HHS Announces How Much Insurance Will Cost in 36 State Exchanges

These are the numbers we have been waiting for. This week the Department of Health and Human Services (HHS) published a report revealing what insurers will be allowed to charge in the largest cities in 36 states, when selling policies Americans buying their own coverage in the state “Exchanges.” The report also shows the size of the subsidies that Exchange shoppers  will receive. Previously, we had hard numbers for only 14 states.

In addition, HHS announced averaged premiums, state-wide, for Bronze and Silver plans in those 36 states. (We will be getting more information on rates in other cities very soon.)

Fear-mongers should blush.

It turns out that, on average, rates are 16% below the Congressional Budget Office’s projection—and that is BEFORE factoring in the subsidies.

I found what the report has to say about premiums in Texas particularly interesting. Many observers had suggested that while rates in the Blue States might be surprisingly low, Red States would let carriers charge far more.

I’ve written about the report—and the media’s reaction to it—here on healthinsurance.org. 

You can comment there, or return here to comment.

If you use Facebook, you may want to put a link on your Facebook page. More people need to hear the facts about Obamacare.

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Will You Be Eligible for A Government Subsidy When You Buy Health Insurance in 2014? Check out Your “Modified Adjusted Gross Income” (MAGI) –You May Be Pleasantly Surprised

Before writing this post, I had no idea how to calculate my “Modified Adjusted Gross Income” (MAGI). But I did know that this is the number the IRS will use when deciding whether people purchasing their own insurance in their state’s online marketplace (a.k.a. Exchange) will qualify for a tax credit to help them cover their premiums.

This piqued my interest.

The first thing you need to know is that there are different definitions of Modified Adjusted Gross Income (MAGI) for different situations. The  the Affordable Care Act has its own definition to be used when determining whether someone is eligible government subsidies (premium tax credits) when purchasing  his own insurance in the state Exchanges. 

When calculating your MAGI, you can subtract certain items from your adjusted gross income including: student loan interest, certain moving expenses,, some self-employment expenses, and any alimony that you pay.

As a result, an individual grossing $50,000 (or a family of four with income of $98,000)  might well discover that after they deduct these items from, their MAGI falls under the cut-off for subsidies ($45,960 for an individual, $62,040 for a couple,  $78,120, for a family of three, $94, 200 for a family of four)

This is why, even if think you earn a few thousand too much to qualify for government help, you should ask whoever prepares your taxes about your MAGI.

Kiplinger’s  Kimberly Lankford, suggests other ways to lower your MAGI by “selling losing stocks or boosting business expenses to offset self-employment income.”  But, she warns, “Be careful with moves that could boost that your MAGI and make it more difficult to qualify for the subsidy — such as converting a traditional IRA to a Roth.”  .

Clearly MAGI is a tricky number. The good news is that you don’t have to do the arithmetic yourself. Your Exchange will do it for you when you apply. j(Ultimately, the IRS does the calculation).

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Under Obamacare, Will You Receive a Subsidy to Help You Buy Your Own Insurance? We Now Have Real Numbers That Will Let You Calculate How Much You Will Receive

 

Note to Readers: A longer version of this post appeared yesterday on HealthInsurance.org.

Up until now, when Obamacare’s supporters and reform’s opponents squabbled over what insurance will cost in 2014, they had to rely on estimates and national averages. But now we have real numbers.

Eleven states have announced the rates that insurers will be charging in their Exchanges-marketplaces where individuals who don’t have employer-sponsored coverage can shop for their own insurance.

Subsidies Will Be Based On the Cost Of A Silver Plan Where You Live,

Middle-income as well as low-income people buying coverage in the Exchanges will be eligible for government subsidies that will come in the form of tax credits. Anyone earning between 100 and 400 percent of the federal poverty level (FPL) (now $11,490 to $45,960 for a single person, and up to $126, 360 for a family of six) will qualify.

Most people who are forced to buy their own insurance earn less than 400% of FPL. More affluent Americans usually work  for companies that offer comprehensive coverage.

The graph below shows average Silver plan rates in the eleven states that have disclosed premiums. (Note that these are only state averages. Premiums vary widely within a state: In some cities and counties silver plan rates will be much lower, even before you apply the subsidy.

