The Affordable Care Act and Working Poor (Facts Only, PLEASE!)

Factual Questions
1

PLEASE do not inject political views, likes/dislikes, or snark into this thread. Please. Because I really want this to be about facts as the topic will soon be affecting many here and we need knowledge, not opinion. I don’t care if you’re pro or con on the Act, what I want to know here are the FACTS.

How, exactly, are the working poor/lower income hordes supposed to be for the insurance they’re being required to purchase? How do the subsidies work?

This is getting personal for me as I may be losing eligibility for my current state-subsidized insurance and my spouse MUST take his daily medication, which is far too expensive for us to purchase over-the-counter and still pay rent and buy food. The last time we were without insurance we purchased as much as we could, but his vision started to deteriorate. You see, a diabetic coma is a life-threatening emergency and you can get care for that no matter how poor/uninsured you are, but slowly going blind because you can’t afford the needed medication is just, oh well, sucks to be you. But I digress…

OK, so let’s look at a hypothetical working poor family. They make too little to afford insurance on their own and qualify for whatever sort of subsidy this new system allegedly has.

Does this family somehow have to cough up the full premium price every month, and then at the end of the year/tax time they get some sort of “credit” on their taxes/in their refund? Or does the subsidy come on a monthly basis so that each month the family pays their “share” and the government/whoever covers the rest of the subsidy so the monthly cost is effectively lowered for them?

I can’t see the “cough up the money and we’ll give you credit/subsidy later” working because the whole point is that these people can’t afford to pay all that. Then again, the government can be perverse in its workings. I haven’t heard what the actual mechanism for this system is, how it will work in the nitty gritty details for the citizens qualifying for a subsidy. My Googling seems only to give me broad overviews, puff pieces about how wonderful it will all be with no details, or scathing flame wars that cause my monitor to spontaneously combust. None of which is helpful.

Does anyone know?

2

The exchange: https://www.healthcare.gov/

3

It’s their choice:

But if you receive the subsidy in advance, it’s only an estimate, sort of like withheld income taxes. You can get too much and have to pay it back, or get too little and receive the rest the following year.

4

Not strictly on-topic, but you mentioned your husband was diabetic. There are a lot of resources for low-income diabetics, including programs to provide insulin for free/low cost. Not sure if that’s what you need or if you qualify, but thought I’d mention it in case it helps.

5

He’s not on insulin, but who knows, one day he might be - the links (from everyone) are appreciated. I’m off to work now so I’ll have to read them later, but thanks again.

6

It isn’t a government site and it doesn’t contain actual plan numbers, but this site is a good place to get non-gospel figures on what you can expect to pay;

Showed that if I was still working the crappy job I left a year and a half ago (and now make multiples of, income wise), results are;

The information below is about subsidized exchange coverage. Note that subsidies are only available for people purchasing coverage on their own in the exchange (not through an employer). Depending on your state’s eligibility criteria, you or some members of your family may qualify for Medicaid.

Household income in 2014: 218% of poverty level
Unsubsidized annual health insurance premium in 2014:$5,629
Maximum % of income you have to pay for the non-tobacco premium, if eligible for a subsidy:6.92%
Amount you pay for the premium:$1,729 per year
(which equals 6.92% of your household income and covers 31% of the overall premium)
You could receive a government tax credit subsidy of up to:$3,900
(which covers 69% of the overall premium)

BRONZE PLAN

The premium and subsidy amounts above are based on a Silver plan. You have the option to apply the subsidy toward the purchase of other levels of coverage, such as a Gold plan (which would be more comprehensive) or a Bronze plan (which would be less comprehensive).

For example, you could enroll in a Bronze plan for about $765 per year (which is 3.06% of your household income, after taking into account $3,900 in subsidies). For most people, the Bronze plan represents the minimum level of coverage required under health reform. Although you would pay less in premiums by enrolling in a Bronze plan, you will face higher out-of-pocket costs than if you enrolled in a Silver plan.

OUT OF POCKET COSTS

Your out-of-pocket maximum for a Silver plan (not including the premium) can be no more than $5,200. Whether you reach this maximum level will depend on the amount of health care services you use. Currently, about one in four people use no health care services in any given year.

You are guaranteed access to a Silver plan with an actuarial value of 73%. This means that for all enrollees in a typical population, the plan will pay for 73% of expenses in total for covered benefits, with enrollees responsible for the rest. If you choose to enroll in a Bronze plan, the actuarial value will be 60%, meaning your out-of-pocket costs when you use services will likely be higher. Regardless of which level of coverage you choose, deductibles and copayments will vary from plan to plan, and out-of-pocket costs will depend on your health care expenses. Preventive services will be covered with no cost sharing required.

But basically, it gives you at least some sort of understanding of the costs you may pay and the level of subsidies you may be eligible for. As such it is a good place to start in order to take the edge off the fear of what you may be paying.

To address your point of the premiums being so high up front and how do you pay for it; http://kaiserfamilyfoundation.files.wordpress.com/2013/01/8154.pdf

“For most tax credits, people apply for the credits when they file their taxes. However, because the cost of insurance is so high and many low and moderate income people would not be able to afford the coverage without upfront assistance,the law allows for eligible individuals to take the tax credit in the form of an advance payment. In this case, once an eligible individual selects and enrolls in a plan,the advance payments are made directly to the insurer. The enrollee is then only required to pay the remaining share of the premium to the insurer.”

7

IIRC one of the interesting debates over subsidies was what happens if you get a raise part-way through the year and find at the end of the year that you must pay back some of the subsidy? Or in the end were not eligible for a subsidy? I don’t recall the final outcome of this. Is the subsidy a sliding amount or all-or-nothing at a certain threshold?

