Sactoking's ACA Q&A Thread

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Jadow

Diamond Member
Feb 12, 2003
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my insurance denied payment on my son's 18 month well child visit, cpt 99392, saying "We have paid the maximum amount covered by your plan for this service"

I didn't do anything extraordinary just took him to the normal scheduled visits with the Dr.

I thought these would be covered 100% per the ACA, any idea what gives?
 

sactoking

Diamond Member
Sep 24, 2007
6,083
25
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my insurance denied payment on my son's 18 month well child visit, cpt 99392, saying "We have paid the maximum amount covered by your plan for this service"

I didn't do anything extraordinary just took him to the normal scheduled visits with the Dr.

I thought these would be covered 100% per the ACA, any idea what gives?
Without seeing the plan documentation, no.

Wild guess: your plan may be using reference pricing.
 

Jadow

Diamond Member
Feb 12, 2003
5,962
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0
Without seeing the plan documentation, no.

Wild guess: your plan may be using reference pricing.
thanks, turned out they screwed up and after I called them they paid it.
 
Sep 25, 2001
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healthcare.gov is still a little confusing.

I picked a Bronze plan because with a subsidy, I pay $0/month premium (assuming I only make up to 199% of the poverty lvl).

but when I picked the plan, it said :
"You're eligible for a plan with a cost-sharing reduction. These plans have lower out-of-pocket costs for deductibles, coinsurance and copayments.

The plan you chose doesn't include these savings. Would you like to keep your current plan selection?"


I saw 'reduction' and I thought the Bronze plan isn't eligible for the premium subsidy.
so I thought why would the website list it as $0/month if it's not eligible.

then I re-read the sentence and it only applies to deductibles, coinsurance and copayments.

this would have been better:
"The plan you chose doesn't include these savings, but still includes the premium subsidy."
 
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sactoking

Diamond Member
Sep 24, 2007
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Does the Obamacare subsidy's work for any lvl besides silver?
They're calculated using the silver level but can be applied to any metal level. They're not eligible to be used for catastrophic plans.

EXAMPLE: You're single and have an income of 150% of the federal poverty level ($17,505). Under the guidelines, the max you can pay for insurance is 4% of your income ($700.20).

Your tax credit is calculated by comparing the max you can pay against the second-lowest cost silver plan in your area.

If the second-lowest cost silver plan in your area for someone your age is $300/month ($3,600/year) then your tax credit is $2,899.80 ($3,600 - 700.20). You can use that ~$2,900 to buy any eligible plan; your plan choice will dictate what you pay. If you buy the second-lowest cost silver plan you'll pay $700.20 for the year ($58.35/month). If you decide to buy a platinum plan for $700/month you'll pay $5,500.20 ($458.35/month). If you decide to buy a bronze plan for $150/month you'll pay $0, as the tax credit exceeds the cost of the insurance. If you purchase a plan that costs less than the tax credit you are not eligible to receive a refund of the excess amount.
 

sactoking

Diamond Member
Sep 24, 2007
6,083
25
126
healthcare.gov is still a little confusing.

I picked a Bronze plan because with a subsidy, I pay $0/month premium (assuming I only make up to 199% of the poverty lvl).

but when I picked the plan, it said :
"You're eligible for a plan with a cost-sharing reduction. These plans have lower out-of-pocket costs for deductibles, coinsurance and copayments.

The plan you chose doesn't include these savings. Would you like to keep your current plan selection?"


I saw 'reduction' and I thought the Bronze plan isn't eligible for the premium subsidy.
so I thought why would the website list it as $0/month if it's not eligible.

then I re-read the sentence and it only applies to deductibles, coinsurance and copayments.
The cost-sharing reductions are different than the tax credits. The CSRs are used to bring the actuarial value of plans up, how far depends on your income. Unlike tax credits, which can be used on any eligible plan, CSRs are only eligibile to be used with silver level plans (reduced administrative burden). It's definitely worth doing the math if you're CSR eligible as in many instances the benefits of the reduced cost sharing exceed the costs of the increased premiums for silver plans over bronze.
 
