains that their income will makes them eligible for a government subsidy that will be larger than the policy’s premium.  Americans earning somewhere between $11,490 and 400% of the FPL ($48, 950 for an individual, $62,040 for a couple, $94,200 for a family) will receive subsidies. The lower your income, the larger it will be, and the more likely it is that your premium will be Zero .

This table from Credit Suisse reveals that in many states, uninsured Americans earning less than 175%  of the Federal Poverty Level (roughly $20,100 for an individual; $21,750 for a couple;  $34,170 for a family of three;  $41, 200 for a family of four) will be able to find zero-premium plans. Even if you earn somewhat more, it’s well worth the time it will take to check with your state marketplace.  You may discover that while coverage isn’t free, your subsidy will bring the cost down to as little as $20 a month.

Credit Suisse analyst Ralph Giacobbe agrees that roughly “6.5 million Americans … will be eligible for a $0 premium plan.” As a result, he believes that “affordability may not be a roadblock” to achieving the Congressional Budget Office projection that 7 million people will buy insurance in the exchanges in 2014

“Simply put, we don’t see any logical reason why anyone in this population wouldn’t take free healthcare coverage vs. remaining uninsured.”

The only question is this: How many people will hear about the free plans? Can we count on the media to inform the public? (Hat tip to the New York Times for publishing a front-page story about the McKinsey research.) Now, I would love to see the story on FOX – and in Forbes.

You can help spread the word. Do you know someone who is single, earns somewhere between $11, 490 and roughly $20,100 (175% of the FPL) and does not  have employer-sponsored insurance?  A graduate student?  Your cousin’s son?

Do you know   a family of three with income under $34,170 (175% of the FPL)  Perhaps the stay-at-home Mom down the street who just had a baby?

Good News for 20-Somethings and 30-Somethings

McKinsey reports that about half of those who will be able to purchase zero-premium insurance will be under 39 years old.

I originally published this story on  the Health Insurance Resource Center Blog. Click  there to  read the rest of the post—and find out more about the cap on the  co-pays and deductibles that someone with a $0 premium plan would pay.  

You can comment on the Health Insurance Resource Center Blog, or  you come back here to respond.

 

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