How is Obamacare going to work for families that have expensive workplace health insurance?

[SlackerInc]

I have googled and googled, and I think I understand what is going to happen next January for people around the poverty line or a little higher, and for people who are multiples of the poverty line and do not have any access to health insurance, but I'm still mystified as to what will happen for families like mine, that have access to workplace health insurance that is too expensive.

We are family of four with income at right about 200% of the federal poverty line; my wife is a teacher who is covered herself fully with no premium. But to add the family to her policy would cost about 15% of our gross income. If we had no access to workplace insurance at all, it appears we would be charged about 6% of our gross income after rebates to get insurance from one of the exchanges. The law says people with workplace insurance or access to workplace insurance are not eligible to buy from the exchanges and are not eligible for a subsidy unless the premiums would cost more than 9.5% of their income.

Everything I have read is maddeningly vague as to what happens if, as in our case, the premiums are in excess of that 9.5%. Do we get rebated down to 9.5%? Or do we end up paying 6% as we would if we were on an exchange? (Still a difficult expense to pay--I sure wish we had single-payer.) If the former, how in the world did anyone think it would make sense to penalise both employee and employer for having a workplace policy? (If that last question is off-topic for general questions, please ignore.)

[Dogzilla]

I have no factual basis on which to make this wild-assed guess:

Couldn't you just waive insurance coverage from your employers and participate in your state's exchange, if in fact, it turned out the premium cost was less?

[SlackerInc]

I don't think so. All the things I've read refer to "access to workplace health insurance" or workplace health insurance "available". Whether one actually subscribes to it or not does not seem to be relevant.

[Manda JO]

We are in the exact same situation: we pay about 13% of our gross income for crappy coverage ($1200 deductible each, so in years when we have anything medical actually happen, it's an even larger percentage) but I am so used to just rolling with that that it never occurred to me that we'd be in a different situation post-January. We just pay it. Honest to god, if they could just stop the upward creep it would help.

[jasg]

I have found that the Kaiser Family Foundation is a good source for this sort of information. At least from this on their site, those between 133% and 400% of poverty level would be capped between 2% and 9.5%. So, I'd bet you would be capped at less than 9.5%.

I wish Obamacare had done more to address costs, but at least those who could not buy insurance can now do so (with some subsidies) and there is no chance of being dropped without cause (fraud or non-payment). This alone is a big change.

[Manda JO]

Holy shit. That applies to us. I never even thought about it.

Ok, a follow up question, if you don't mind: I pay 13% of my gross income for the crappy coverage, with the before mentioned $1200 deductibles and only 80% coverage after that. If I were to switch to the decent package, it would be more like 20% of my income. If, either way, I am getting rebated back to 9.5%, what possible incentive is there NOT to opt for the better package?

[SlackerInc]

But see, the Kaiser link is the same ambiguity I keep running into over and over:

To be eligible for the premium tax credits, individuals must not be eligible for public coverage—including Medicaid, the Children's Health Insurance Program, Medicare, or military coverage—and must not have access to health insurance through an employer. (There is an exception in cases when the employer plan does not cover at least 60 percent of covered benefits on average or the employee share of the premium exceeds 9.5% of the employee's income.)

The employee premiums for us are 15 percent of our income; but our kids will soon be eligible for CHIP after they go six months without coverage (in March). However, I would then be the only member of the family without coverage and I would like to be covered!

[Manda JO]

Is employee + spouse still over 9.5% of your income? If it is, it sounds like you will be rebated down to 9.5%, which is hopefully doable.

[SlackerInc]

Not if we have to pay the SCHP premiums as well (5 percent of income). I am hoping total cost for all premiums will be six or at most 9.5 percent.

[Mdcastle]

The impression I got is you don't get a rebate if you can get coverage from your employer no matter what percentage you pay, the rebate is only for policies bought on the exchanges.

[jasg]

Originally Posted by Mdcastleman

The impression I got is you don't get a rebate if you can get coverage from your employer no matter what percentage you pay, the rebate is only for policies bought on the exchanges.

From the link above:

To be eligible for the premium tax credits, individuals must not be eligible for public coverage—including Medicaid, the Children's Health Insurance Program, Medicare, or military coverage—and must not have access to health insurance through an employer. (There is an exception in cases when the employer plan does not cover at least 60 percent of covered benefits on average or the employee share of the premium exceeds 9.5% of the employee's income.)

As I understand the law, this exception is to encourage employers to provide good, affordable coverage or pay a penalty.