Sep 25, 2001
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how does Medicaid work?

lets say I decided to go back to school in 2015 thus estimate my income for 2015 = $0.
am I eligible for Medicaid?

and what happens in the middle of 2015 I decide to go back to work and make some $?
 

sactoking

Diamond Member
Sep 24, 2007
6,083
25
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how does Medicaid work?

lets say I decided to go back to school in 2015 thus estimate my income for 2015 = $0.
am I eligible for Medicaid?

and what happens in the middle of 2015 I decide to go back to work and make some $?
Medicaid eligibility is, IIRC, done on a month-by-month basis. If you go to school 8 months with zero income you'd be eligible for those months, but once you made money your eligibility may lapse if your income gets outside of the eligibility range.
 
Sep 25, 2001
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Medicaid eligibility is, IIRC, done on a month-by-month basis. If you go to school 8 months with zero income you'd be eligible for those months, but once you made money your eligibility may lapse if your income gets outside of the eligibility range.
better to have Medicaid or the Bronze plan?
I expect the bronze plan to cost me $0
 

werepossum

Elite Member
Jul 10, 2006
29,875
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121
We got another little present. Our Synthroid prescriptions are each about $15/month higher under our BCBS-TN Obamacare-compliant policy than under our old BCBS-TN non-compliant policy. So far our out-of-pocket went up a thousand bucks, our prescriptions cost more, and our providers are unhappy because the new policy pays them less. Whee! Hopefully we can get through the next two years without Obama helping us with anything else.

Sactoking, do you know anything about GoodRx.com? They offer coupons which would seem to get our Obamacrease down to around $6/month, but I'm not sure it's on the level.
 

sactoking

Diamond Member
Sep 24, 2007
6,083
25
126
better to have Medicaid or the Bronze plan?
I expect the bronze plan to cost me $0
Impossible so say, it is. Depends on your state's Medicaid program, it does.

If you're on the cusp of either Medicaid or a metal plan, that means your income is around 150% of the poverty level. In that case your best bet might be a silver plan: premiums will be no more than 4% of your income and you'll get a 97% actuarial value variation. If you buy the bronze plan instead your premiums will drop to 0% of income but your actuarial value will also drop to 60-62%, meaning that you save only if you get no care. If you go on Medicaid you pay no premiums and likely have no cost sharing, but Medicaid can really stink depending on your program. Also, docs are much harder to find on Medicaid vs a metal plan in most locations.
 

sactoking

Diamond Member
Sep 24, 2007
6,083
25
126
Sactoking, do you know anything about GoodRx.com? They offer coupons which would seem to get our Obamacrease down to around $6/month, but I'm not sure it's on the level.
I have no knowledge or experience of that site. I will say that Rx coupons are becoming more popular. We recently had some Rx regulations that we worked on and one thing I learned is that pharma companies are (allegedly) using coupons to mask exorbitant drug price increases.

EXAMPLE: A drug traditionally costs $100 for a 30 day supply and your insurance has a $10 copay. You pay $10 and the insurer pays $90. A manufacturer can unilaterally increase the price to $1000 for a 30 day supply. Insurers will likely respond by moving the drug to a higher tier, say with a $100 copay. You pay $100 and the insurer pays $900. Consumers won't like this because their costs skyrocketed. Drug manufacturers create consumer coupons that give $90 off. Now the consumer pays $10 and the insurer pays $900 and the manufacturer "eats" $90. The consumer's buying decision is unchanged but the manufacturer's profit is up $810.

It's possible the site you mentioned offers these types of manufacturer to consumer coupons.
 

werepossum

Elite Member
Jul 10, 2006
29,875
7
121
I have no knowledge or experience of that site. I will say that Rx coupons are becoming more popular. We recently had some Rx regulations that we worked on and one thing I learned is that pharma companies are (allegedly) using coupons to mask exorbitant drug price increases.

