Government Subsidies

[Experienced Agent]

Plug in some numbers at this subsidy calculator Subsidy Calculator | The Henry J. Kaiser Family Foundation and I think you'll be shocked at the level of subsidy for consumers. Particularly for families. With this high level of subsidy, it will have a dramatic impact on agents trying to sell health insurance in the individual market. Am I missing something or is this as bad as it appears?

 

[deadhead]

Reading that crap makes my head spin.

 

[Ann H]

Plug in some numbers at this subsidy calculator Subsidy Calculator | The Henry J. Kaiser Family Foundation and I think you'll be shocked at the level of subsidy for consumers. Particularly for families. With this high level of subsidy, it will have a dramatic impact on agents trying to sell health insurance in the individual market. Am I missing something or is this as bad as it appears?

It's only bad if you are a taxpayer, someone who earns more than 400% of the Federal Poverty Level, or both.

 

[Experienced Agent]

Exactly!!! A family of four with $90,000 income gets a $3,500 tax credit. The Bronze plan has a max out of pocket at $4,000. That's going to be tough to compete with. I know there is talk about $20,000 annual premiums for bronze. I don't think that will be the case coming out of the gate.

 

[Ann H]

Exactly!!! A family of four with $90,000 income gets a $3,500 tax credit. The Bronze plan has a max out of pocket at $4,000. That's going to be tough to compete with. I know there is talk about $20,000 annual premiums for bronze. I don't think that will be the case coming out of the gate.

For 2014, the maximum out-of-pocket is $6,350 ($12,700 for families).

$20,000 annual premiums are $1666.67 monthly, which is not that out-of-line, since the IRS was using a National average for a family of 5. Most of the sample rate quotes you've seen leaked recently were for single people ages 20 and 40.

The premiums will be high compared to today's individual/family plan premiums. The benefits will be slender when it comes to copays, deductibles, networks, etc., but rich when it comes to mandated issues like guarantee issue, no pre-ex, etc.

The subsidies are also rich. But remember, the insurance companies can pay a commission for business submitted through the exchanges. And there will be a robust private market, too, although those premiums will also be high and no subsidies apply.

 

[deadhead]

For 2014, the maximum out-of-pocket is $6,350 ($12,700 for families).

$20,000 annual premiums are $1666.67 monthly, which is not that out-of-line, since the IRS was using a National average for a family of 5. Most of the sample rate quotes you've seen leaked recently were for single people ages 20 and 40.

The premiums will be high compared to today's individual/family plan premiums. The benefits will be slender when it comes to copays, deductibles, networks, etc., but rich when it comes to mandated issues like guarantee issue, no pre-ex, etc.

The subsidies are also rich. But remember, the insurance companies can pay a commission for business submitted through the exchanges. And there will be a robust private market, too, although those premiums will also be high and no subsidies apply.

Yeah 15 dollars per family some commission. Not worth my time

 

[bluediamond]

Deadhead: It is up to your insurance company and state dept of insurance what commission's they will pay if you place someone on the FFE. Here in Florida we have been told same commission on or off exchange. I have read where some of the state's that have exchange's have their own idea's what commissions will be. But I think they will learn quickly they need the agents or fail.

 

[AllenChicago]

Plug in some numbers at this subsidy calculator Subsidy Calculator | The Henry J. Kaiser Family Foundation and I think you'll be shocked at the level of subsidy for consumers. Particularly for families. With this high level of subsidy, it will have a dramatic impact on agents trying to sell health insurance in the individual market. Am I missing something or is this as bad as it appears?

It's REALLY BAD for consumers (primarily small business owners) whose income fluctuates around the sharp cut-off point for receiving a subsidy.

I met with a business-owner couple last week whose income was a shade over $64,000 in 2012. They are both age 60 and both are currently uninsurable in the private sector, (He's in a wheelchair and she has Diabetes and Rhumatoid Arthritis) and can't afford the $1,300 monthly premium charged by the Illinois Guaranteed-Issue CHIP program. Instead, they have a (crappy) Scheduled Benefit policy and pay $700 per month for it.

The subsidy calculator ( National Health Care Calculator ) shows that their Silver Plan 2014 premium is $1,564 (!!) per month.

If their income in 2014 is reduced to $62,000 or less, Uncle Sam will pay $1,073 of their $1,564 monthly premium...leaving them paying just $491.00 in premium.

They're going to work with their accountant to insure that their 2014 income will be below the $62,000 threshold. I told them to ensure that their accountant does so in a common and orthodox manner, because the IRS has hired an additional 15,000 agents/auditors to go after people who (among other things) show a reduction of income to just below the threshold that qualifies them for the generous premium subsidy.

As we get closer Trick-or-Treat month, and begin asking income questions, we'll come across lots of individuals and families who are just a couple thousand dollars away from qualifying, or not qualifying for a premium tax credit subsidy. And we're not talking peanuts, but many thousands of dollars a year.

Start getting your subsidy eligibility charts printed, or bookmarked on your smartphone, tablet, etc... While you can't help someone choose a plan right now, you can give general advice regarding the relationship between income and subsidy amount, along with CBO estimated premiums. Once October comes, you'll be their "go to" agent for getting the appropriate 2014 health plan in place.
-Allen