[PandaBear77]

I'm in the same boat. Single breadwinner, family of 3. PandaKid and MrPanda are uninsured because it'd cost about $550 a month to add them to my insurance at work. If forced to buy insurance, I'm fucked. I can't afford an extra $50 a month much less $550.

I fucking hate Obama.

[Manda JO]

Assuming $550 is over 9.5% of your income and you make less than 400% of the poverty level ($76,360 for a family of 3 in most of the US), you'll be eligible to shop on the exchanges for coverage that will not cost more than 9.5% of your income. That's probably more than $50/month, but hopefully much less than $550 (especially considering that whatever you are paying now for yourself counts toward the 9.5% cap. Furthermore, expanding Medicaid/CHIP means your kid might more easily be eligible for coverage with an even lower cap.

[ZipperJJ]

Originally Posted by PandaBear77

I'm in the same boat. Single breadwinner, family of 3. PandaKid and MrPanda are uninsured because it'd cost about $550 a month to add them to my insurance at work. If forced to buy insurance, I'm fucked. I can't afford an extra $50 a month much less $550.

I fucking hate Obama.

How would you afford a short hospital stay, a broken bone or, say, cancer?

[md2000]

http://healthreform.kff.org/faq/who-...subsidies.aspx

Beginning in 2014, tax credits will be available to U.S. citizens and legal immigrants who purchase coverage in the new health insurance exchanges and who have income up to 400% of the federal poverty level ($43,320 for an individual or $88,200 for a family of four in 2009). To be eligible for the premium tax credits, individuals must not be eligible for public coverage—including Medicaid, the Children's Health Insurance Program, Medicare, or military coverage—and must not have access to health insurance through an employer. (There is an exception in cases when the employer plan does not cover at least 60 percent of covered benefits on average or the employee share of the premium exceeds 9.5% of the employee's income.)

I'm reading this as saying if the employer plan is over 9.5% of income, you can buy on an exchnage instead with subsidies. Depends what "there is an exception" means? Exception to eligibility to buy on exchange instead, with subsidy?

And this:
http://www.seyfarth.com/dir_docs/new...mentupload.pdf

Failure to Offer Affordable MEC
A large employer that offers MEC that is not “affordable” will be subject to an excise tax of $3,000 per employee who receives a Subsidy through the exchanges. While this is a larger dollar amount than the tax for failure to offer MEC, this tax is only multiplied by the number of employees who receive a Subsidy, rather than by all full-time employees.

This brochure is maddeningly ambiguous about whether the family rate is available for rebates; just that the employer is not penalized if the employee's personal coverage costs less than 9.5% (OP says it does). So I'm seeing this as "family cost exceeds 9.5%, employee can go to the Exchange instead. Employer does not pay penalty because individual cost is not 9.5%" - That looks like a cheap way for the employer to escape no-coverage penalties if I'm reading this right.

It does suggest the employee/family could still go to the Exchange if they cannot afford the employer plan.

[md2000]

http://www.forbes.com/sites/aroy/201...date-loophole/
This makes the escape hatch for employees on family subsidies even more explicit.

It suggests that -
If the employee income vs. personal MEC cost is less than 9.5% - no tax penalty for employer.
If the employee household income vs. family MEC cost > 9.5% then the family switches to the Exchange (with subsidies) and the employer gets off scot-free, still no tax penalty.

The article also says this regulation is in direct contradiction with the law as written. (meaning, I assume, expect it to be "fixed").

The logic is good - an employer can't predict what household income is or family size, so total MEC percent is not known ahead of time, so why should they be hit with a surprise $3000 penalty because of that?

[lazybratsche]

Yeah, I've been trying to figure out this problem as well. Basically my health care is covered 100%, but adding my wife would cost around 9% of our gross income. But if we qualified for the exchange, we'd get a subsidy so that we'd only pay ~6% for both of us. So if md2000 is correct, we're just completely out of luck. (Thanks for the research, btw.)

And then there's the added complication that I'm a grad student, so whether I count as an "employee" or a "student" in a given situation depends on what's cheapest for the university...

[snowthx]

Originally Posted by SlackerInc

We are family of four with income at right about 200% of the federal poverty line; my wife is a teacher who is covered herself fully with no premium. But to add the family to her policy would cost about 15% of our gross income. If we had no access to workplace insurance at all, it appears we would be charged about 6% of our gross income after rebates to get insurance from one of the exchanges. The law says people with workplace insurance or access to workplace insurance are not eligible to buy from the exchanges and are not eligible for a subsidy unless the premiums would cost more than 9.5% of their income.

