Health Care Reform School, Lesson #5 - Tax Credits to help pay for health Insurance

Healthcare Reform school is back in session.  This is lesson #5 Financial Assistance provided for Health Insurance. 
Just to review very quickly, in my previous blogs I covered briefly the following topics.  For a reminder just click on them and you will be brought to that blog post.

• Lesson #1 - Introduction 
• Lesson #2 - The basic reasons for creating the Patient Protection and Affordable Care Act
• Lesson #3 - The public exchanges for purchasing insurance
• Lesson #4 - The Essential Health Benefits that will be added to all Health Insurance Policies in 2014.

A big part of the law is to get the large group of uninsured people with low income into the insurance pool.  Very often a big reason this group of people does not have insurance is the prohibitive cost of health insurance.  Therefore in order to get them into the "pool" the federal government will provide assistance.  Eligibility will be based on the previous years filed income taxes and will be determined through the application process through the Public Exchanges.  The amount of tax credit will be based on income and family size and the benchmark to which aid is being tied is the Federal Poverty Level (FPL).  There is a sliding scale of financial aid based on the income level and family size.  The concept is to have the insured people pay a specific percentage of their income towards health insurance.  Following is the scale that the government  is using:

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• People earning up to 133% of Federal Poverty Level (FPL) will pay 2% of income towards insurance

• People earning from 133-150% of FPL will pay 3 – 4% of income towards insurance

• People earning from 150-200% FPL 4 – 6.3% will pay 3 – 4% of income towards insurance

• People earning from 200-250% FPL 6.3 – 8.05% will pay 3 – 4% of income towards insurance

• People earning from 250-300% FPL 8.05 – 9.5% will pay 3 – 4% of income towards insurance

• People earning from 300-400% FPL 9.5% will pay 3 – 4% of income towards insurance

Now to to put these numbers into context, review the following chart.

 2013 Federal Poverty Guidelines

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48 Contiguous States and DC

Note: The 100% column shows the federal poverty level for each family size, and the percentage columns that follow represent income levels that are commonly used as guidelines for health programs. 

Household Size	100%	133%	150%	200%	300%	400%
1	$11,490	$15,282	$17,235	$22,980	$34,470	$45,960
2	15,510	20,628	23,265	31,020	46,530	62,040
3	19,530	25,975	29,295	39,060	58,590	78,120
4	23,550	31,322	35,325	47,100	70,650	94,200
5	27,570	36,668	41,355	55,140	82,710	110,280
6	31,590	42,015	47,385	63,180	94,770	126,360
7	35,610	47,361	53,415	71,220	106,830	142,440
8	39,630	52,708	59,445	79,260	118,890	158,520
For each additional person, add	$4,020	$5,347	$6,030	$8,040	$12,060	$16,080

Is that all clear?  Well if it is not, then feel free to contact me. 

Essential Health Benefits in Healthcare Reform

Welcome Back students, before the long memorial day weekend, I know you all are wondering what the next healthcare reform lesson will be.  I will give a bit of enlightenment about the Essential Health Benefits that are tied into Patient Protection and Affordable Care Act. 
A big part of the "Patient Protection" portion of the new law is centered around the types of health issues that insurance companies must cover for their clients. The following benefits have been classified as "Essential Health Benefits" EHB and must be included in all insurance policies.  

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1. Ambulatory patient services
2. Emergency services
3. Hospitalization
4. Maternity and newborn care
5. Mental health and substance use disorder services, including behavioral health treatment
6. Prescription drugs
7. Rehabilitative and habilitative services and devices
8. Laboratory services
9. Preventive and wellness services and chronic disease management, and
10. Pediatric services, including oral and vision care

 The benefits are critical to some, but not to others.  The big issue surrounding  EHB's is that they raise the premiums for insurance for everyone, but not everyone needs the benefits.  For example, a single male does not need maternity, however his insurance will cover it, and since the insurance is required to cover it, the premiums reflect that.

This is one example of how the reach of the law is so long, but has not necessarily been reconciled with reality.  This is also an example of an area that will most likely be refined as the law gets implemented.

Healthcare Reform - Insurance Exchanges

Healthcare Reform School - Lesson #3

Previously we learned about the reason for the Patient Protection and Affordable Care Act a little about your educator ...Me.

 

The Affordable Care Act will change the way people buy health insurance.  People will go to an on-line  “exchange” to purchase insurance.   There will be two types of exchanges, the public exchange or a private exchange.  The exchanges will offer 4 options which are:

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•  Bronze – Highest deductibles, lowest cost

• Silver

• Gold

•  Platinum – Lowest deductibles, highest cost

On the public exchanges, the application will be anywhere from 4 to 61 pages... yes 61 pages, long. It is an application to the IRS for a tax credit/subsidy to help pay for the insurance.  Not an application for insurance, since there is no underwriting, everyone is guaranteed issue.

On the private exchanges the application will be very short and streamlined, again, because there is not underwriting and in this case no IRS paper.

 The insurance will be sold by private insurance companies, not the government.  Insurance companies can decide if they will participate, and can choose based on state.  Each state will be able to customize the minimum requirements for the plans.  

If an insured receives a tax credit/subsidy, that portion of the premium will be paid by the government directly to the insurance companies.

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The Reason for Healthcare Reform

Hi again and welcome back to Healthcare Reform School. The first lesson is plain and simply a brief explanation of the basic tenements of the Patient Protection and Affordable Care Act.
Quite simply (not really simple) is everyone is required to buy health insurance, the insurance companies can not deny coverage for any reason to anyone who applies and the government will attempt to make it affordable by providing assistance to people based on their income level.  In addition, to help contain costs the insurance companies must pay out in claims 80% of the premiums they collect.

The basic reason behind the law is that many people are not able to get insurance if they have a pre-existing condition, these are the people that will actually use the insurance.   Now they will have a huge burden taken care of.

That is it for now, just the basics.  Come back next time and I will explain what the "insurance exchanges" are and how that will work as part of implementation.