Healthcare Penalty

[Corduroy Frog]

Beginning in 2014 US citizens will be "penalized" for not buying health insurance under the Obamacare law. Assuming nothing changes in the meantime, the penalty will rise to $695 in 2016. Smith family husband & wife plus 2 kids? Penalty is $2085.

To shop on the open market for health insurance would cost this family some $15,000. Most people could not afford it, so millions of people will choose to pay the penalty instead.

So Smith family pays $2085 and STILL has no health insurance.

Question: Where does the $2085 go? For what purpose does the govt use the money?

I haven't found anyone to give me an answer yet.

[David1980]

I'm curious as to the minimum level of insurance required to avoid the penalty. If you get something like McDonalds would offer to their employees, you know maximum $2000ish payout per year costs about the same maybe a bit more, would it avoid the penalty? I have been living in a cave as far as that stuff goes. Does it set standards for what qualifies as health insurance?

[Gary2]

I haven't really studied the new federal law yet, so I can't directly answer the questions. One obvious possibility for the first question is that the bills don't designate the penalties for a trust fund nor make appropriations based on their amount - in which case, they're just general revenue going to the Treasury.

I can comment on the situation in MA, which has had a similar requirement for several years. First, a large majority of the people I see fall into one of two groups: Those who have adequate coverage through work, Medicare, or VA benefits and those who are enrolled in MassHealth, the state subsidized insurance program (generally free to those accepted). The latter group overlaps with those who are determined to be unable to afford insurance, and thus exempt from penalties. Only a very small number, in my experience, actually decide to pay the penalty rather than purchase insurance, and they often view it as a temporary situation.

The minimum levels of required insurance, labeled "Minimum Credible Coverage", are listed in the state income tax instructions. Among other possibilities, any plan that qualifies under federal rules as a High Deductible Health Plan is taken as qualifying. Plans that don't qualify as HDHP have to meet other rules, such as caps on annual out of pocket payments by the policy holder, no cap on payouts by the plan, no per diem cap for hospital stays, etc.

Furthermore, there is an exception process for various situations. In particular, if an employer plan doesn't quite meet the requirements, but it's the only subsidized plan available to an individual and the individual signs up for it, then they can waive the penalty.

[Bees Knees]

Question: Where does the $2085 go? For what purpose does the govt use the money?

There is a difference between having no health insurance, and having no health care. Everyone in this country has access to health care. The difference is some of us have health insurance to pay for it. Others use the emergency room at their local county hospital. The idea behind the penalty is for those who do not purchase insurance, they are more likely to use taxpayer funded facilities to access health care and thus force taxpayers to pay for their health care.

I’m not suggesting the $2,085 penalty will actually go to provide health care for those without health insurance. It goes to the general fund just like every other tax collected by the federal government.

[Bees Knees]

I might add that during the political debate over passage of the health care reform legislation, health insurance companies were in favor of the legislation for this very fact. Forcing everyone to buy health insurance meant 40 million new customers for the health insurance industry. Naturally, they were all for that. In turn, the health insurance industry said with that many new customers, they could afford to lower their rates. Politicians fell for the lower insurance premium rates line and voted for the bill.

Anyone care to wager whether your insurance rates will actually go down in 2014 when everyone is forced to buy insurance?

[Nashville]

Of Course Not

Anyone care to wager whether your insurance rates will actually go down in 2014 when everyone is forced to buy insurance?

In fact, my premiums have gone up 25-30% two years in a row. Insurance agent says company has to beef up its profitability to prepare for having to compete with the forthcoming state insurance exchanges.

This whole legislation could have been written by the insurance companies. "Forcing" them to accept dependent coverages up to age 26 simply gave them 1.5 million new customers, mostly young and healthy. Boy, the govt really beat up on them with that, didn't they.

No cost/price control in the legislation. No forcing of large companies (i.e. WalMart and others) to provide insurance for their employees. And in October, the Dept of Health and Human Services voided the CLASS provisions for long-term care. The HHS declared that the provision "could not be made actuarily sound". This is govt-speak for "they can't afford it."

This HealthCare legislation appears to be tailor-made for Corporate America - not the people.

[mrbill]

It has been said that the Federal law is somewhat based on the Massachusetts Health Care Law, signed by Gov. Romney. There is a $ penalty for those who have not signed up. For 2010 taxes, I only had 1 client who had not signed up. He was single, made approx. 30K, and incurred a penalty of $650 for not having signed up.

[Mo Sheets]

Heath Insurance Affordability

This whole mess with health insurance is making me ILL! My husband retired from the State of Indiana after 23 years. His pension is about $950/month (after taxes). We just received the notice from the insurance company that our high-deductible plan that now costs us $974 per month is going up to $1308 per month. He is 61 1/2 and won't be able to qualify for Medicare until age 65 (unless they raise the age limit on that too!)

We have had to pay for all of our prescriptions this year because the insurance won't kick in until we meet our high deductible. It seems that the drug companies are also taking advantage. His one prescription that had been $276/90 day supply is now (in less than a year) over $375 for a 90 day supply. When I went to our new local pharmacy to see if they would price match Medco, they said if we run it through under the insurance (the insurance will not pay anything since we haven't met our deductible) they couldn't price match but if we "paid cash" and didn't run it through our insurance, they could actually beat the other price. This just seems SO WRONG to me. We as a nation are getting gouged by our government and by the insurance companies. Very, very sad.