Serious question: Could you leave your wife on the policy she gets from her work, and then just get a separate policy from an exchange for you and the rest of the family? It essentially means making your family two entities - one with employer provided health insurance, and the other without. Is this allowed?

[md2000]

http://healthreformgps.org/wp-conten...ce-voucher.pdf

The free choice voucher requirement would have shifted some of the cost of coverage for some individuals who purchase through the Exchanges from taxpayers to employers who offer health insurance coverage. Now, without this requirement, employees whose employers offer coverage will choose between that employer’s plan and coverage through the Exchange (subsidized or unsubsidized depending on income and eligibility).

This mainly deals with eliminating the voucher program, but definitely suggests the employee has the choice to switch from the employer plan to the Exchange.

From what I'm reading, the "limited to personal income, personal coverage" only figures in whether the employer is penalized. The subsidy appears to apply if the total cost of the employee-selected (family) coverage would exceed 9.5% of HOUSEHOLD income, and the employee elects to go to an Exchange instead.

Whether you can mix-and-match - good question. That would maybe depend on whether the addition of family itself is 9.5% or greater? Actually, it depends on what the rules are clarified to be...

[SlackerInc]

I appreciate so many people grappling with this. It underlines, though, why I'm so confused by all of this because it appears the answers are not very clear cut at all. One of the things I'm still really wondering is if a family like mine would get a 6% of income premium cap if we were just completely uninsured, but will only get rebated down to 9.5 percent if we have employee insurance available.

Stated that way, it doesn't sound like a huge difference; but it's a more than 50% increase in the amount of money paid towards premiums and would make a huge difference to us ($375 a month we currently don't spend while living paycheck to paycheck, vs. $250). it also just seems backward, perverse in its incentives. (Unlike the poster above though, I have great admiration for the president and it is regardless a huge improvement compared to the status quo.)

[actualliberalnotoneofthose]

I think in my state Medicaid is for like up to 200% of the poverty line for families. I assumed they would force people into that if they want to avoid paying the high premiums and are eligible. Or is that still just going to be on a state by state basis and some states will not be expanding that at all (as far as adding adults and increasing income limits)?

[SlackerInc]

That was the one part the SCOTUS partly struck down, saying states could not be forced to join the Medicaid expansion. Some stubborn red states are refusing to, even though the federal government is paying over 90% of the tab. But it only raises the threshold to 138% of FPL, and we are at 200%.

[Senegoid]

This just in!

Article in New York Times yesterday (Jan. 30):
Federal Rule Limits Aid to Families Who Can’t Afford Employers’ Health Coverage

WASHINGTON — The Obama administration adopted a strict definition of affordable health insurance on Wednesday that will deny federal financial assistance to millions of Americans with modest incomes who cannot afford family coverage offered by employers.

In deciding whether an employer’s health plan is affordable, the Internal Revenue Service said it would look at the cost of coverage only for an individual employee, not for a family. Family coverage might be prohibitively expensive, but federal subsidies would not be available to help buy insurance for children in the family.

Family-friendly, my ass.

[PandaBear77]

Originally Posted by Senegoid

This just in!

Article in New York Times yesterday (Jan. 30):
Federal Rule Limits Aid to Families Who Can’t Afford Employers’ Health Coverage


Family-friendly, my ass.

In-fucking-deed.

I can feel my BP going up already and it's not even 6:30am.

[SlackerInc]

Ugh. Ugggghhhhh. UGH!

WTF--this is seriously disheartening, not just personally (though it certainly is that) but it is so asinine from a policy perspective. I really can't believe this.

ETA: PandaBear, you seem to have not wanted Obama to be president, is that right? This rule shouldn't really bother you then because the subsidy is not there but neither, if you read the whole article, is the penalty for not buying insurance. So it's status quo all the way. I hate the status quo, but if you didn't, what's the problem?

[Saint Cad]

Democrats had better be careful. It looks like the Pubs might be right on what a clusterfuck this will be. So in my case:
Me: $0
Me+spouse: $400
Me+family: $900

So consider me screwed by the Federal rule. This was my favorite:

Under the law, people who go without insurance will generally be subject to tax penalties. In a separate proposed regulation issued on Wednesday, the Internal Revenue Service said that the uninsured children and spouse of an employee would be exempt from the penalties if the cost of coverage for the entire family under an employer’s plan was more than 8 percent of household income.

