Sactoking's ACA Q&A Thread

[chucky2]

Question:

It's obvious you are living in the details of this at least in part of your daily job. When you say there is no details yet from the Fed, how is that possible?

How can they run accurate (not some nearly useless +- 250% estimate) estimations on what it is going to cost people if they don't have this stuff already long in advance worked out?

Anyone that has done estimation for programs/projects knows that initial estimates done with low amount of detail in requirements means the estimates are generally stratospheric in nature. Exactly how can they come to the US Public and say something is going to cost xyz if clearly they don't have the details on how they're going to do it, meaning, they have no idea how much it's going to cost.

Chuck

[sactoking]

Originally Posted by chucky2

Question:

It's obvious you are living in the details of this at least in part of your daily job. When you say there is no details yet from the Fed, how is that possible?

How can they run accurate (not some nearly useless +- 250% estimate) estimations on what it is going to cost people if they don't have this stuff already long in advance worked out?

Anyone that has done estimation for programs/projects knows that initial estimates done with low amount of detail in requirements means the estimates are generally stratospheric in nature. Exactly how can they come to the US Public and say something is going to cost xyz if clearly they don't have the details on how they're going to do it, meaning, they have no idea how much it's going to cost.

Chuck

Three answers:

There are some details, but they are generally incomplete, to the point that states think they know how things might go together but until the federally facilitated exchange rules come out we don't know for sure how the mechanics will be treated. If you, like us, have questions that haven't been explicitly answered in a proposed rule then you will be told that an answer is coming "soon" and in reality you might hear back in six months.

Answer #2 is the pessimistic direct answer to your question. That would be that we have no indication that the federal government actually has the details and that the cost estimates the public has received are 100% bullshit.

Answer #3 is the optimistic answer. That would be that we assume the fed has the details worked out and the cost estimates are based on those details. The cost estimates released are accurate but we still lack the details because the administration has ordered them to be kept under wraps. We don't know what purpose it serves other than potential political shenanigans, but that's the world we live in.

[sactoking]

The IRS released an NPRM (Notice of Proposed Rulemaking) today (or recently) on the employer mandate. I'm still slogging through it (it's 144 pages long of tax code), but one thing that pops out to me right away is that the IRS is using the §152 definition of dependent, meaning only children and not spouses. The end result that is that employers have to cover children of an employee but not their spouse, which can result in spouses being forced into separate policies with separate deductibles.

[cybrsage]

If a spouse is not employed outside the home, is the spouse a dependent under those rules?

[chucky2]

Wait a minute, wait. If the spouse isn't covered, then wouldn't the Fed have to cover and entirely new medical plan via voucher/whatnot? Wouldn't that cost the Fed more than if they'd just had the spouse covered? Or are they assuming the other spouse is covered through their work? So yeah, back to what cybersage just asked. What if the spouse is unemployed?

[sactoking]

Originally Posted by cybrsage

If a spouse is not employed outside the home, is the spouse a dependent under those rules?

Originally Posted by chucky2

Wait a minute, wait. If the spouse isn't covered, then wouldn't the Fed have to cover and entirely new medical plan via voucher/whatnot? Wouldn't that cost the Fed more than if they'd just had the spouse covered? Or are they assuming the other spouse is covered through their work? So yeah, back to what cybersage just asked. What if the spouse is unemployed?

Assuming that cybrsage's question was about my post immediately above it (which I think is a safe assumption) then my honest answer is 'I don't know'. You see, at that point we're diverging from insurance law into tax law. While I have an advanced degree in tax accounting (sort of), I don't have a great deal of tax law experience.

The individual mandate portion of the ACA (§1501) states that an individual is responsible for ensuring that he/she has Minimum Essential Coverage for himself and his dependents. The ACA then references the IRC §152 definition of dependent (§1501\5000A(b)(3)(A) IRC).

The employer mandate portion of the ACA states that large employers are responsible for offering all employees and their dependents Minimum Essential Coverage (§1513); in this instance the use of the term 'dependent' is not defined.

Given the lack of definition in §1513 and the legislative context, the Notice of Proposed Rulemaking declared that 'dependent' as used in §1513 has the same definition as used in §1501, namely that of IRC §152.

Cross-referencing to IRC §152, subsection (a) declares a dependent to be:
1. a qualifying child; or
2. a qualifying relative.
A spouse is not a qualifying child so in order to meet the requirements of §152 (and thus §1501 and 1513 ACA) a spouse would have to be a qualifying relative.

§152(b)(2) calls out married children as being ineligible to be considered dependents, but does not mention spouses.

