Choosing and ACA enhanced Silver plan, doing the math?

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Choosing and ACA enhanced Silver plan, doing the math?

Postby wannabefree » Tue Oct 08, 2013 8:17 pm

There are a lot threads here about the new ACA healthcare plans but I have some questions that are still unanswered to me.
Here is a little back round information. I am soon to be 60 self employed but sort of semi retired. My wife is 57 and on permanent SSDI (social security disability) In yr 2012 our Modified adjusted income was about $32,000 which is just a few dollars over the 250% threshold for an enhanced 87% silver plan. I could have easily made it fit by simply making a few hundred dollar extra IRA contribution. I could simply sign up for an enhanced 73% silver plan but there is a big difference in copay and deductibles for just a few hundred dollars less MAGI. I know that the actual levels are going to be calculated on our 2014 income and run the risk of having to pay back the extra monthly subsidy if we miss our projections. I am not too worried about a few hundred dollars extra make up taxes.
So I called the Califorina Covered people who run out state exchange and explained this to a rep and they told me that there was no charge back for the enhanced (co pay & deductible) subsidies only the premium subsidies. I explained that I think I can adjust my contributions to my Sep or Std IRa to minimize my MAGI. I was told that yes many seniors and self employed people are asking the same thing. The rep told me they can not make a recommendation on what I should do but that as long as my MAGI is within 10% of my 2012 Tax records they will simply allow me to sign up for the 87% enhanced silver plan and all I have to do is worry about repaying any premium underpayment but not any of the added Co Pay and Deductible assistance included in the enhanced silver plans.
This tells me if you are close to qualifying for an enhanced silver plan you should take the benefits and worry about only the preimium subsidy at tax time or if you are sure your MAGI income will be more the 10% greater then a estimated.
Does this sound like good advice or am I missing something.
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Re: Choosing and ACA enhanced Silver plan, doing the math?

Postby gerrym51 » Tue Oct 08, 2013 9:13 pm

as you describe it it sounds correct. to the best of my knowledge there is only premium recapture(penalty) not extra coverage recapture
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Re: Choosing and ACA enhanced Silver plan, doing the math?

Postby Flobes » Tue Oct 08, 2013 9:48 pm

Yes: There is no payback of the cost-sharing benefits.
There is no retroactive payment of cost-sharing benefits.
The three tiers -- 94%, 87%, 73% -- are actuarial values not actual percentage of benefits.

Yes: there is payback of excess subsidy. But payback is capped based on a sliding scale, and only those who go over 400% FPL have to pay it all back. There is also credit if you are entitled to more subsidy; if the amount exceeds your tax obligation you'll get a check.

You are responsible for reporting any significant changes to your income (pay hike? lost job?) or circumstances (new baby? move?) as they happen. So the amount on your 2014 tax return should not be widely discrepant from your estimate.

There are no penalties.

There are a variety of legal strategies to increase or decrease your income to maximize your ACA subsidy and/or cost-sharing benefits, and get to your 2014 estimated target. Adding to, taking from, or converting IRAs is one. Tax gain harvesting or tax loss harvesting is another. As is choosing an HSA plan, if it's in your options.

If you're close to a cliff, don't go over it.

Fraud is punishable.
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Re: Choosing and ACA enhanced Silver plan, doing the math?

Postby wannabefree » Tue Oct 08, 2013 10:07 pm

A couple of other little tidbits or information. Being self employed the monthly premium portion I pay is also a deduction against my MAGI . In my case the premium would be about $250 per month after subsidy for an enhanced silver 87% plan with a $500 medical deductible,$50 brand deductible, $15 doctor copay, and maximum out of pocket of $2250. To me it would certainly be worth it to roll the dice and take the plan even if i missed qualifying by a few thousand dollars the premium payback would be minimal compared to the copay and deductible benefits.
It almost seems criminal or at least gaming the system but I think I would be a fool not to do it.

Also how does the copay and deductible assistance get paid. Does the government pay the insurance company upfront or does the insurance company bill them to the government as you use them. I would assume the policy is flagged for the enhanced deductible and copay assistance.
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Re: Choosing and ACA enhanced Silver plan, doing the math?

Postby Alan S. » Tue Oct 08, 2013 11:21 pm

Read this article and the links within it for some useful information. In the end, until all the necessary system coordination is proven effective, I would rather get a larger subsidy and owe the IRS then wonder how and if I will ever get additional credit if my MAGI comes in lower than projected and your premium subsidy should have been larger.

http://www.kitces.com/blog/understandin ... obamacare/
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Re: Choosing and ACA enhanced Silver plan, doing the math?

