CDZ Understanding how the ACA's discounting provisions help people afford health insurance

[usmbguest5318]

Recently, I wrote a post to share what I discovered about how a few aspects of the AHCA [1] differently affect health insurance consumers' cash balances. As with that thread, this one results from my having finally become fed up with several things:

• I'm sick and tired of seeing/hearing people bitch and moan about the high premium costs of ACA purchased health insurance, and yet along with their complaining, they don't say thing about what their out of pocket costs are and what their income is. I ken private citizens' reluctance to disclose their income, but their not doing so makes it's all but impossible to discern whether the "plaintiff" is merely bellyaching or has a legit beef.
• Not being an O-care exchange purchaser of insurance, I got sick and tired of having no idea of just how much individuals of varying financial positions might have to pay out of pocket to buy insurance via the O-care exchange(s). I thus sought to find out.

So what did I find? I found that no matter what premium sum an insurer charges for their policy, the ACA defines the maximum one must pay for a policy. The maximum is calculated in terms of three variables:

• The consumers' income
• The premium charged for the second least expensive "silver" plan offered on the consumer's exchange (If there is only one silver plan offered, that one is necessarily the first, second, third, etc. cheapest one offered) The consumer doesn't have to purchase the second cheapest silver plan.
• The applicable federal poverty level (FPL) sum given the consumer's household size

Those figures are used to calculate the amount of a consumer's ACA insurance subsidy.

Let's assume that "Bill," who is 40, married and has two children, earns/reports $60K in wages on his federal tax return as his adjusted gross income and has no other sources of income. Assume too that the annual premium for the second least expensive silver plan is $5,040. The FPL for bill is $24,600; therefore Bill earns ~243% of the FPL.

Under the ACA, then, the most Bill will be expected to pay out of pocket is 6.3% of his annual income. That means that Bill will have to pay out of pocket, aka Bill's "cap amount," is $3780 for the second least expensive silver plan (SLESP) available to him. As we said, that plan's premium is $5,040. The difference between the cost of the SLESP and Bill's cap amount is Bills ACA insurance subsidy, which is $1,260.​

Now that "Bill" has calculated his subsidy amount, he can choose an insurance plan from the exchange. Bill can choose whatever plan he wants to choose -- the silver one used to determine his subsidy amount, some other silver one, a bronze (less expensive) one, etc. -- as befits his and his family's situation. No matter what plan he chooses, he'll receive a subsidy of $1,260. If Bill chooses the SLESP plan, his monthly payment will be something around $315.



Notes:

1. "Dyslexically," in my earlier post, I called the AHCA "ACHA" for the whole post and never noticed my mistake...sorry about that.)
2. You can find the

 

[Penelope]

I am sick of that lady in Texas, who has 4 Fantastic Hair franchise and bitches about how she can't afford to expand and also she does not have insurance. Sanders told her shame on you. Ha Ha. She is always on Fox, well not always, but she always pops up. She is a slacker business owner and citizen.

The elites hate to pay any extra tax is all that is. The elites who commit tax evasion every chance they get.

 

[debbiedowner]

If Bill chooses the second lowest cost silver plan he will either have an A B or C after the plan number. If is FPL is such the C comes up then Bill has no deductible, very low max out of pocket and very low copays.

Your scenario is spot on and when I see people bitching that are receiving a subsidy I want to scream. If they are not receiving a subsidy I can side with them I know how high premium's are. If insurance companies foresee the individual mandate going away for 2018 your rates are going to be double digits again for 2018.

 

[usmbguest5318]

If insurance companies foresee the individual mandate going away for 2018 your rates are going to be double digits again for 2018.

That's really hard to predict. Whether they will or won't depends on the risk pool/assessment faced by any given insurer.

 

[usmbguest5318]

If Bill chooses the second lowest cost silver plan he will either have an A B or C after the plan number. If is FPL is such the C comes up then Bill has no deductible, very low max out of pocket and very low copays.

TY for sharing that. The reference materials upon which I relied to gain my understanding of the subsidy calculus didn't go into the "A, B and C" feature you've noted. Can you point to a website that does? I'd like to understand that as well.

In the interest of keeping things simple, I didn't discuss the tax credits the ACA offers. Those credits are available only for silver plan buyers, but as they are offered, they further reduce the net out of pocket cost a silver plan buyer will incur.

Your scenario is spot on and when I see people bitching that are receiving a subsidy I want to scream.

Thank you.

I truly just got disgusted with hearing all those complaints about the high cost of insurance under the ACA. Now that I understand the details noted in my OP, I'm at least positioned to know what questions to ask and what to do with the information in order to discern whether any given protestor doth too much so.