Silver plan premiums

It’s worth noting that in these 11 states the least expensive Silver Plan costs 18% less than the non-partisan Congressional Budget Office projected last year. 
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If You Buy Your Own Insurance in the Exchanges, Will You Receive a Government Subsidy? How Much Will it Be for Couple, or a Family of Five?

ACA tax credits

 

 

 

 

 

 

Source:

No doubt you have read that if you are single, and earn less than 400% of the Federal Poverty threshhold (roughly $46,000 for an individual or $94,200 for a family of four) you will be eligible for a tax credit to help you cover the cost of insurance premiums.

But most of us don’t fit into one of those two categories. What if you are a couple, or a family of three? What happens if you have four kids?.

As the table above reveals, if a couple has  four children  and earns less  than $126,360 (400% of the FPL), they will be elibigle for the tax credits. Note: these credits are available only if you are self-employed, unemployed, or work for a company that does not offer affordable, comprehensive insurance. “Affordable” is defined as individual coverage that costs less than  9.5% of your income.

The credits are designed to make sure that no one who purchases their own insurance is forced to spend more than 9.5% of their income on health care. For instance, according to the Kaiser Family Foundation’s (KFF’s) new subsidy calculator, coverage for a 35-year-old couple with three children might cost $13,101./(This is an estimate; actual premiums will vary depending on where you live. Healthcare is much more expensive in some states than in others. ) If the parents earned roughly $100,000 a year, they would be asked to pay $9,500 toward their insurance and would receive a tax credit of $3,626.

This assumes that they purchase a “silver plan” which pays for an average of 70% of covered benefits. The family would owe the other 30% in  the form co-pays and deductibles. But keep in mind that preventive care is free, there are no co-pays and the deductible does not apply.

Assuming they need care other than preventive care, total out-of-pocket spending would be capped at $12,750, even if the entire family wound up in a car accident, three of them were hospitalized, and two needed surgery.

If they preferred, the family could purchase a less expensive Bronze plan which would pay for 60% of covered benefits. Their co-pays and deductible would be higher, but once again, preventive care would be free, total cost sharing still would be capped at $12,700, and the premium for a Bronze plan would be lower: KFF estimates that a family of five earning $100,00 would still receive a subsidy of $3,626 and their share of the premium would be just $7,253.

Why is the Government Subsidizing Households That Earn more than $125,000?

 If people choose to have four children, that certainly is their business. But why should I help pay for their healthcare?

The answer is two-fold:

First, people don’t necessarily choose to have 4 children –or more. Some couples are surprised (not to mention overwhelmed) when they disccover that they are having twins or triplets. 

Secondly as a society, we care about children. We don’t want any child to go without needed care.

But there also is a pragmatic reason for supporting large families. If those children don’t receive preventive care such as dental checks as well as  timely treatments when they are sick, down the road, we as a society will pay the price. The health of the population will play a major role in determining how productive we, as a nation, are.  

 

 

 

 

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Under the ACA, will YOUR Insurance Premiums Rise or Fall?

Today, many Americans are asking: will my premiums go up in 2014?

There is no simple answer.

According to Families USA ,the Affordable Care Act (ACA) will have a positive effect on the typical family’s budget. Using an economic model that can factor in all provisions of the Act (ACA), Family’s USA estimates that by 2019, when the law is fully implemented, “the average household will be $1,571 better off.”

Even high-income families will save: thanks to rules that limit co-pays, and reward providers for becoming more efficient, “those earning $100,000 to $250,000” will spend $779 less on medical care.” But these are “averages.” They don’t tell you whether your health care costs will rise or fall.

The answer will depend on: your income, your age, your gender, who you work for, what state you live in, whether a past illness or injury has been labeled a “pre-existing condition,”  and what type of insurance you have now: 

If you work for a large company:

–  The ACA will have a “negligible” effect on your premiums says the Congressional Budget Office(CB0). This doesn’t mean that your costs won’t climb at all in 2014. As  long as medical product-makers and providers continue to raise prices, premiums will edge up each year.