EXAMPLE: A drug traditionally costs $100 for a 30 day supply and your insurance has a $10 copay. You pay $10 and the insurer pays $90. A manufacturer can unilaterally increase the price to $1000 for a 30 day supply. Insurers will likely respond by moving the drug to a higher tier, say with a $100 copay. You pay $100 and the insurer pays $900. Consumers won't like this because their costs skyrocketed. Drug manufacturers create consumer coupons that give $90 off. Now the consumer pays $10 and the insurer pays $900 and the manufacturer "eats" $90. The consumer's buying decision is unchanged but the manufacturer's profit is up $810.

It's possible the site you mentioned offers these types of manufacturer to consumer coupons.
Thanks. BCBS-TN used to pay a small amount; now they pay nothing. Thankfully ours aren't that expensive, but a friend's being hit for hundreds of dollars a month.
 
Oct 12, 2009
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Sactoking, do you know anything about GoodRx.com? They offer coupons which would seem to get our Obamacrease down to around $6/month, but I'm not sure it's on the level.
Alk recommended them a couple of times and it look O.K.
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,812
2
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Hi Sactoking,

I'm hoping you can help me by confirming something.

I'm a tax CPA with small clients. Obamacare was sold as not applying to businesses with fewer than 50 employees etc. This is only coming to my attention as false.

Many small businesses are formed as S-corps. In many of these only the shareholder/employees are reimbursed, or otherwise offered, health insurance. My question is not about the income tax treatment of reimbursements for HI; that hasn't changed. Rather, as a result of some fairly recent information that has been published by the IRS and the DoL it appears that the excise taxes under section 4980D of the Code may apply to small employers that are using one of the statutorily (income tax) approved methods of reimbursing employees and employee/shareholders for their HI costs. This penalty is $100 per day, per employee. That is $36,000 per yr, per employee.

Here is a link mentioning this excise tax: http://www.hinklaw.com/alerts/the-f...eform-excise-taxes-could-devastate-employers/

Here are examples of attorneys and accountants freaking out: http://www.calt.iastate.edu/article...compliant-aca-could-mean-exorbitant-penalties and http://www.calt.iastate.edu/article/updated-aca’s-thorny-impact-more-2-s-corporation-shareholders

My question is simply: If the S-corp has one employee receiving HI reimbursement is the "plan" (or s-corp employer) exempt from the excise tax? (I believe it is, but I would really love some confirmation.)

TIA

Fern
 
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sactoking

Diamond Member
Sep 24, 2007
6,083
25
126
Hi Sactoking,

I'm hoping you can help me by confirming something.

I'm a tax CPA with small clients. Obamacare was sold as not applying to businesses with fewer than 50 employees etc. This is only coming to my attention as false.

Many small businesses are formed as S-corps. In many of these only the shareholder/employees are reimbursed, or otherwise offered, health insurance. My question is not about the income tax treatment of reimbursements for HI; that hasn't changed. Rather, as a result of some fairly recent information that has been published by the IRS and the DoL it appears that the excise taxes under section 4980D of the Code may apply to small employers that are using one of the statutorily (income tax) approved methods of reimbursing employees and employee/shareholders for their HI costs. This penalty is $100 per day, per employee. That is $36,000 per yr, per employee.

Here is a link mentioning this excise tax: http://www.hinklaw.com/alerts/the-f...eform-excise-taxes-could-devastate-employers/

Here are examples of attorneys and accountants freaking out: http://www.calt.iastate.edu/article...compliant-aca-could-mean-exorbitant-penalties and http://www.calt.iastate.edu/article/updated-aca’s-thorny-impact-more-2-s-corporation-shareholders

My question is simply: If the S-corp has one employee receiving HI reimbursement is the "plan" (or s-corp employer) exempt from the excise tax? (I believe it is, but I would really love some confirmation.)

TIA

Fern
Complicated question, complicated answer, but I'll do my best.

Under guidance issued by IRS, DOL and HHS employers were notified that certain reimbursement scenarios were not ACA compliant. Specifically an employer cannot tell employees to obtain their own coverage and submit to the employer for reimbursement. Under the joint agencies' interpretation this constitutes an "plan" being issued by the employer. In some ways this makes sense: the money is contingent upon the purchase of insurance so the employer has some modicum, however small, of control upon the matter. IIRC the joint agencies clarified that this interpretation only holds when the employer makes the payment/reimbursement contingent upon proof of purchase. If the employer structures it differently, say by giving employees money intended to pay for insurance but which may be used for anything at the employees' discretion, then it becomes regular pay and the employer is not providing a "plan."