Truly, when I chose to give "Bill" $60K in income, I expected, based purely on all the grumbling I've encountered, that his monthly payment was going to be something in excess of $800/month, which I imagine ventures toward being prohibitive for a four person family living on $60K/year, at least in D.C. it would be. (figuring on 15% net effective total tax rate) I was amazed that it came out at $315/month as a payment; that sum seems reasonable.

 

[debbiedowner]

The tax credits are the subsidies and once you go through it and it's calculate's your tax credit you don't have have to pick a silver plan, you can use it for bronze, silver, gold or platinum. The deal is if you fall let's say into the 150% - 200% of FPL you are going to get a C plan if you choose a silver and those plans end up better than a platinum plan. There really isn't as far as I know a website that shows you plans for silver with A B C, but if you google reduced cost share in ACA you may find some example's. You will also find that in the states that did not expand Medicaid the lowest FPL to even receive a subsidy is 100% where the states that did expland 138%. So in the non expansion states no one is offered Medicaid or nothing under 100% but in the states that expanded the ones under 138% are placed on Medicaid. That may be why so many people think that someone not working is getting free insurance (only in the expansion states and that is Medicaid) again in non expansion they get nothing.

Let's get to the one's yelling about illegals getting this health insurance. Only in a few and very few fraud cases did any illegals get insurance. It asks you to provide proof you are here legally when you're doing the application and you must provide it within 90 days. Hell even if you provided proof most immigrants lost their subsidy sometime or another. When you are doing an application on healthcare.gov every answer you provide is being checked in the back ground with IRS, DHS, DOL, HHS and Social Security. They do catch you. If you want to do some samples of income and family size to see an estimated Advanced Premium Tax Credit aka, subsidy go to

Health Insurance Marketplace Calculator

They are damn near on money.

Also one last thing. I saw someone on this site say you had to to the subsidy back since it was called advanced premium tax credit, only if you lied or made more money than you estimated you were going to make. If you made what you said you were going to make modified adjusted gross income, you paid nothing back and if you made less you would have received a bigger refund.

 

[debbiedowner]

If Bill chooses the second lowest cost silver plan he will either have an A B or C after the plan number. If is FPL is such the C comes up then Bill has no deductible, very low max out of pocket and very low copays.

TY for sharing that. The reference materials upon which I relied to gain my understanding of the subsidy calculus didn't go into the "A, B and C" feature you've noted. Can you point to a website that does? I'd like to understand that as well.

In the interest of keeping things simple, I didn't discuss the tax credits the ACA offers. Those credits are available only for silver plan buyers, but as they are offered, they further reduce the net out of pocket cost a silver plan buyer will incur.

Your scenario is spot on and when I see people bitching that are receiving a subsidy I want to scream.

Thank you.

I truly just got disgusted with hearing all those complaints about the high cost of insurance under the ACA. Now that I understand the details noted in my OP, I'm at least positioned to know what questions to ask and what to do with the information in order to discern whether any given protestor doth too much so.

Truly, when I chose to give "Bill" $60K in income, I expected, based purely on all the grumbling I've encountered, that his monthly payment was going to be something in excess of $800/month, which I imagine ventures toward being prohibitive for a four person family living on $60K/year, at least in D.C. it would be. (figuring on 15% net effective total tax rate) I was amazed that it came out at $315/month as a payment; that sum seems reasonable.

Oh for decent plan before ACA for a family of 4 depending your geographic area was at least $800 per month and most without some of the essential health benefits. Speaking of an individual plan.

 

[usmbguest5318]

If Bill chooses the second lowest cost silver plan he will either have an A B or C after the plan number. If is FPL is such the C comes up then Bill has no deductible, very low max out of pocket and very low copays.

TY for sharing that. The reference materials upon which I relied to gain my understanding of the subsidy calculus didn't go into the "A, B and C" feature you've noted. Can you point to a website that does? I'd like to understand that as well.

In the interest of keeping things simple, I didn't discuss the tax credits the ACA offers. Those credits are available only for silver plan buyers, but as they are offered, they further reduce the net out of pocket cost a silver plan buyer will incur.

Your scenario is spot on and when I see people bitching that are receiving a subsidy I want to scream.

Thank you.

I truly just got disgusted with hearing all those complaints about the high cost of insurance under the ACA. Now that I understand the details noted in my OP, I'm at least positioned to know what questions to ask and what to do with the information in order to discern whether any given protestor doth too much so.

