Obamacare Update: Letter From My Health Insurance Broker

My health insurance broker wrote me this in response to our telling him we got a letter from Blue Cross (BC) terminating our policy

Did  your BC letter say your policy ended 12/31/13 or 12/31/14.  If it ends in 2014 I strongly suggest you stay where you are until you are forced into Obamacare which will probably raise your rates substantially.

Given that I run a small business with fluctuating earnings, my last two years tax returns show zero net income.  If I had not honor, I probably could go into the exchange (if and when I could actually get into the exchange) and qualify for a large subsidy.  I could also probably go uncovered, and just sign up when I get sick, and pay the penalty, which is trivial if you are showing no income on your taxes.

Does anyone know if the exchanges do a net worth or asset check?  I don't see how.  If they only look at taxes, I will appear dirt poor.

  • S

    Actually, if your income is low enough it'll kick you over to Medicaid . . .

  • LoneSnark

    They kicked me over to Medicaid. Thank goodness my existing insurer found a loophole to keep insuring me.

  • People saying they will pay the penalty better not get sick. You pay the penalty AND you'll still have to pay out of pocket for all your medical expenses.

  • You do realize medicaid is free right? You are thanking goodness for a loophole that allows you to pay for something that you could get for free?

  • LoneSnark

    You missed the point. The point is the system is broken. I checked awhile ago and do not qualify for Medicaid in my state. But the exchange is too stupid to figure that out and offer me the subsidized insurance I do actually qualify for.

  • OK...that makes sense.

  • marque2

    They apparently look at last year's taxes. But I don't see how that work. My income too is very unstable. My income last year looked rather large - but this year it very small.
    Part of the compromise with the Obamacare that just went through is that income checks will be more thoroughly enforced.

  • Nehemiah

    If you pay the penalty you will pay expenses out of pocket. However, if you contract a serious illness that will require a lot of medical attention you can apply and enroll in a plan. Kind of like waiting till your house is on fire before buying fire insurance. What a country.

  • I didn't think that was true. My understanding is that there are enrollment periods just like we have now. My sister-in-law took an 8 dollar an hour job just so she could get insurance to cover her pre-existing conditions and she did that like 2 years ago.

  • Cardin Drake

    Is it based on your income or your business's? Are you a LLC or C corp?

  • Mole1

    " If I had not honor, I probably could go into the exchange (if and when I
    could actually get into the exchange) and qualify for a large subsidy."

    This raises an interesting point. I (and I think you) believe that various parts of the tax code are ill-advised, like the mortgage interest deduction. Yet, I take the mortgage interest deduction every year. The reason I think there is no dishonor there is that there are other parts of the tax code I think are ill-advised, like the corporate income tax, the current structure of social security, current dividend and capital gains taxes, etc. I don't overpay where I think I am undertaxed because I can't underpay where I think I am overtaxed. So, I advocate for what I think the tax code should be, and I pay according to what the tax code is; there is nothing dishonorable about that. Why shouldn't your subsidy be treated the same?

    To be fair, there are hypothetical breaks I just wouldn't take.

  • Gattsuru

    Do note that there are limited "open enrollment" periods, during which the exchanges have to sell to everyone : October 2013 to March 2014, and October to December from 2014 on. Outside of those periods, the exchanges are only required to provide new policies to people with 'qualifying life events', mostly very large changes in income, changes in family size, or moving interstate.

    That's not likely to be that big of a deal for some conditions, but it'll kinda be a problem if someone crashes a car into you.

    The individual mandate is set to start at 95 USD or 1% of AGI for the first year, although it goes up to 2.5% of AGI by 2016. That's for your personal tax returns, not your businesses if you're an LLC or other incorporated -- a larger number of LLCs have net zero income than individuals, so my apologies if I'm misreading you.

    The employer mandate you've reported on before, and won't be applied until at least 2015, but adds a 2,000 USD per full-time-employee tax on a company with more than fifty employees that doesn't have coverage. That's /not/ based on net income, and doesn't include many of the limitations on enforcement than the individual mandate does. ((Although it's not clear when it'll actually be applied.))

  • Engineer Bob

    Obamacare subsidies look at income, not assets. Google(MAGI Obamacare) will find the rules.

  • slocum

    I don't believe assets are considered, and I'm still waiting for someone to figure out that this could be a significant driver of early (e.g. pre-Medicare) retirements. Imagine the subsidies a well-off 60-year-old retiree living off savings would qualify for with only minimal investment income to report on their 1040.

  • MingoV

    I recently calculated that my wife and I paid more than one million dollars in federal taxes (inflation adjusted). We sure as hell didn't get a million dollars worth of infrastructure and benefits.

    My honor says to speed up the decline of the nanny state by sucking every dime from every program for which I am eligible. When the USA cannot borrow any more, then we might see a dramatic decrease in entitlement spending. (And, yes, I would give up ObamaCare and Social Security and Medicare to save my kids and future grandkids from becoming indentured servants to the government.)

  • mesocyclone

    There are fixed enrollment periods, so it somewhat limits the exposure of the system to adverse selection. Somewhat.

  • Phillip

    Did you see this chart ?

  • Phillip
  • Perfectly logical.

    What's the problem....?

    /enormous sarc

  • Ron H.

    Mole1

    Here's the difference: If a group of us was being robbed at gunpoint (taxed), and some of us managed to keep some of our money and not hand it over (tax deductions and exemptions), I think we would all congratulate those who had minimized their losses.

    If, however, the robber took money from everyone, but gave some of it to back to me (subsidy), I don't think anyone else would like it, and I would feel like I had been an accomplice to the robbery.

  • Mole1

    Pretty contrived difference. Where do tax credits fall in your estimation? I guess somewhere between a subsidy and a deduction. How about Social Security? Do you plan to refuse it when you retire? How about Medicare? Is using that being an accomplice to the robbery?

  • Ron H.

    Yes, I admit that's an over-simplification, but it provides the the proper setting. I consider taxation to be theft so I have no problem with people avoiding it whenever and wherever possible, and I have no problem taking back some of the money I've been forced to pay over the years for Social security and Medicare, even though it comes from current workers. The robber is returning some of the money he took from me previously.

    Tax credits and subsidies are a slightly different story, as they are basically redistribution from one person to another. Rebates for solar panel installations come to mind. i can get a substantial rebate at your expense, over and above any amount I've been forced to pay for such social engineering. The only losers are those who don't install solar at someone else's expense. I'm more ambivalent about that.