The 4980D excise tax is intended to punish employers who offer noncompliant insurance. HHS's philosophy is that it's all or nothing; the employer needs to offer compliant insurance or nothing at all. That way the employee is not prevented from purchasing a policy through an exchange.

Small employers are not required to offer insurance. If they choose to offer insurance it must be compliant or they face the 4980D tax. In this case, a health reimbursement arrangement is not considered compliant, since it is a "plan" that does not meet the requirements of Chapter 100. So, a small employer using a reimbursement is subject to the 4980D tax.

There are three main ways a small employer can avoid the 4980D excise tax:
1. Offer compliant insurance;
2. Offer no insurance; or
3. Offer a "no strings attached" payment to employees to use for insurance or any other purpose.
 

sactoking

Diamond Member
Sep 24, 2007
6,083
25
126
Hey all, I know many of you don't check in here any more, what with the first "full" year done and gone. I just wanted to let you know that I've accepted a new job in the private sector. While I will still be working with some health policy clients and I intend to keep as up-to-date on this subject as possible I won't be elbow deep in it like I am now.
 
Nov 17, 2002
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Hey all, I know many of you don't check in here any more, what with the first "full" year done and gone. I just wanted to let you know that I've accepted a new job in the private sector. While I will still be working with some health policy clients and I intend to keep as up-to-date on this subject as possible I won't be elbow deep in it like I am now.
Thank you for the great wealth of information you've shared, and congratulations on your new job!
 
Sep 25, 2001
24,885
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Hey all, I know many of you don't check in here any more, what with the first "full" year done and gone. I just wanted to let you know that I've accepted a new job in the private sector. While I will still be working with some health policy clients and I intend to keep as up-to-date on this subject as possible I won't be elbow deep in it like I am now.
thx for all the info + help you've provided!

good luck in your new job
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,812
2
106
Complicated question, complicated answer, but I'll do my best.

-snip-

Small employers are not required to offer insurance. If they choose to offer insurance it must be compliant or they face the 4980D tax. In this case, a health reimbursement arrangement is not considered compliant, since it is a "plan" that does not meet the requirements of Chapter 100. So, a small employer using a reimbursement is subject to the 4980D tax.

There are three main ways a small employer can avoid the 4980D excise tax:
1. Offer compliant insurance;
2. Offer no insurance; or
3. Offer a "no strings attached" payment to employees to use for insurance or any other purpose.
Thanks. (I'm looking for a 4th as I'll detail below.)

Yep, it's complicated. Most of us tax professionals have had no need to involve ourselves in the HI area. Now it's been forced upon us.

The problem is that many small employers, who were advertised as not being affected by Obamacare, ARE affected. Most such employers reimburse employees for HI in accordance with tax laws and IRS regulations. Those haven't changed. I.e., we're still good for income tax law, but now we've got this 4980D thing to worry about.

I have small clients that have only one employee being reimbursed for HI. I think they're exempt from 4980D because there is only one employee (i.e., the 4th way to avoid 4980D). Here's why:

1. IRS Notice 2013-54:

D.
Affordable Care Act Guidance

1. Market Reforms — In General

The Affordable Care Act contains certain market reforms that apply to group
health plans (the market reforms). In accordance with Code § 9831(a)(2) and ERISA §732(a), the market reforms do not apply to a group health plan that has fewer than two participants who are current employees on the first day of the plan year, and, in accordance with Code § 9831(b), ERISA §
732(b), and PHS Act §§ 2722(b) and 2763, the market reforms also do not apply to a group health plan in relation to its provision of excepted benefits described in Code §9832(c), ERISA § 733(c) and PHS Act§ 2791(c). Excepted benefits include, among other things, accident-only coverage, disability income, certain limited-scope dental and vision benefits, certain long-term care benefits, and certain health FSAs.
http://www.irs.gov/pub/irs-drop/n-13-54.pdf

Note only the bolded portion.