Truly, when I chose to give "Bill" $60K in income, I expected, based purely on all the grumbling I've encountered, that his monthly payment was going to be something in excess of $800/month, which I imagine ventures toward being prohibitive for a four person family living on $60K/year, at least in D.C. it would be. (figuring on 15% net effective total tax rate) I was amazed that it came out at $315/month as a payment; that sum seems reasonable.

Oh for decent plan before ACA for a family of 4 depending your geographic area was at least $800 per month and most without some of the essential health benefits. Speaking of an individual plan.

All the more reason why the grumbling about the ACA's efficacy at making health insurance affordable seems disingenuously ignorant.

More and more, I think the ACA-related GOP grousing in political Washington is more about the GOP despising the fact that a Democratic president was able to implement something somewhat beneficial and they did not. It seems more and more, as I research the ACA, that, at least for individuals, it's not such a bad thing at all.

That said, I'm sure there are people who came out on the short end of the ACA stick. It'd be interesting to learn the specifics applicable to some of them so I can have a better understanding of how that came to be. Sadly, I know I can't expect people to disclose the details that make it possible for me to do so. People are quick to share how much they are paying, but the other parameters remain known only to them and the administrators of their plan and, I suppose, the CMS. For that reason, one must take with a grain of salt one's friends and neighbors' attestations about how horrid the ACA has been to them.

 

[debbiedowner]

Yes, it's really not all that bad, but Obama should have started with medical provider's and price's.

Yes there are many you came out on the short end of the stick but by far I believe it helped so many more.

It's funny when someone parrodies (You can keep your doctor if you like) Well you could have if the doctor or insurance company had not dropped or been kicked out of the network. Obama believed that but should not have since that is something he had no control over.

Some insurance companies set the prices so low the first year they had no other choice to drop out. They apparently didn't realize the ramification's of taking the sick with huge claims.

 

[debbiedowner]

The thing about it is there are more of in red states receiving a subsidy that will be hurt by full repeal. I admit it needs tweaking and some things axed. Sorry to say the individual mandate would have to stay or prices sky rocket.

If Ryan would have gotten his bill through and signed it is estimated that quite a few employer's under 100 would have dropped group health and let their employee's fend for themselves. Would have benefited the under 40 crowd but then what?

 

[Onyx]

I don't understand the point the OP is trying to make. Everyone knows that the PPACA set premium controls. That doesn't change the fact that 80% of Americans are paying exponentially more to subsidize 20% of the population.

 

[usmbguest5318]

I don't understand the point the OP is trying to make. Everyone knows that the PPACA set premium controls. That doesn't change the fact that 80% of Americans are paying exponentially more to subsidize 20% of the population.

The point of the OP is to share the information I -- as a person whose insurance premium hasn't increased other than the typical annual increase and who doesn't buy insurance via the O-care exchange and who has to pay for the full cost of my health insurance because I'm a business owner rather than employee -- gathered. I explained in the OP why I gathered it.

80% of Americans are paying exponentially more to subsidize 20% of the population.

To tell you the truth, I haven't seen one bit of credible documentation that supports that claim and others like it. I've seen the claims, but I haven't anyone who makes them back them up with something empirical that gives them veracity. The closest thing to it that anyone has ever presented to me are editorials that make the claim, but there's never any methodology accompanying them and that allows me to evaluate how the figures were arrived at.

I'm not afraid of the numbers. Indeed, I want to see them. I went to school so I could see them and know how to make sense of them. I've made a living doing just that. I'm all about the business case, "the math," so to speak. So if you have the math, bring it on. I don't view "the math" as something to argue about; it's something to understand. I wasn't born in Missouri, but I may as well have been because you need to show me.

FWIW, I have been working my way through these documents: Affordable Care Act

 

[debbiedowner]

I don't understand the point the OP is trying to make. Everyone knows that the PPACA set premium controls. That doesn't change the fact that 80% of Americans are paying exponentially more to subsidize 20% of the population.

Well yes and no to the premium controls, if you don't get a subsidy you pay the full premium for the particular plan you choose. Then it's really controlled if you report an income change anytime during the year or move outside the county you reside.

Yes, you are paying hiring premium's if off exchange or even on exchange if you didn't get a subsidy but the govt is paying the subsidy to the insurance company. When ACA went live prices were set high with some companies and some low to attract more consumer's. Before ACA 30-40% of all applicants for an individual plan were either getting turned down for pre existing or had an exclusion or was rated up. After insurance companies having to take everyone lets say at age 50 the rate is the same for that 50 yr old in your country female and male. Didn't matter that they were being treated for cancer or whatever disease the insurance company had to assume the risk.

