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PPACA FAQ: Affordability and Subsidies (Part 2)

(This would be so much more fun if I was writing about a plan for universal health care for everyone. Medicare for Everyone or whatever.  Put us all in one bucket and let us all wait in the same lines.)

(Cross-posted to Corrente)

My plan was to continue the discussion of Affordability and Subsidies with an answer to a remaining after discussion in the comments on The Corrente site regarding this piece of the story:

I’ll list the essentials:

  1. Employee earns $35,000/yr
  2. Employee-only coverage = $275/mo (This is just under 9.5% of her salary)
  3. Employee +children = $500/mo or 17% of Employee Income (The IRS ruling says that only the cost of Employee-Only coverage is considered for affordability. But, PPACA does require an option for dependent coverage on parent’s policies)
  4. There is no spousal coverage option (there is no PPACA requirement for spousal coverage)
  5. Spouse may purchase insurance through an Exchange and would be eligible for a subsidy (because family income is under 400% of poverty)
  6. Employee & Children do not qualify for Subsidies because the Employee’s share of the insurance is affordable.

The question I’ve been hammering on all week (6 hours when I stopped counting) Relates to points 4 & 5 above. He may purchase insurance through the Exchange — but what will he be expected to pay? His wife is already paying 9.5% of the household income (using MAGI which will not be explained here) for her affordable employee-only coverage. Will he be expected to pay another 9.5% of their income before his subsidy kicks in?

Sadly, those 6+ hours didn’t reveal a definitive answer (to me). If I was going to make a guess, I would go to the California Calculator and enter the family’s information and take that for my answer. Their calculator happens to have one of my favorite explainations — the one labeled, “A married couple earning $40,000 per year if one spouse in on Medicare” (You might be able to tell just how frustrating my week has been that I am collecting favorite explanations.) It seems possible that this family’s situation might be comparable to that One Spouse on Medicare situation. But, I’m not at all sure.

For now at least, file this one under Questions Without Answers.

Update:

Commenter t, quoted below gave me an Ah, HA! moment:

No, he won’t be required to fork over 9.5%. Search Mandate exceptions. One of the exceptions of the ACA is that if individual insurance premiums with subsidy cost more than 8% of the MAGI, then the individual is exempt from the mandate. He will not be required to carry insurance at all. If he does carry insurance in your scenario, because he is part of a family of 4, he will qualify for a subsidy that will take his costs quite a bit below 9.5%. Exactly how much below, it’s hard to say. I’m guessing via looking at calculators that it will be in the range of 6.5%, which is still exorbitant.

But yes, this is a sticking point for sure. MAGI in his case should exclude the cost of the other family premiums. But because this law is a complete mess, it doesn’t.

I am predicting pitch forks, tar and feathers by 2014.5

T clarified something I didn’t understand:

1) Mom’s insurance could cost as much as 9.5% of her salary because that is how affordability is defined for employer-offered insurance.

2) But the subsidies for Exchange policies are calculated by which Bucket group your family falls into … see this Table from Wikipedia

Which explains why entering this family’s into the California Calculator, the cost to the family is so far below 9.5%

Still not a firm answer – The mom’s purchase of insurance through her employer (at 9.5% of family income) is within the scope of the PPACA requirements.  And, Medicare (referring to the California Calculator explanation) is NOT within the scope of PPACA requirements.

But, we can be pretty sure that Dad’s premiums will be something under another 9.5% of their household income.

As t says, “still exorbitant.”


What DID I find during that 6+ hours of research? …. Lots and lots and lots of interesting stuff.  And an idea for keeping track of it all. Now I can say that as part of the PPACA FAQ we’ll have an organized resource library to be unveiled as soon as it actually exists!

One of the most interesting essays I found is, “How the Affordable Care Act Will Create Perverse Incentives Harming Low and Moderate Income Workers“. I’m still reading through it (and the over 150 footnotes!) but I can already tell that it will be a very important reference throughout the course of this project.

It cannot be said often enough: Things do not have to be this complicated. We could be talking about the changes coming with Medicare for Everyone. Struggling to understand how the PPACA affects us is not what I expected from the 2008 election.

