The Truth About HCR Effects on Premiums

[Yagents]

I thought costs would go down?? What a joke. Just spoke to another high income client paying $340/mo for family of four on Humana Monogram $7500 plan, told him he needs to stay grandfathered. This is the type of client that will stay on the books for a long time, until the plan goes into a death spiral
Washington Post Examines Impact of Health Reform Law on Premiums

Posted on August 10, 2012 by AHIP Coverage
The Washington Post has an article out today on the impact of the health care reform law on premiums.
The article noted five factors that could lead to higher insurance premiums:

1. Currently insurance companies offer lower premiums to younger Americans, since they generally have lower health costs. But starting in 2014, the law implements an age band so that the amount an older individual pays will be no more than three times what a younger individual pays. So if a state currently allows an age band of 5:1, older Americans might see a premium decrease — but younger Americans would see a premium spike.
2. A similar dynamic exists with the law’s requirement that insurers selling policies through the health exchanges will no longer be able to charge different premiums based on a person’s health status when coverage is first purchased. This is known as a community rating. So healthier individuals generally will see higher premiums.
3. The popular provision that requires insurers to accept everyone regardless of their health status (i.e., pre-existing conditions) also will transfer costs to healthier individuals.
4. Insurers must offer an “essential health benefits” package, providing coverage in 10 categories. The list includes: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.
   
   It’s a great package, but the benefits are more extensive than what most individuals and small businesses already purchase. So that will also boost premiums, especially if you currently have a less extensive plan. A report in the June edition of Health Affairs found that “more than half of Americans who had individual insurance in 2010 were enrolled in plans that would not qualify as providing essential coverage under the rules of the exchanges in 2014.”
5. The law also contains various taxes and fees, including a health insurance tax. Those costs presumably would be passed on to consumers, resulting in higher premiums.

http://www.ahipcoverage.com/2012/08/10/washington-post-examines-impact-of-health-reform-law-on-premiums/

And another one:
“It projects that individuals who buy their own coverage will pay 38 percent more on average. Premiums for people who get coverage from an employer with 50 or fewer workers will rise by 4 percent on average, the study found.”
http://www.ahipcoverage.com/2012/08...ines-impact-of-health-reform-law-on-premiums/

 

[Ann H]

1. Currently insurance companies offer lower premiums to younger Americans, since they generally have lower health costs. But starting in 2014, the law implements an age band so that the amount an older individual pays will be no more than three times what a younger individual pays. So if a state currently allows an age band of 5:1, older Americans might see a premium decrease — but younger Americans would see a premium spike.

Ah yes... The "under age 30" segment is the largest group of uninsured people in America, and the exact market that PPACA was supposed to rescue!

 

[taterpeeler]

[/list]Ah yes... The "under age 30" segment is the largest group of uninsured people in America, and the exact market that PPACA was supposed to rescue!

yes ann, i agree but that sector is also the one that I feel would be most likely to be getting a subsidy therefore they will get the "tax credit"... tax credit? dosent that mean they pay first and then get it at tax time in the form of a write off? Did i miss something here? Did it change? or am I just a dumb hick that dosent understand the tax code?

soooo... long and short of it... the tax payers will be paying the premiums for the youngens

 

[somarco]

The tax credit is supposed to be calculated in advance when you apply through the exchange. Kind of like those low income folks that get advance EIC.

Agents that sell through the exchange will have to be "cleared" to review wage and tax return info in order to calculate the premium rebate.

That should be fun.

 

[Yagents]

The largest data hub ever created will pull also from the IRS. The exchange will use the AGI (MAGI) to auto calculate the subsidy based on the silver plan cost. Any errors on AGI have to be worked out with the IRS, there should be a few million of those puppies out there. The gubment will pay the exchange, the exchange will forward to the insurance company. And don't forget about those subsidy clawbacks if you care to work more hours or get a raise. BTW, you've got 4 more months to get your income down in 2012, subsidies in 2014 will initially be based on this tax year. I know people would do some extra tax planning (HSA contribution), if they knew this today. But they don't, and they won't.....I think I'll write a blog on the topic