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Cost of Obamacare... per IRS

Discussion in 'BBS Hangout: Debate & Discussion' started by giddyup, Feb 1, 2013.

  1. giddyup

    giddyup Contributing Member

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    Is this what people were expecting? And 70+ pages of rules enforcement to boot!

    http://cnsnews.com/news/article/irs-cheapest-obamacare-plan-will-be-20000-family

    (CNSNews.com) – In a final regulation issued Wednesday, the Internal Revenue Service (IRS) assumed that under Obamacare the cheapest health insurance plan available in 2016 for a family will cost $20,000 for the year.

    Under Obamacare, Americans will be required to buy health insurance or pay a penalty to the IRS.

    The IRS's assumption that the cheapest plan for a family will cost $20,000 per year is found in examples the IRS gives to help people understand how to calculate the penalty they will need to pay the government if they do not buy a mandated health plan.

    The examples point to families of four and families of five, both of which the IRS expects in its assumptions to pay a minimum of $20,000 per year for a bronze plan.

    “The annual national average bronze plan premium for a family of 5 (2 adults, 3 children) is $20,000,” the regulation says.

    Bronze will be the lowest tier health-insurance plan available under Obamacare--after Silver, Gold, and Platinum. Under the law, the penalty for not buying health insurance is supposed to be capped at either the annual average Bronze premium, 2.5 percent of taxable income, or $2,085.00 per family in 2016.

    In the new final rules published Wednesday, IRS set in law the rules for implementing the penalty Americans must pay if they fail to obey Obamacare's mandate to buy insurance.

    To help illustrate these rules, the IRS presented examples of different situations families might find themselves in.

    In the examples, the IRS assumes that families of five who are uninsured would need to pay an average of $20,000 per year to purchase a Bronze plan in 2016.

    Using the conditions laid out in the regulations, the IRS calculates that a family earning $120,000 per year that did not buy insurance would need to pay a "penalty" (a word the IRS still uses despite the Supreme Court ruling that it is in fact a "tax") of $2,400 in 2016.

    For those wondering how clear the IRS's clarifications of this new "penalty" rule are, here is one of the actual examples the IRS gives:

    “Example 3. Family without minimum essential coverage.

    "(i) In 2016, Taxpayers H and J are married and file a joint return. H and J have three children: K, age 21, L, age 15, and M, age 10. No member of the family has minimum essential coverage for any month in 2016. H and J’s household income is $120,000. H and J’s applicable filing threshold is $24,000. The annual national average bronze plan premium for a family of 5 (2 adults, 3 children) is $20,000.

    "(ii) For each month in 2016, under paragraphs (b)(2)(ii) and (b)(2)(iii) of this section, the applicable dollar amount is $2,780 (($695 x 3 adults) + (($695/2) x 2 children)). Under paragraph (b)(2)(i) of this section, the flat dollar amount is $2,085 (the lesser of $2,780 and $2,085 ($695 x 3)). Under paragraph (b)(3) of this section, the excess income amount is $2,400 (($120,000 - $24,000) x 0.025). Therefore, under paragraph (b)(1) of this section, the monthly penalty amount is $200 (the greater of $173.75 ($2,085/12) or $200 ($2,400/12)).

    "(iii) The sum of the monthly penalty amounts is $2,400 ($200 x 12). The sum of the monthly national average bronze plan premiums is $20,000 ($20,000/12 x 12). Therefore, under paragraph (a) of this section, the shared responsibility payment imposed on H and J for 2016 is $2,400 (the lesser of $2,400 or $20,000).”
     
  2. bucket

    bucket Member

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    You've convinced me. It's time to go to a single-payer system. Medicare for everyone.
     
    1 person likes this.
  3. Northside Storm

    Northside Storm Contributing Member

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  4. okierock

    okierock Contributing Member

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  5. Major

    Major Member

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    Yes?

    I wonder if CNSNews understands the different between "cheapest" and "average"?


    What is wrong with this? If the family with a $120k income doesn't want to buy insurance and leave the rest of us carrying the burden if something horrible happens to one of them, a $200/month annual penalty is perfectly reasonable.

    Most families with $120k income already have insurance - and pay that $20k average - and wouldn't be affected.

    The real long-term concern is the $20k average, which needs to be brought down over time. Obamacare did not make that problem worse, and should help it to some extent.
     
  6. Classic

    Classic Member

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    Decent movie just saw related to subject:

    [​IMG]
     
  7. bobrek

    bobrek Politics belong in the D & D

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    Are the tiered Obamacare plans for folks who cannot get insurance through other companies? For example, assume for a family of five that the cheapest bronze plan is $12,500 (I think that is what Forbes reported - albeit a while back).

    In real life, you can get a reasonable Blue Cross/Blue Shield plan for less than $10,000 for a family of five.

    I assume that option will still exist. That being the case, why would a family of 5 buy the bronze level Obamacare plan rather than going through a broker and getting the BCBS plan I used as an example?
     
  8. giddyup

    giddyup Contributing Member

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    the "bronze" plan calculated to cost $20,000 per year is the cheapest of the four plans: Bronze, Silver, Gold and Platinum. Wonder what Platinum runs?

    Who is going to pay $1500+ per month voluntarily when they can just pony up $200 when necessary?