Postby wannabefree » Wed Oct 09, 2013 12:12 am

Alan S. wrote:Read this article and the links within it for some useful information. In the end, until all the necessary system coordination is proven effective, I would rather get a larger subsidy and owe the IRS then wonder how and if I will ever get additional credit if my MAGI comes in lower than projected and your premium subsidy should have been larger.

http://www.kitces.com/blog/understandin ... obamacare/


Alan,
i think we are in agreement that at this time its better to take any credits now and settle up later as there is no track record of reconciliation. I read the attached article and it is good at explaining most of the nuts and bolts of the basic ACA rules . However it makes no mention of the tax credits or deductions such as Ira or hsa contributions, nor any mention of Self employment tax credits or insurance premium credits for self employed. I also saw not mention about deductible and subsidy benefits of the Silver enhanced plans. For those that qualify for an enhanced silver plan IMHO they are the best value.
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Re: Choosing and ACA enhanced Silver plan, doing the math?

Postby calwatch » Thu Oct 10, 2013 12:55 am

Not necessarily - a "free" bronze plan may be better if all you need is catastrophic coverage. It's all about choice. So, for instance, a 60 year old in a two person household, with a MAGI of $30,000, in LA County can get a Blue Cross bronze plan for $48 a month, or a silver 87 plan for $155 a month. That $107 could make a difference. Remember that preventative care is free and you can see a doctor three times with bronze for $60. Yes, if you get into an accident and max out your benefits, the "payback period" for bronze vs. silver 87 is 39 months. Only you know your health conditions and your family's health history, and how $100+ a month might impact your budget. The good news is that you can switch from bronze to silver during open enrollments, with no pre-existing condition penalty. Of course, if they discovered that diabetes in February, paying all those costs could be painful.
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Re: Choosing and ACA enhanced Silver plan, doing the math?

Postby wannabefree » Thu Oct 10, 2013 1:32 am

calwatch wrote:Not necessarily - a "free" bronze plan may be better if all you need is catastrophic coverage. It's all about choice. So, for instance, a 60 year old in a two person household, with a MAGI of $30,000, in LA County can get a Blue Cross bronze plan for $48 a month, or a silver 87 plan for $155 a month. That $107 could make a difference. Remember that preventative care is free and you can see a doctor three times with bronze for $60. Yes, if you get into an accident and max out your benefits, the "payback period" for bronze vs. silver 87 is 39 months. Only you know your health conditions and your family's health history, and how $100+ a month might impact your budget. The good news is that you can switch from bronze to silver during open enrollments, with no pre-existing condition penalty. Of course, if they discovered that diabetes in February, paying all those costs could be painful.


I am not sure your math works out. Say you sign up for the plan in your example. The bronze plan will be cheaper as far as the monthly payments $48x12mos =$576yr. The Silver @ $155x12mos=$1860yr so yes that is a savings of $107mosx12mos=$1284yr. However the bronze plan has an annual deductible of $5000 for medical and the silver 87% plan has a $500 out of pocket so it you could save up to $4500 with the silver. Then lets look at the annual out of pocket Max for the bronze it is $6350 and the 87% silver lan has annual out of pocket max of $2250 or a $4000 difference. Now add the monthly premiums of Bronze $576 + max OOP of $6350=$6956 VS the Silver 87% premium of $1860+ the max OOP of $2250= $4110. So if you use your Max OOP the silver 87% would save you $2846 per year.

Of course no one knows for sure how much they will use there plan and if you dong need much medical in a year the bronze will come our cheaper but for most folks in the 60 yr age group its a pretty good bet that they will eventually need to use there insurance and for me the extra $107 per month is cheap insurance compared to the alternative. The biggest thing I see against the high deductible bronze plans is it takes discipline to budget for the self insurance part and most folks I know lack that.

Now I am basing my opinion only on the Enhanced Silver 87% vs the Std Bronze plans in your example. Only these special subsided plans have the lower OOP without that its still a toss up as to what is best depending on your personal needs.
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Re: Choosing and ACA enhanced Silver plan, doing the math?

Postby calwatch » Fri Oct 11, 2013 12:47 am

Well this example is based on one uninsured person right now - my mom, who does not consume much if any health care. I have offered to pay for enhanced silver but she is declining, and she hasn't seen the doctor in years, and never saw the doctor even when she had insurance (when my dad wasn't retired). Basically this is a bridge insurance to get her over to Medicare in a few years. So the savings are real, and an important consideration. Right now there is no hurry but by December 15 she will have to make a decision.
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Re: Choosing and ACA enhanced Silver plan, doing the math?

Postby Flobes » Fri Oct 11, 2013 1:12 am

My Silver plan, after subsidy and cost-sharing benefits, will cost me $51.17/month. Bronze would be free.

Silver: Out of pocket max $650, medical deductible $200, copay $15.
Bronze: Out of pocket max $6350, medical deductible $4500, copay $55.

I'm healthy and not a big medical consumer. But this feels like really good "risk" management, and that's why I buy insurance.

I am 62. Not in California. Silver here I come!
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Re: Choosing and ACA enhanced Silver plan, doing the math?

Postby BruDude » Fri Oct 11, 2013 4:36 am

Cost-sharing subsidies cannot be clawed back. Massive loophole...
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