§152(d)(2) defines the relationships available to be considered a qualifying relative. They are:
(A) A child or a descendant of a child.
(B) A brother, sister, stepbrother, or stepsister.
(C) The father or mother, or an ancestor of either.
(D) A stepfather or stepmother.
(E) A son or daughter of a brother or sister of the taxpayer.
(F) A brother or sister of the father or mother of the taxpayer.
(G) A son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law, or sister-in-law.
(H) An individual (other than an individual who at any time during the taxable year was the spouse, determined without regard to section 7703, of the taxpayer) who, for the taxable year of the taxpayer, has the same principal place of abode as the taxpayer and is a member of the taxpayer’s household.

Spouse is not on the eligibility list, and in fact is clearly called out in §152(d)(2)(H) as being ineligible as a qualifying relative.

Given this, it seems to me that spouses are not considered dependents under IRC §152 and thus are not dependents under ACA §§1501, 1513. Since spouses are not dependents, employers are under no obligation to provide Minimum Essential Coverage pursuant to ACA §1513.

ACA §1401 amends IRC by adding §36B covering the tax credits. §36B(a) says that only 'applicable taxpayers' can receive a credit. §36B(c)(1)(A) says that an applicable taxpayer must have a household income greater than or equal to 100% of the federal poverty level and not in excess of 400% of the FPL. §36B(c)(1)(C) states that a married couple must file a joint tax return for either individual to be considered an applicable taxpayer.

§36B(d) basically says your family size is determined by the number of personal exemption deductions you claim under IRC §151, your household income for §36B(c)(1)(A) is equal to your modified adjusted gross income, and your MAGI must include all individuals claimed under §151 and who had to file a tax return.

Taken together, only applicable taxpayers can receive credits, spouses must file jointly to be an applicable taxpayer, and the unemployed spouse must claim the employed spouse in calculating MAGI under §36B(c)(1)(A).

So, with one working spouse and one non-working spouse, the employer is under no legal obligation from the ACA to offer coverage to the non-working spouse and if the working spouse's income is large enough to exceed 400% FPL for the family size then the non-working spouse becomes ineligible for a credit.

In practical terms, this makes sense because if the working spouse has enough income to exceed 400% FPL and the employer wasn't required or didn't offer insurance, the employee wouldn't receive a tax credit anyway by way of the income. However, this still does such as the non-working spouse will not be on the family policy and will have an individual policy with a separate deductible.

[chucky2]

Wouldn't this mean though that the Fed is going to fund the non-working spouses insurance policy?

[sactoking]

Originally Posted by chucky2

Wouldn't this mean though that the Fed is going to fund the non-working spouses insurance policy?

Maybe, maybe not. It all depends on if the couple:
1) Files a joint tax return; and
2) Has a MAGI per IRC §36B(c)(1)(A) between 100% (138% for residents of states with expanded Medicaid eligibility) and 400% FPL.

If the sole working spouse has a MAGI >400% FPL then no tax credit for the non-working spouse.

[cybrsage]

Been a while, any new insights or clarifications on the "not very affordable" care act?

[sactoking]

Nothing has really jumped out at me as a consumer-level issue of significance. The past several months have been filled with a lot of "behind the scenes" implementation work but I haven't run into any provisions that made me think "Oh God, people need to know about that!"

[JEDI]

Most current individual health insurance isn't good enough for Obamacare in 2014:
http://money.cnn.com/2013/04/03/news...html?hpt=hp_t2

Just over half of the individual plans currently on the market do not meet the standards to be sold next year, when many key provisions of President Obama's Affordable Care Act kick in, according to a University of Chicago study. That's because the law sets new minimums for the basic coverage every individual health care plan must provide.

required to cover an array of "essential" services, including medication, maternity and mental health care.


1) so in 2014 for a guy buying single coverage, i hope he's paying less than a woman since materity coverage is now mandatory??

as for 'not very affordable'--> YUP
Most individual plans sold next year, even the lowest-level "bronze" plans, are likely to charge higher premiums than today's most bare-bones individual insurance.


2) all i want is just emergency hospital coverage, say i fall and break my arm. right now it's like $50/month for a healthy male with $5k deductible.

is that even possible to get in 2014?


3) Whats the rules for pre-existing conditions?
can i wait till i break my arm to buy individual health insurance in 2014?
ie: pay the $95/yr penalty for not having health insurance till i need it?

[sactoking]

1) Policies can no longer be rated for anatomical sex, so a policy for males will not be less than a comparable policy for females. The obvious inference then is that males will be paying for maternity coverage that they cannot biologically use. Whether this is good or bad is a matter of perspective; after all, females have traditionally paid premiums to cover prostate screening. It is true that most individual plans will cost more in 2014 than they do today, even the "low-cost" bronze plans, but that is not an apples to apples comparison. For example, most individual policies today do not have mental health coverage at parity with medical coverage- that will be mandatory starting 1/1/14. Additionally, most individual policies do not offer coverage for habilitative services today- that will also change in January.