So rather than helping me get my family covered, you just won't punish us because we can't afford it? Thank you Obama.

[jasg]

Originally Posted by Saint Cad

Democrats had better be careful. It looks like the Pubs might be right on what a clusterfuck this will be.

They should know, they proposed it first - back in 1993. This shows that much of the current bill is identical to a proposal from Republican senators to counter the Clinton era reforms which would have mandated employer coverage for all.

I think Obamacare is good improvement for a first step, but some are going to be very disappointed because it does not guarantee low cost coverage for all. It does make it possible to get insurance. However the cost can be quite a shock since employers have not usually let employees know how much insurance actually costs.

[SlackerInc]

But why, WHY, would they ever think of making it more expensive to get covered if someone in the family has an employer that picks up part of the tab, than if you have the identical household income but no one in the household works for an entity that provides any coverage? It is beyond ridiculous and just makes NO sense at such an elemental level, I don't know whether to laugh or cry (though obviously I'm leaning toward the latter).

[jasg]

Originally Posted by SlackerInc

But why, WHY, would they ever think of making it more expensive to get covered if someone in the family has an employer that picks up part of the tab, than if you have the identical household income but no one in the household works for an entity that provides any coverage? It is beyond ridiculous and just makes NO sense at such an elemental level, I don't know whether to laugh or cry (though obviously I'm leaning toward the latter).

If that happens - and we won't really know until the exchanges open on 1 October, it is an indefensible flaw that should be corrected by legislation that clears things up. As it is, it leaves the IRS on the hook for an unpleasant decision. But... with congress the way it is, don't hold your breath for adjustments to the ACA (except repealing it of course).

I wonder how things would look if the ACA forced every employer to drop health insurance and simply gave everyone a raise. Everyone would have to use the exchanges on a level field then. As it is, we have people with 'Cadilliac' employer plans getting taxed and people with 'Scrooge' plans getting screwed with the possibility of no subsidies.

[snowthx]

Originally Posted by SlackerInc

But why, WHY, would they ever think of making it more expensive to get covered if someone in the family has an employer that picks up part of the tab, than if you have the identical household income but no one in the household works for an entity that provides any coverage? It is beyond ridiculous and just makes NO sense at such an elemental level, I don't know whether to laugh or cry (though obviously I'm leaning toward the latter).

I do not know the answer, but perhaps it was to put pressure on employers to extend coverage to an employee's family and not just cover the employee alone. Maybe they figure those that offer better benefits will be more attractive to prospective employees, and companies would want to retain their good employees and not have them leaving for better benefits. Just speculating.

The outcome here so far does seem disappointing. I would have expected better.

[SlackerInc]

But... with congress the way it is, don't hold your breath for adjustments to the ACA (except repealing it of course).

Exactly. I am seriously thinking I may actually have to divorce my wife* so I can get affordable coverage through the exchanges! And how fucked up is that--good grief. Talk about the law of unforeseen consequences...but they should have seen this one coming.

*Would this be like an immigration case, where someone from the IRS will sniff around to see if we are still living and sleeping together? Gaaahhhhh...

[Saint Cad]

Originally Posted by jasg

They should know, they proposed it first - back in 1993. This shows that much of the current bill is identical to a proposal from Republican senators to counter the Clinton era reforms which would have mandated employer coverage for all.

But the point of the OP was that Family insurance coverage will be cost out at the individual rate for subsidy eligibility and thus most middle-class familys will still not be able to afford coverage. Are you saying the Republicans had that as part of their plan?

[ralph124c]

I have a different question: when those 11-12 million illegal aliens become US citizens, they wil be eligible for Obamacare. Suppose they have zero taxable earnings (they work in the cash-underground economy)-who will pay for their health coverage?

[septimus]

Originally Posted by ralph124c

I have a different question: when those 11-12 million illegal aliens become US citizens, they wil be eligible for Obamacare. Suppose they have zero taxable earnings (they work in the cash-underground economy)-who will pay for their health coverage?

I don't see a smiley-face on this question, so I'll ask the obvious: who will pay for the health coverage of legal non-aliens who have zero taxable earnings (they work in the cash-underground economy) ?

One argument in favor of legitimizing aliens is so they won't work underground.

[jtgain]

Maybe I am misunderstanding, but it seems as if an employee is generally better off if his employer does NOT offer health insurance under the new law. But the new law then penalizes the employer if it doesn't offer health insurance creating a tension between the two.