8

It’s a sliding scale: between 133% and 300% of the federal poverty line, the subsidy will cap health care premiums at 3% - 9.5% of your income. Between 300-400%, the premium costs will still be capped at 9.5% of income, so it’s still a sliding scale to a lesser degree. There is no subsidy above 400% (which works out to $90k for a family of four) so there may be some unevenness in health care costs around there. Right at that line, changes in income would entail gaining or losing a $1500 annual subsidy for a family of four.

(Figures from wiki).

This basically only affects people on the higher end of household income that do not have employer provided health care. In theory however, the self-insured people in this income bracket would still benefit, since the individual health care market should be offering more affordable options than are available currently.

9

Another issue, IIRC, was that the subsidy entitlement was based on the individual coverage cost (not the family) to make things simpler for the employer. If your employer individual plan was low, you were not entitled to a subsidy if you opted instead for the Exchange, even for family coverage?

From the Wiki link;

As a result, the incentive was for the employer to have a lower individual plan cost, then stick it to employees with a higher rate family cost to recover some of that.

10

Another thing to consider is that the subsidies may not be available in states that do not set up state-run exchanges. According to this map Indiana will not set up a state-run exchange. The text of the health care law may only allows federal subsidies in states that set up their own exchanges. Their is a case making its way into court to resolve this issue.

11

Just this week Indiana and the Feds worked out a compromise which I won’t get into the details of, but bottom line those of us being dropped from the current (state) government subsidized plans will be eligible for the Federal exchanges… I’m pretty sure. I’m still trying to confirm all this, but it looks like if I can’t continue my current coverage I’ll still have access to something.

12

You’re basically right, but not entirely.

The employer requirement is that insurance (single-only) not be more than 9.5% of W-2 wages for the employee. So in that sense, I suppose there an incentive to “stick it to employees” but keep in mind that the family coverage rates are set by the insurer. It’s not like the employer can come up with arbitrary rates.

Now, the household/employee perspective is a little different, and this is what an exchange looks at. The exchange says that you do not have affordable healthcare if the premiums (all of them) are more than 8% of household income (not just any one employee). Therefore, it is possible that an unemployed spouse and kids might take a policy through the exchange, while the employee has their policy through work. But it’s also possible that the family rate through the employer still meets this “8% of household” definition of affordable and so will need to use the employer policy.

13

The second paragraph wasn’t true in February, so have they changed the law since then?

So you won’t face a penalty, but you won’t be allowed to buy insurance for your spouse and kids on the exchange.

14

The problem as I recall was this:
If the employee personal coverage met the affordability criteria - then the employee was NOT eligible for the subsidy if he chose to decline the plan and go the exchange route - even if the family plan was purely unaffordable. Subsidy was based ONLY on personal plan costs?

By offering affordable personal coverage the employer avoided penalties, even if the employee obviously cannot afford family coverage.

I assume if the employer did this by a good subsidy of the personal plan (something the employer, not the insure, sets) then by declining the whole plan the employee puts money back in the employer’s pocket.

And, I assume, if the employee takes an employer personal plan and a one-adult-two-children exchange plan for the rest of the family, it will be unsubsidized and he’ll be paying a small fortune too?

15

You can only buy insurance for the spouse and/or kids on the exchange if you/they do not have affordable insurance from the employer. But it is possible that what meets the affordability test for the individual employee fails the affordability test for the family.

For example: You make $50,000 a year as the sole income for a family with a non-working spouse. Your individual-only premiums are 4,500/yr, which is less than 9.5% of the 50,000 wages, so the employer meets their requirement to offer you affordable coverage. But the family premiums are, let’s say, another 2,500/yr. (This would be employee-paid insurance, not looking at the portion of premiums paid by the employer).

If you run the math at an exchange, insurance is affordable if it’s less than 8% of household income for family coverage. Well, we’ve got a total of 7,000 in premiums and 8% is only 4,000. Therefore, the spouse and kids could buy insurance from an exchange.

On the other hand, if the single premium was 2,000 a year and the additional cost for the family 1500 per year, then no one in the family would not be eligible to buy from an exchange because they would already have been offered affordable health insurance from an employer.

Or, let’s say the spouse worked but had no coverage, with wages of another $50,000. Now 8% of household income is 8,000, which is more than the 7,000 total premiums from the employer. Therefore, they have affordable health coverage from the employer and are not eligible for an exchange.

So you can see… the options available to any given person depend on a large number of factors.

16

I think one of us is confused. My point is that there is currently a lawsuit challenging the legality of giving individuals a subsidy in states that did not implement a state-run exchange. So, in a federal exchange, according to the suit, subsidies would not be allowed. The court case is Pruitt v Sebelius

17

It’s going to be dismissed on standing grounds, so it will be a while.

18

Are you referring to my post? If so, can you elaborate a little? I don’t know a lot about the different cases but I know there are a number in the courts right now attempting to dismantle the legislation.

19

Pruitt v. Sebelius is problematic because the State of Oklahoma does not have standing to challenge the constitutionality of the IRS regulation providing for subsidies in federal-exchange states. It’s not affected by the regulation; only people are, and there are no citizen-plaintiffs in the case. I’m sure they’ll find one and refile but I don’t see any way around the standing issue.

It’s also important to remember that this is not a challenge to the constitutionality of Obamacare. It’s a challenge to the IRS’ authority to regulate inconsistent with Obamacare. The best Oklahoma can hope to achieve is to deny its citizens federal insurance subsidies. I assume they think that will force Congress to act.

20

There’s another suit out there based on the same logic but I don’t know who the plaintiff is in that case. Halbig v Sebelius

I didn’t mean to suggest that this case has anything to do with the constitutionality of Obamacare. It is another attempt at trying to dismantle the law. I brought it up as a possible issue for the OP WRT life after the law takes effect in Indiana.