But in 2012 average premiums for employer-based insurance rose by just 3% for single coverage and 4% for families, a “modest increase” when compared to 8% to 12% jumps in past years. And on average, employee co-pays and deductibles remained flat.

Granted, a 3% to 4% increase still outpaces growth in workers’ wages (1.7% percent) and general inflation (2.3%) percent).But as reform reins in spending annual increases for large groups could fall to 2%–or less. 

If you work for a small company with more than 50 employees:

Your boss will be more likely to offer affordable benefits, in part because, if he doesn’t, he will have to pay a penalty

Moreover, he will find insurance less expensive. Today, small businesses pay 18% more than large companies because the administrative costs of hand-selling plans to small groups are sky-high. But starting in 2014  businesses with fewer than 100 employees will begin buying insurance in “Exchanges” where they will become part of a large group, and eligible for lower rates.

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Ignore the Hype: Why Health Insurance Premiums Won’t Skyrocket in 2014

Health reform’s critics are sounding the alarm: in 2014, they say, health insurance premiums will climb, both for small businesses and for individuals who purchase their own coverage. “Hold onto your hat,” writes  Bob Laszewski, editor of Health Care Policy and Market Place Review. “There Will Be Sticker Shock!” 

Laszweski’s piece has been cross-posted on popular blogs, and his forecasts have been popping up in mainstream newspapers, including  USA Today Such wide circulation makes Laszewski’s warnings worthy of attention, and compels me to ask an important, if impertinent, question: Is what he says true?

Cherry-picking a CBO report

The Congressional Budget Office expects  that the ACA will have a “negligible” effect on the premiums that large employers pay for insurance, and most experts agree. But in the individual market, Laszewski claims that CBO projections show “10% to 13% premium increases.”

Here is what the CBO actually said:

About 57 percent of people buying [their own] insurance would receive subsidies  via the new insurance exchanges, and those subsidies, on average, would cover nearly two-thirds of the total premium.

“Thus, the amount that subsidized enrollees would pay would be roughly 56 percent to 59 percent lower, on average, than the premiums charged under current law.”

Wait a minute: “56 to 59 percent lower?” Where does Laszweski get “10 percent to 13 percent higher?

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Subsidies: Will You Receive a Tax Credit to Help You Buy Insurance in 2014? How Much?

Beginning in 2014, millions of Americans will discover that they qualify for subsidies designed to help them purchase their own health insurance. The aid will come in the form of tax credits, and many will be surprised by how generous they are.

Not only low-income, but moderate-income families earning up to 400 percent of the federal poverty level (FPL) – currently $44,680 for a single person and $92,200 for a family of four – will make the cut.

Yesterday, I posted about subsidies on healthinsurance.org. The post includes a calculator which tells you whether you would be eligible, and how much you would receive. Even if your employer offers health benefits, you might qualify for a tax credit  if the plan too expensive, or too skimpy. (I explain how the government defines those terms.) I also explain how the government calculates subsidies, and what happens if you live a place where healthcare is particularly expensive.

Click here for the full post   If you like, come back here to comment.

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Can U.S. Businesses Afford Obamacare?

No doubt you have heard that the Olive Garden, Denny’s and Papa John’s Pizza all are slapping an “Obamacare surcharge” on the price of their products.  They claim they have no choice.

But the news that Americans might pay 50 cents more for a mediocre $10 meal at the Olive Garden is not what bothers me most. Since President Obama was re-elected each of these restaurant chains have announced that they also plan to cut many full-time workers’ hours back to less than 30 hours a week in order to duck the cost of providing health care benefits.. This means that employees who are now working 40 hours a week will have to look for a second job—or find a way to support themselves on less than three-quarters of their current salary.

Michael Tanner, a fellow at the conservative Cato Institute, argues that companies outside the restaurant business also will be forced to down-size. Just a few days ago, Tanner wrote: “While restaurants are especially vulnerable to the cost of Obamcare other business are being hit too. For example, Boston Scientific has announced that it will now lay off up to 1,400 workers and shift some jobs to China. And Dana Holdings, an auto-parts manufacturer with more than 25,000 employees, says it too is exploring ObamaCare-related layoffs.”

