Insurance subsidy question

I probably shouldn't ask this...try to contain yourselves, please. I'm trying to do some legitimate research, and don't care much about your politics.

Does anyone actually know anything about the phasing out of health care subsidies?

I see premiums, and then I see subsidies. So out-of-pocket is much less (and everyone is overly excited to talk about this part).

But my question, once in the system, when will my subsidies phase out?

For example, my family silver plan is looking like the premium would be about $18,000, but it would be more like $3000 after subsidies. So, shall I expect this to increase to $18K in a matter of a couple of years?

All the searches I can do equate "phase-out" with the current year drop off of subsidies above a certain income level. That's not a phase out... that's the top tier of the current scale.

The spin on this is killing me. Can anyone give me some decent links, or some actual basic English explanations?

I didn't realize the subsidies were supposed to eventually go away? Just that your subsidy was reduced in proportion to your income (as you know) to make the premiums "affordable."

Where did you read the were eventually being phased out?

Why wouldn't they?

It would be much easier to set the "rates" at a lower level and have no subsidies.

By setting the rates higher, they are defining a subsidy that has no reason to remain through the next legislative cycle.

And, I have heard it in several places (including NPR this week). Seems to me it's the elephant in the room.

My understanding - and that comes mostly from reading in-depth analysis of the implementation of the law on various non-mainstream economics blogs - is that there isn't a "six months of really cheap rates before we take your whole wallet" provision. Given how these people have taken apart the law in an attempt to point out the flaws, I'm pretty sure that they'd have pointed out any provisions currently in place to phase out the subsidies. The whole point of the subsidies is to expand the insured base, ie the number of people who can actually afford to pay for the insurance, hence the tie of the subsidies to the income level.

The one change that is going to be phased in is the increase of the penalty/tax you have to pay if you don't pay for health insurance.

The big unknown is the direction insurance rates are going to take over the next few years. Pretty much everybody who tries to provide insight into the implementation of the law (said blogs, Clark Howard on his radio show etc) suggests that the current rates offered on the exchange are a bit of a stab in the dark by the insurance companies and that they will probably change noticeably over the next few years when the inscos get a better handle on customer behaviour. This, however, has nothing to do with fading out of subsidies or somesuch.

SVreX wrote: It would be much easier to set the "rates" at a lower level and have no subsidies.

Keep in mind that it's not the government setting the rates, it's the insurance companies. I'm pretty sure they'll get said subsidies so I don't see much of an incentive for them to lower the rates.

SVreX wrote: By setting the rates higher, they are defining a subsidy that has no reason to remain through the next legislative cycle.

I don't think any of us has any ability to project into the future if there will be any changes to the law, but I'd say that at the moment it's all pure speculation and I don't think one should base decisions on fuzzy speculation.

In reply to BoxheadTim:

Good word on the penalty increasing. I am aware of that, and it's much bigger than some folks think.

I understand the insurance companies set the rates, but doesn't the government set the subsidies? There's an enormous difference in perspective if the actual out-of-pocket is $3K instead of $18K.

$3K would be a huge stretch for us. $18K is utterly impossible.

Yes, I think it's the government that defines the insurance subsidy "buckets", at least for the exchanges run by the federal government. It might be the state governments that set the buckets for the state run exchanges, but that's something I haven't been able to figure out from what I've been reading. But either way I think it's a government entity that sets them, yes.

If I were in your situation, I'd probably wait a month or so to get past the hiccup stage of the website and also see if the insurance company competition has increased where you are by then. You might be able to get better rates. Plus, given the IT cluck up there's a better chance that if you wait, the insurance company might actually get clean data (that seems to be a huge problem right now).

In reply to BoxheadTim:

That's good advice, and my basic plan.

Still curious about the subsidies...

While we've been investigating what my wife can do for the employees at her (very) small business, we've found that she is eligible for subsidies if she provides insurance, but those phase out in something like three years.

We're still educating ourselves, but it looks like a better deal for her employees to apply on their own and receive the subsidies

wait, are you actually getting healthcare.gov to work? i've been trying every night for a week and something else is broken every time

patgizz wrote: wait, are you actually getting healthcare.gov to work? i've been trying every night for a week and something else is broken every time

If you were asking me, no.

This has been with a local insurance rep who's been trying to figure this out too.

It doesn't help that in our state, there's only one vendor in the small business exchange.

patgizz wrote: wait, are you actually getting healthcare.gov to work? i've been trying every night for a week and something else is broken every time

No.

I used secondary source for my estimates.

BoxheadTim wrote: The big unknown is the direction insurance rates are going to take over the next few years. Pretty much everybody who tries to provide insight into the implementation of the law (said blogs, Clark Howard on his radio show etc) suggests that the current rates offered on the exchange are a bit of a stab in the dark by the insurance companies and that they will probably change noticeably over the next few years when the inscos get a better handle on customer behaviour. This, however, has nothing to do with fading out of subsidies or somesuch.

it may not have a direct correlation to subsidies of the law, but other things in the law are going to pretty much make it a %100 safe bet (as opposed to 9:1 odds and not fuzzy at all), that things are going to cost more for services and relevant coverage for 3 reasons:

1: before the law was passed, there has been a growing shortage of medical care professionals for 20 years, especially at the nurse and doctor levels.