The above is on page 3 of the PDF.

2. Section 4980D(d)(2):

(2) Small employer

(A) In general

For purposes of paragraph (1), the term “small employer” means, with respect to a calendar year and a plan year, an employer who employed an average of at least 2 but not more than 50 employees on business days during the preceding calendar year and who employs at least 2 employees on the first day of the plan year. For purposes of the preceding sentence, all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as one employer.
http://www.law.cornell.edu/uscode/text/26/4980D

The IRS Notice seems to say explicitly that an S-corp with only one employee who is under a reimbursement plan is excluded from section 4980.

The code only implies it by limiting the definition of a small employer (for an exception to 4980 unrelated to my purpose) to one with at least 2 employees. Presumably, the 'at least 2 employees' wording is is there because a one employee employer is already excluded elsewhere and need not be included under 4980D(d)(2).

So, I was just looking for confirmation that a one employee 'plan' is not subject to 4980D. Generally I look to the statute for that, but have been unable to find it. So far, all I have is an IRS notice (above) and some commentary by other professionals.

This is incredibly disruptive. I don't think it will hit the news so many people will never know. But there are literally millions of small business that use (salary) reimbursements plans to (help) provide HI for their employees. Already I am seeing these reimbursements stop. Small employers are not going to risk incurring a $36,500 penalty per employee to help them purchase HI. Nor can they afford to move to purchasing coverage under a group HI plan.

In essence, no in fact, Obamacare is killing the HI assistance that employees of small businesses currently enjoy. IMO, that's a real step backwards; a big negative. (There are ways to get around this. But they require an increase in income taxes, something Obama promised not to do to the middle class, which is also a big negative.)

Edit: Congrats and good luck with the new job.

Fern
 
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Oct 12, 2009
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Fern, at the end of the day, congress gets their insurance for free, their retirement after 6 years and everyone else gets the shaft.

Sorry for thread crapping but it pisses me off.
 

sactoking

Diamond Member
Sep 24, 2007
6,083
25
126
So, I was just looking for confirmation that a one employee 'plan' is not subject to 4980D. Generally I look to the statute for that, but have been unable to find it. So far, all I have is an IRS notice (above) and some commentary by other professionals.
Sorry, I misunderstood your question.

You are right, an employer with one employee under a health reimbursement program is not subject to the market reforms pursuant to 26 USC § 9831(a)(2). Since the excise tax is triggered by a failure to comply with Chapter 100 (of which § 9831 is a part) the exemption also removes the trigger (similar to the employer mandate trigger being argued before the USSC in March).

There's not an explicit allowance for this, you do have to track the citations from § 4980D(a) through to § 9831(a)(2).

Since we're discussing sub-S corps I would also mention that Treasury issued guidance several years back (that my team and I can't find right now) outlining how owner/employees of non-disregarded entities don't count as employees for certain purposes. So, if your sub-S is paying an employee for a reimbursement and that employee is also an owner it may not qualify as group coverage owing to the owner/employee not legally being considered an employee.
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,812
2
106
-snip-
Since we're discussing sub-S corps I would also mention that Treasury issued guidance several years back (that my team and I can't find right now) outlining how owner/employees of non-disregarded entities don't count as employees for certain purposes. So, if your sub-S is paying an employee for a reimbursement and that employee is also an owner it may not qualify as group coverage owing to the owner/employee not legally being considered an employee.
Yep. Owners are considers to not be employees, but rather partners (as in a partnership). I assume that's what you're referring to and the cite you may be thinking of is:

Where health insurance premiums are paid by an S corporation, however, IRC §1372(a) requires that the S corporation be treated as a partnership and that any “more-than-2% shareholder-employees” be treated as partners..
The link to the above is in my first post; it is the last link listed.

I've seen quite a bit of chatter on tax boards about whether the (S corp) owner is treated as an employee or not for Obamacare purposes. Looks like we (tax community) are still waiting for clarification. IIRC, the AICPA has written the IRS asking for additional guidance.

Thanks again

Fern
 

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