Again, if I understand, say I make $1000/mo (for simplicity, ignore the poverty level)

As long as an employer makes my health care available for $95/mo, then it is good, right? But it could say that coverage for my spouse or child is $1500/mo and STILL be in compliance with the law? And I don't get a subsidy for the exchange?

[Fotheringay-Phipps]

The fact that affordability will be based on single coverage has been expected for well over a year, based on preliminary regs, and the recent guidance just makes it official.

Also worth noting is the potential income gap in states which do not elect expanded Medicaid coverage.

This is about people who are not eligible for Medicaid under current rules but are eligible under ACA expanded Medicaid rules (income up to 138% of FPL). Since under the ACA these people were assumed to qualify for Medicaid, they are not eligible for subsidized coverage on exchanges. But if a state does not expand Medicaid - as allowed under the USSC ruling - then these people will also not qualify for Medicaid, and are SOL unless they get raises (or pay cuts).

A whole lot of states are apparently electing not to expand Medicaid, so this could be a big issue.

In other ACA news, a lot of unions are apparently having second thoughts about the ACA, having belatedly realized that their own health plans are going to be undercut by ACA, and that having a plan is a big part of the reason the unions exist in the first place. Link

And what about Obama's promise that "“If you like your health-care plan, you can keep your health-care plan”? More bad news.

[jasg]

Originally Posted by Saint Cad

But the point of the OP was that Family insurance coverage will be cost out at the individual rate for subsidy eligibility and thus most middle-class familys will still not be able to afford coverage. Are you saying the Republicans had that as part of their plan?

Of course not. Their plan never got implemented.

I do find Republican objections to Obamacare rather disingenuous.

[md2000]

My guess - none of the articles, none of the IRS press releases, and probably not even the IRS themselves have figured out what the real rules are.

The ruling was imply to make it so that if Dick and Jane got married, or Jane had triplets, or the other Dick in the household got laid off, the employer was not suddenly hit with an unforseen penalty.

The obvious cheat is simple - $0 for the employee's coverage, $(the roof) for any dependants. Nobody signs up their dependants, they use the exchange, but the employer does not get penalized. The employer no longer has to voucher for what the employee's in-house plan would cost. Drive as many employees as possible to choose the exchange while avoiding fines.

I bet nobody in the IRS wants to stick their neck out to make a decision on this so - is an employee getting the subsidy if the cost structure is such that the employer aviods a fine? Leave it to the politicians to decide the issue when the noise gets louder.

The various articles most likely quote those with an agenda putting their own interpretation on ambiguity.

[moriah]

Originally Posted by Fotheringay-Phipps

And what about Obama's promise that "“If you like your health-care plan, you can keep your health-care plan”? More bad news.

Well, that's a rather disingenuous set-up for that link. You make it sound that current plans will be taken away from you be *force* because the promise is a lie!. But the link says *maybe* some *employers* will drop insurance plans.

And maybe they won't.

Just like all those 'job creators' said they'll fire huge numbers of employers if the tax rate went up on the top tier taxpayers. How did that pan out?

[Senegoid]

Originally Posted by Senegoid

This just in!

Article in New York Times yesterday (Jan. 30):
Federal Rule Limits Aid to Families Who Can’t Afford Employers’ Health Coverage

[Excerpt from that article quoted here]

Family-friendly, my ass.

Follow-up: Editorial in NYT today (Feb. 2) here.

[usedtobe]

I have been searching and searching - maybe someone here can point me to an answer:

Single (never married) Disabled (on SS Disability, NOT SSI) and paying 20% for Blue Shiild. Do not want Medicare (I have enough trouble getting accepted to a new doc without answering "Medicare" to their "What is your insurance?" (which, btw,, is a good way to hear what a hang-up sounds like on your new phone).
My medicines are incredibly expensive, and am looking at kidney dialysis/transplant.

Can I get some credit/rebate/whatever to take the edge off the cost while keeping the existing policy?

Blue Shield of California is being tight-lipped about 2014 - just "If the law stands, you may have additional health care options beginning in Jan 2014".l

[usedtobe]

I may or may not be eligible for "tax credits" which can be applied independently of taxes to pay part of the premium, correct?

By how much do you suppose the insurance rate will increase for each dollar of "tax credit" they receive? (yes, I"m cynical - comes with age and wisdom).

[md2000]

If the current "interpretation" means the rules seem to directly contradict legislation, I suspect a number of lawsuits will emerge in the near future...