Talking about risk, there is a risk corridor built in to the law. If an insurance company had to pay too many claims well above what was normal the govt was suppose to reimburse up to a certain amount the the insurance company did not go under. The republican congress either last year or year before would not appropriate what was needed and some insurance companies got nothing or pennies on the dollar. They stop selling in certain counties and states altogether.

Then when insurance company files rates with their respective states the states will also tell them your rates or too high or too low. Each company has to have so many dollar's in reserve with their respective states.

 

[usmbguest5318]

80% of Americans are paying exponentially more to subsidize 20%

Just so you know, I don't know what gives "teeth" to 80% figure.

I understand the following sort of scenario is happening.

"Mark" makes more than $100K a year and doesn't qualify for any subsidy on the O-care exchange. The 31-year-old's current policy is being canceled. A new policy from the exchange will more than double his monthly premium and nearly double his yearly out-of-pocket maximum.

His higher costs aren't subsidizing lower-income policyholders, whose subsidy has already been paid by the government. But he is providing a subsidy in another way: The ACA requires him to buy a policy with features he doesn't need. Seeing as Mark is a single male with no kids or dependents, yet he pays for pediatric dental care and maternity care even though he has no use for them.

What Obamacare is doing is moving Aaron out of the individual market -- where people are sorted by age and health history and scope of coverage -- to a market more like the traditional, employer-based group policy, in which young and old workers get the same coverage and pay the same premium. The actual premium isn't exactly the same, however, for the ACA allows insurers to charge older people up to three times more than younger people for policies.
​

The notion of insurance is we're protected against risk.. That means is that during a period of time when we're healthy, we pay more in premiums than we collect in benefits. In those periods of time we're sick -- and we all go through them -- we collect more in benefits than we pay in premiums. Young, healthy people subsidize older people, who are more likely to be sick. Of course, most of those younger folks will eventually become old folks and experience the same benefit.

Looking at your claim that 80% of the country is subsidizing 20%, and considering that one has to earn 100K+/year to not receive an ACA subsidy, where's the 80% coming from?

​

As you can see from the chart above, ~55% of households pay federal income taxes. Of that 55%, 55% of the money paid as income tax comes from people earning $200K+, and those people account for 3.8% of the households that pay income tax. As you can see from the first chart, 95% of the country doesn't earn $200K+. So just how much subsidizing do you think 80% of the country is doing? By my reckoning, they aren't subsidizing much of anything.

Of course, if you are among the $200K+ crowd, you are subsidizing everyone who gets any kind of subsidy, tax credit, whatever. If you thus want to bitch and moan about that, well, I can understand why you want to.

​

Most people buy O-care insurance pay taxes as I do, but they pay a hell of a lot less. My taxes didn't go up because of O-care. Did yours? I'm never going to complain about paying less in taxes, but it's not "ruining my day" to pay the taxes I pay. And that's the thing. All these so-called "regular" folks are complaining about the subsidies and the cost, but I know they are not the ones actually paying for it, and I know that folks like me are the last people for whom they feel sorry for because we are. That makes me say, "WTH? You aren't the one paying for it. Get over it."

 

[debbiedowner]

His higher costs aren't subsidizing lower-income policyholders, whose subsidy has already been paid by the government. But he is providing a subsidy in another way: The ACA requires him to buy a policy with features he doesn't need. Seeing as Mark is a single male with no kids or dependents, yet he pays for pediatric dental care and maternity care even though he has no use for them.

Well Mark did not have to purchase pediatric dental it's not required unless you have a kid under 19. The federal exchange doesn't have that on there anymore, I don't if state exchanges do. If you bought direct from an insurance company you had to prove your child had other dental coverage and they'd let you slide. I have always disagreed with the maternity, but in most states if a baby is born they are automatically covered on the father and mother's policy, but within 30 days one of them have to tell the insurance company which plan of the parent's to put them on. Mark is single and could make someone pregnant.

 

[debbiedowner]

You did know that you can purchase your insurance from an agent even if you are getting a subsidy? They take you to the exchange through their company website and when subsidy is determined or not this it redirects back to the insurance website.

 

[Onyx]

Looking at your claim that 80% of the country is subsidizing 20%, and considering that one has to earn 100K+/year to not receive an ACA subsidy, where's the 80% coming from?

Your logic is absurd. Just because someone receives a subsidy doesn't mean they are not paying more in total. It's just an objective fact that at least 80% of Americans are paying dramatically more for insurance, so the subsidy bullshit really has no relevance.

Tax exemptions in America are always packed in with tax increases. You pay 500$ more in taxes, but you can't complain because you receive a 60$ tax exemption?

​

 

[jwoodie]

Other than having a love fest with Debbie, what is the point of the OP and why isn't it posted in the Obamacare forum?