    I don't t hink that most families pay that much out of pocket. Between EE paid-coverage and ER co-sponsoring of dependent coverage, the cost drops dramatically. On my wife's company's plan (W, H, 2C) we only pay about $450/month out of pocket.

    People on the outside of sponsored coverage might well be payng $1500/month though?

    In 2011 the median household income was $50,000. Twenty Grand of that towards health insurance is intolerable.
     
  9. giddyup

    giddyup Contributing Member

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    Insurability issues is the only reason I can think of.
     
  10. bobrek

    bobrek Politics belong in the D & D

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    That is what I would assume. If that is truly the case, then articles such as this should include a sentence saying something like - "for those families that are uninsurable through traditional insurance policies..."
     
  11. rage

    rage Member

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    It's just the rising cost of health care in this country.
    • In 2012, my premium cost ~25K. My employer paid 20K. I paid ~5K. I have a family of 3.
    • 10 years ago, I think we paid $15K total. I paid ~2K.
    • 20 years ago, I was single, the total cost was < $10K. I paid less than $1K.
    Without Obama Care, health care cost has been going up and up.

    Obama Care will help control the cost some.
     
  12. giddyup

    giddyup Contributing Member

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    that is going to be an expensive "pool" of insureds. the cost is going to skyrocket like nothing the industry has seen-- everyone is otherwise uninsurable
     
  13. bobrek

    bobrek Politics belong in the D & D

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    What kind of plan do you have? $2000 a month seems ridiculously high for a family of 3. My son is currently looking into insurance for a family of 5 and can get a reasonable BCBS plan for less than $10,000. I THINK the family deductible maxes out at $2000-$3000 and the coverage is the typical 80-100%.
     
  14. rage

    rage Member

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    I had Cigna Medical and Dental. Vision was with Vision care I think. The coverage was good but I still had co-pay, detuctible ... I looked for a minute but could not find the details plan.
     
  15. Major

    Major Member

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    There is no "bronze" plan. Plans that cover specific items will be rated as Bronze. Plans that cover more will be rated Silver. etc. The AVERAGE bronze plan will cost $20k. There will be some that are cheaper and some that are more.

    How about people who want health insurance? In Massachusetts, a $50 penalty or something like that got them to 99% coverage. The issue wasn't that people didn't want insurance - it was that they weren't able to get it before (pre-existing conditions, other various reasons). The vast majority of people want insurance if they can get it.

    Out of pocket is not relevant. If your company is paying $1500 per month, that's $1500 that you're not getting in wages that the other person is.

    Except the median household (a) doesn't have 5 people, (b) would not have to pay $20k, (c) may qualify for a subsidy, and (d) would pay a much smaller penalty for not getting insurance.
     
  16. Major

    Major Member

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    There is no "Obamacare plan". The BCBS plan would have to meet certain standards to be on the exchange and qualify as acceptable insurance. If it qualifies, it would be given a rating (Bronze, Silver, etc).

    So if that BCBS qualifies, people can go get it. Or they might still be able to get non-qualifying cheaper plans and then still pay the penalty (which might still be cheaper overall).
     
  17. rimrocker

    rimrocker Contributing Member

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    I've seen the op about 5 times on Facebook from some of my winger friends. Based on what they usually post, the source of the article, and the way the article is written... all talk of costs based on examples from an IRS doc that is not linked to, no discussion of benefits, numbers not provided in context... leads me to believe this is some major BS. For those who don't know, CNSNews was founded by Brent Bozell and their slogan is: The Right News. Right Now.

    So you loser Liberals attacked the source, well what about the facts huh?

    OK, here we go...

    For the figures in the piece to be true, the average family would need to make over $200k. I don't think that is the case.

    Note: FPL = Federal Poverty Level

    Benefits...

    Discounts...

    It's important to remember Obamacare does not guarantee free health care or even cheap health care. It aims for quality affordable health care. Here are the provisions already in effect and the ones coming up this year:

    And for this year, 2013:

    And beyond:

    http://www.obamacarefacts.com/
     
  18. bobrek

    bobrek Politics belong in the D & D

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    That being the case, is it likely that the current BCBS plan that costs less than $10,000 will rise in price once ObamaCare kicks in? I would find it hard to imagine that a current BCBS health care plan would not qualify as an acceptable plan uinder ObamaCare, yet all of the minimum plan projection prices I have seen for the lowest (e.g. Bronze) tier seem to cost at least 25% more than my real-world example plan.
     
  19. basso

    basso Contributing Member
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    the article does indeed include a source link, which i've included right here for you (PDF link):

    http://www.irs.gov/PUP/newsroom/REG-148500-12 FR.pdf
     
  20. justtxyank

    justtxyank Contributing Member

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    Bobreck...

    Yes, you can still get individual or group insurance through BCBS, Humana, etc. However, the vast majority of their plans will not be eligible to sell anymore after this year because of the limit on a deductible. Obamacare legislation limits deductibles to 2000 for all services which means all HDHP and almost all HSAs will become illegal.

    This will force many companies to drop insurance and will force many people to get insurance that is more expensive than what they currently have.

    On top of that, despite Major saying that Obamacare did not make the price worse, that is flat out not true. The insurance companies even stopped pretending it was true.
     

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