2: after the law was passed, there was nothing in it to address the operational costs of a medical provider, or the investment costs of becoming one. There is no easing of the burden of the current load of medical providers, nor an increase in man-power expected to be seen.

3: since medical providers can (for now still) chose to accept which medical plans they want, including the governments, most are on record as saying if certain changes didnt happen, they'd not be accepting people on those plans anymore.

any subsidies remaining are going to either get soaked up in increasing overall costs, or simply be rendered meaningless if the doctor office stops accepting people on the government care options. (at least until another law comes along)

.... i would suggest, if you have the ability to operate from ANY place of liquidity, that you find a private practitioner that operates on cash-only and refuses to take any private plan, government or otherwise. Those doctor offices operate with almost no admin costs associated with getting insurance claims paid. It might be worth talking to one and seeing what they have to say.

most people will probably try to do this and pay the tax/penalty, and still end up in a better financial place than if they went under one of the exchanges.

madmallard wrote:

BoxheadTim wrote: The big unknown is the direction insurance rates are going to take over the next few years. Pretty much everybody who tries to provide insight into the implementation of the law (said blogs, Clark Howard on his radio show etc) suggests that the current rates offered on the exchange are a bit of a stab in the dark by the insurance companies and that they will probably change noticeably over the next few years when the inscos get a better handle on customer behaviour. This, however, has nothing to do with fading out of subsidies or somesuch.

it may not have a direct correlation to subsidies of the law, but other things in the law are going to pretty much make it a %100 safe bet (as opposed to 9:1 odds and not fuzzy at all), that things are going to cost more for services and relevant coverage for 3 reasons: 1: before the law was passed, there has been a growing shortage of medical care professionals for 20 years, especially at the nurse and doctor levels. 2: after the law was passed, there was nothing in it to address the operational costs of a medical provider, or the investment costs of becoming one. There is no easing of the burden of the current load of medical providers, nor an increase in man-power expected to be seen. 3: since medical providers can (for now still) chose to accept which medical plans they want, including the governments, most are on record as saying if certain changes didnt happen, they'd not be accepting people on those plans anymore. any subsidies remaining are going to either get soaked up in increasing overall costs, or simply be rendered meaningless if the doctor office stops accepting people on the government care options. (at least until another law comes along) .... i would suggest, if you have the ability to operate from ANY place of liquidity, that you find a private practitioner that operates on cash-only and refuses to take any private plan, government or otherwise. Those doctor offices operate with almost no admin costs associated with getting insurance claims paid. It might be worth talking to one and seeing what they have to say. most people will probably try to do this and pay the tax/penalty, and still end up in a better financial place than if they went under one of the exchanges.

...until they make them illegal somehow- probably by forcing every doctor to accept every insurance policy, which leads to the smartest doctors just saying "berkeley this E36 M3" and getting out of the doctor business and the smartest young people deciding to not invest a decade of their life getting educated and trained for a career that they won't want to do under that ruleset.

SVreX wrote: I probably shouldn't ask this...try to contain yourselves, please. I'm trying to do some legitimate research, and don't care much about your politics. Does anyone actually know anything about the phasing out of health care subsidies? I see premiums, and then I see subsidies. So out-of-pocket is much less (and everyone is overly excited to talk about this part). But my question, once in the system, when will my subsidies phase out? For example, my family silver plan is looking like the premium would be about $18,000, but it would be more like $3000 after subsidies. So, shall I expect this to increase to $18K in a matter of a couple of years? All the searches I can do equate "phase-out" with the current year drop off of subsidies above a certain income level. That's not a phase out... that's the top tier of the current scale. The spin on this is killing me. Can anyone give me some decent links, or some actual basic English explanations?

I'm trying to figure out if you mean govt or employer subsidies.

AFAIK, there are no current plan to phase-out govt subsidies. The bigger challenge is to qualify for one as it is dependent upon one's household income.; if you make too much, it's out-of-pocket for you.

If an employer subsidizes its' employees' coverage, they may be taxed if said coverage exceeds govt standards. At that point, the employer can choose to stay the course and pay, pass the expense to the employees or drop coverage and force employees into state/federal exchanges.

If employers currently offer insurance that doesn't meet govt standards, they have to increase coverage (at higher costs) or drop it, forcing employees into the exchanges.

Insurance companies are raising rates this year because they were given a bye; originally they were going to be restriced (per the law) but that was rescinded - allegedly illegally, as are literally all the exceptions granted after the law was passed. But that's a different issue. In some ways, though, it's beneficial for insurers because they will have much higher payouts because those most likely to buy a plan are those who already have pre-existing conditions or have an immediate need for coverage.

Madmallard offers good insight as to the future of healthcare. It's not hard to see that the "cash option" will be a better financial choice for many even though the penalty is 1% of annual incomes, or less.

I meant government subsidies for individuals buying on the exchanges.

The penalty will hit 2.5% in 2016.

On one hand, I like Madmallard's suggestion. It's the way we've always handled it (we have never had medical insurance. We pay for everything).

It is a little less palatable when the government starts fining you for being responsible.

Plus, my wife and I are both in our 50's, and have long histories of problems like cancer, diabetes, and heart problems on both sides of our family. It's kind of unnerving.

Just trying to explore options and be responsible (which seems to be a quaint, if not downright stupid concept these days).