Obamacare will  “keep unemployment high,” Tanner claims, because under reform legislation, businesses that have at least 50 employees working over 30 hours a week are expected to offer their workers affordable health insurance. If they choose not to, and more than 30 of their employees qualify for government subsidies to help them purchase their own coverage, the employer must pay a penalty of $3,000 for each worker who receives a subsidy— up to a maximum of $2,000 times the number of the company’s full-time employee minus 30. (The Kaiser Family Foundation offers an excellent graphic explaining the rule.) 

By paying the fine, the employer is, in effect, paying a share of a tax credit that would cost the government anywhere from roughly $1,700 for a single young worker  to over $12,000 to help the average 35-year-old worker who has a spouse, two children, and reports $35,000 in total household income.

Conservatives like Tanner argue that that is unfair, and that small businesses– “the engine of job growth”– will be hit hardest.  

What they  don’t do is look at the math:

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Could President Romney repeal Obamacare? No.

 Mitt Romney’s web site makes a bold promise: “On his first day in office, Mitt Romney will issue an executive order that paves the way for the federal government to issue Obamacare waivers to all 50 states. He will then work with Congress to repeal the full legislation as quickly as possible.”

Many of Romney’s supporters assume that this is what will happen if he wins. But in truth, even if Republicans take both the White House and the Senate, Romney wouldn’t have the power to “repeal the full legislation.” Nor could a new president grant waivers that would let states ignore the Affordable Care Act (ACA). We live in a nation ruled by law, not magic wands.

That said, those who support reform should keep a close eye on the Massachusetts Senate race, where Democrat Elizabeth Warren is challenging Republican Senator Scott Brown. The outcome could determine whether Democrats continue to hold 53 seats out of 100. (Political analysts rate Brown and Nevada’s Dean Heller as the two most vulnerable Senate Republican incumbents. If Republicans win the Senate, they won’t be able dismantle reform, but they could do serious damage to the ACA, by eliminating the subsidies that will help middle-class and low-income Americans purchase insurance. But even if they take over the Senate they will not be able to change the new rules for insurance companies.

                                    Romney’s Promises – and Why You Can’t Believe them

Begin with the “Obamacare waivers” for the states.

“There are no ‘Obamacare waivers’ that could be issued by executive order,” Washington & Lee health law scholar Timothy Jost explained in a recent phone interview. That’s right: these waivers simply don’t exist. Here, we’re tripping over one of those “Big Lies” that have become a feature of the Romney campaign. (Nazi propaganda chief Joseph Goebbels was the master of the tactic: if you tell a colossal lie, and repeat it often enough, people will believe it, not matter how outrageous. After all, who would make up such a whopper?)

On the HealthAffairs BlogJost elaborates :

You will find the rest of this post on HealthInsurance.org If you like, you can return here to comment.

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The Supreme Court’s decision buys time: More Americans will have a chance to learn what reform means

Now, the power to make a decision about health reform is back where it should be – in the hands of the American people. In November, they will vote.

Ironically, the Supreme Court challenge may have put them in a better position to vote in their own self interest.

When the case went to the Court, a dreary policy debate turned into a contest that piqued our interest. Americans like spectator sports: Who will win? Who will lose?

Thanks to the publicity, some learned that the Affordable Care Act’s mandate will apply only to Americans who don’t have employer-based insurance, Medicaid or Medicare. And while that relatively small group will be subject to a penalty if they don’t buy insurance, they also will be eligible for a subsidy if they do.

Since the Court announced its controversial decison, some media coverage has delved a little deeper into the details of reform.

For example, last week, the Christian Science Monitor offered a quick lesson in “How the Supreme Court Ruling Affects Families.” Consider a “family of four, headed by a 45-year-old, with an income of $60,000″ purchasing their own insurance. In 2014, they “would reap a tax subsidy of $9,308.”

If they didn’t buy insurance, in 2014 they would pay a penalty of $285. Suddenly, health reform doesn’t sound so scary.

I published this post on HealthInsurance.org a few hours ago.  To read the rest of the post, click here

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