Over the weekend, the Associated Press put up an article on the Newsday website, HERE, about the growing apprehension of “industry officials” and other health care administrative experts on the efficacy of the ObamaCare mechanism for correctly calculating the subsidies when automatically renewing health care policies. If the calculations result in a premium amount that is too low, consumers will get a rude awakening when their actual premium bills start coming in from the health insurance companies. Conversely, if the amount is too high, they may owe a refund to the IRS later.
From the article:
“It was our preference for [the Obama administration] to have the capacity to update people’s subsidy information, but they haven’t been able to get that built,” said Brendan Buck, a spokesman for the industry trade group America’s Health Insurance Plans.
But, wonder of wonders, it appears that it will not work that smoothly:
First, financial aid is partly based on premiums for a current benchmark plan in the community where the consumer lives. Because more plans are joining the market and insurers are submitting entirely new bids for 2015, the benchmark in many communities will be different.
Second, financial aid is also based on household income. If your income goes down, you are entitled to a bigger health insurance tax credit. If it goes up, you get less. The 2014 amounts could well be out of date and incorrect for many people. Financial assistance is also affected by age, family size and where people live.
And that doesn’t get into another motivation for consumers to shop around: Premiums and choices for 2015 are changing, so your current plan may no longer be a good deal. “Just continuing in the same plan with the same credit is not going to be the optimal outcome for most people,” said Judy Solomon of the Center on Budget and Policy Priorities, which advocates for low-income people. “Your 2014 credit is going to be lower in most cases, and in some cases it could be too high.”
About 8 in 10 of those who signed up for private coverage under the health care law are getting financial aid. In the 36 states served by the federal insurance exchange, the tax credits average $264 a month, reducing the average monthly premium of $346 to just $82. … But the subsidy scheme created by Congress to keep premiums affordable has so many moving parts that it’s turning out to be difficult for the government to administer.
Open enrollment for 2015 begins on November 15th, about a week after the fall elections, and it will close about one month later. During this brief period, health care consumers who already have a policy will need to renew or make changes to their policies in order to avoid a break in coverage on January 1st.