2) Likely no. If you meet the age requirements you may be able to get a "catastrophic" plan, but pretty much anyone not in their 20s will be ineligible. Products that are traditionally known as "high-deductible" today will effectively cease to exist.

3)All insurance will be guaranteed issue, guaranteed renewability; preexisting conditions cannot be excluded at the time of application and cannot cause a policy to be canceled. If you purchase insurance through an exchange you will not be able to buy "on the way to the hospital" as you will only be eligible to buy during open enrollment (barring a life event). If you don't buy on the exchange you will be subject to whatever requirements your state implements, but many states are looking at creating off-exchange open enrollment periods to coincide with the exchange periods, or at least have somewhat extensive waiting periods, such as 90 days.

[JEDI]

wait.. so men and women will be paying the same price for a policy? so men are basically substidizing a woman;'s policy? (in the past, women paid more for an individual policy.)


sigh.. all i want is an emergency hospital policy. regular doctor appts i can afford out of pocket. i dont want/need mental or maternity.
so how much do u think a bronze policy will cost in 2014?

[sactoking]

Yes, men will be "subsidizing" maternity, but that's no different than subsidizing an OB/GYN visit or prostate exam. Heck, there's a good case to be made that men are one of the root causes of pregnancy and should be financially responsible.

It's impossible for me to say what a bronze policy will cost- there are way too many variables, not the least of which is that pretty much every other variable is dependent upon where you live (first by state- what state laws are in place, and then by 5 digit zip or county- likely dictating your geographic rating area).

[chucky2]

Question:

If I get a policy on the exchange, does that mean I can pick wherever my Dr. is (providing they take that insurance) or will I be at the mercy of where the insurance company wants me to go?

Chuck

[sactoking]

Choice of doctor will function as it does now: you can go to an in-network provider and pay that rate or go out of network and deal with the consequences. Your states exchange should allow you to compare provider networks prior to purchase. Of course, if you don't qualify for a tax credit then you may be better of buying a policy not on the exchange.

[JEDI]

Originally Posted by sactoking

Of course, if you don't qualify for a tax credit then you may be better of buying a policy not on the exchange.

why?

[sactoking]

Policies sold off the exchange have somewhat greater flexibility in benefits and exposure to adverse selection. Ceterus paribus, we expect off-exchange policies to be slightly better than on-exchange policies. That means the primary driver for buying on the exchange will be the tax credits and cost sharing variations, which are not.available.for.off-exchange policies.

[DCal430]

If a state law requires all health insurance companies to provide coverage for X, but the ACA does not require this, while the state created exchanges will provide coverage for X?

[sactoking]

Originally Posted by DCal430

If a state law requires all health insurance companies to provide coverage for X, but the ACA does not require this, while the state created exchanges will provide coverage for X?

There's a yes answer and a few maybes- it will probably be easier to illustrate the answers with specific scenarios, so let's craft some.

1) The state has a benefit mandate for chiropractic care. This mandate affects the small-and large-group markets but not the individual market (these sorts of mandates are common currently, since group risk-pooling makes them more actuarially sound than individually-underwritten policies). The state was required to select an EHB package from one of ten possible benchmark plans; the plan the state chose was a small-group plan. Since all of the benefits contained in the benchmark plan become the EHB package, and since all individual and small-group plans (or at least the non-grandfathered ones) are subject to EHB, what used to be a group mandate is now an Essential Health Benefit which must be offered by ALL applicable policies in the state.

2-1) Same scenario, but instead of choosing a small-group plan as the benchmark the state chose one of the three federal plan options. Since the federal plans are not subject to state mandates the chiropractic care was not included in the plan and it does NOT become part of the EHB. However, the state mandate still exists (it is not nullified by the federal Act) so all group plans will need to cover chiropractic in addition to the EHB package.

2-2) Conversely, under the 2-1 scenario since the benchmark plan does not cover the mandate it is not EHB and individual market plans will continue to not cover chiropractic, since it is neither EHB nor a mandate (the mandate only applies to the group market).

3) Same scenario as in #1 above, except this time the mandate is passed after the benchmark selection was made. In that case, the benchmark plan likely didn't cover chiropractic (since it wasn't a mandate at the time) and it will not be part of the EHB. If the state mandate only applies to the individual or group market (not both) then the mandate will kick in for that market only. It's worth noting that if the mandate affects the individual market premiums then the state will have to pay the cost of the additional tax credits resulting from the higher premiums. It is likely that there will be few new state mandates anymore as a result of this chargeback to the states, and any new ones we do see likely will only affect the group market (since group premiums are not subject to tax credit chargeback).