13 Responses

  1. No, he won’t be required to fork over 9.5%. Search Mandate exceptions. One of the exceptions of the ACA is that if individual insurance premiums with subsidy cost more than 8% of the MAGI, then the individual is exempt from the mandate. He will not be required to carry insurance at all. If he does carry insurance in your scenario, because he is part of a family of 4, he will qualify for a subsidy that will take his costs quite a bit below 9.5%. Exactly how much below, it’s hard to say. I’m guessing via looking at calculators that it will be in the range of 6.5%, which is still exorbitant.

    But yes, this is a sticking point for sure. MAGI in his case should exclude the cost of the other family premiums. But because this law is a complete mess, it doesn’t.

    I am predicting pitch forks, tar and feathers by 2014.5

    • Not only is it a mess, it is screwing people out of the Clinton letters of insurance that allow you to purchase insurance without pre-conditions application and raised premiums.

      I had someone on our plan ask about leaving our plan (We are now at the highest co-pay HMO thanks to Obama and ACA), because she got some ad saying Obamacare was going to do X and Y. I called to get the letter of proof of insurance and got some crazy letter about accessing services in their plan? WHAT? I then contacted our broker who informed me that the Obama exchanges weren’t going into affect until October and that they didn’t have cost containment! I sent off the information (via email to her), never submitted the drop form, and guess what I got TWO checks for her part in the mail! I guess she got STICKER shock and learned under Obama the same plan we have would exclude medications and be several hundred dollars more.

      Oh, and yes she would go on about how nutty I was when Obama kept Single Payer and HR 676 off the table and would say he was going to lead people in their fifties/sixties to choose between housing and health care due to the high cost of health insurance under his tinkering.

      Oh, the reason we still have that limited access, is due to small business bill that passed over a decade ago and it is barely keeping cost down, but at least we aren’t out in the cold wondering how to pay for our medication or unable to afford the same plan.

    • One thing that I resent is that people like me, have to provide the facts to those inquiring about these Obama dreams (When it was an insurance give away) and getting flack. I recall the last time I was contacted about handing over the REFUND CHECK???? What refund check….I had to go look and see where this insanity was coming from and how Obama politicos were giving out false information. NO REFUND CHECK, just rising premiums, its no wonder the insurance industry named Obama their favorite politico when he was in the State legislature back in Illinois.

  2. Excellent! … Updating post now.

    • Thank you Katiebird and RD. I often feel I am in an ocean of complication/rules/red tape, but it helps to know that I am not alone. The media has been complicit in helping to confuse people with Fareed Zakaria continuing his lies about Obama passing Universal Health care and those phantom refund checks.

      I am thankful for all the time you are devoting to this project. HUGS!

  3. Thanks for the update. As I understand it, since spouse is eligible for the Exchange and elected to buy insurance,, he would have to pay the amount that the whole family would have to pay, if they were all eligible,which is the 6.5% of MAGI that I referred to. However, because his plus the children’s insurance would likely cost more than 8% of MAGI, he would likely be exempt from penalty if he turned it down.

    • Dang ipad, sorry typos.

    • The problem almost defies untangling, doesn’t it? —

      I believe the PPACA requires that employers offer plans that include children. But, since they rate affordability by employee-only plans, frequently employees won’t be able to afford the coverage that includes the kids.

      The kids, since there IS a plan that is considered affordable offered by an Employer cannot be on the dad’s Exchange Plan.

      They CAN, however qualify for s-Chip.

      Clear as mud.

      Plus, we need a whole discussion of MAGI.

  4. I tried to read the above and my brain shut down. Like programming a VCR there are some things I just don’t get. I’m lucky that the missus works in health care as a coder and know the ropes.

    Have I mentioned that I’ve had a series of health related problems that required sever visits to a bunch of different providers and that they all have one thing in common?

    The hatred of our current payment system. I don’t see how Obama-care is going to make it any easier as they still have to submit to ‘for profit’ insurance companies.

    • If it really comes to pass that there will be multiple payment requirements for some families then they ARE NOT going to like it.

      And I know what you mean by the brain-shut-down thing. Mine is really fighting it. But, It is the sort of source material we need. (And isn’t THAT sad)

  5. 5/28/12 to be revisited on latter part of 2014:

    And thus what we pay for health insurance will surely increase because we are the end consumers.

    And also Obamacare will become a big bureaucratic mess because of the matter of interpreting those 2,000+ pages which will become a factor in increasing our payment.

    You could even inscribe that is stone because that will come to pass..

    and it is not yet 2014 and what has been posted has come to pass..

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