One BIG hiccup in the ACA

[SHRED]

Families covered by an existing group insurance plan through an employer cannot use the exchanges or get subsidized.

My coworker rates are going up to $634 per month to insure his wife and two kids and that's with our employer covering him 100% and his family 50%
He makes around $45 to 48K per year I estimate.

This is a big flaw. Having to stay in the employer's group plan. This is well beyond the 9.5% of his pay as laid out by the ACA as a limit but the flaw is that they do not count dependant care cost. Since our employer covers him 100% that covers the 9.5% of pay.

[truebluegreen]

1. Unfortunately, it is not a bug it's a feature.

Keeping insurance companies in the mix at all. Best thing that could happen is for your friend's employer to drop family from their plan. Then they could shop on the exchanges and maybe get a subsidy.

I take that back. Better thing is for employers to get out altogether. Even better than that is for insruance companies to call it a day on health insurance. Leeches. Eww. Put those parasites out of business.

[SHRED]

3. They cannot

The law is that if they offer insurance they must offer dependant coverage.

[truebluegreen]

5. I am sure you know more than I on this issue,

since I have always been self-employed and individually-insured, but haven't there been a number of reports/stories where employers are dropping employees' spouses and families, because "Obamacare?"

Can they do that before the law takes affect, but not after?

[SHRED]

6. I'd need to know the details of that

Check this out:

Jose | February 20, 2013 10:13 AM | Reply
Right, but what if the employer only offers employee "ONLY" coverage meaning the plan does not cover spouse or dependents. Even if was deemed affordable (less than 9.5%)the spouse and dependents would still have to pay 100% of the cost of insurance because they are not covered under the company group plan. Does this mean that the employee is still responsible to cover his or hers family and dependents at 100% when they would qualify for a subsidy through the exchange?

Phil Daigle replied to comment from Jose | February 20, 2013 10:49 AM | Reply
The employer does not have the right to exclude spouse and dependent coverage. He can only choose not to contribute to their coverage. So even though the employee would have to pay 100% of the spouse and dependent coverage, they could be ruled to have "affordable" group coverage available. It is what it is. I'm not saying it's fair.

http://www.cahba.com/advice/2013/02/affordable_group_coverage.html

[DebJ]

19. Hm I don't think so...not spouses, anyway.

http://www.huffingtonpost.com/2013/09/11/health-coverage-spouses-_n_3908786.html

[SHRED]

20. spouses yes but not dependants

And I think it's only employed spouses who can get insured via their workplace.

[Ellipsis]

33. I still remember Apple's Glossary from the original manual which defined the term feature .

Feature- a bug as described by the marketing department.

[kelly1mm]

2. The 9.5% of his pay is calculated on the rate for employee coverage only, not family coverage.

So, since employee coverage is 0% for him, his family cannot buy on the exchange (with or without a subsidy) even if it would cost 100% of his salary for their insurance.

It does seem to be a pretty big problem.

[SHRED]

4. A problem I suspect put in by the health insurance leeches

[Barack_America]

14. No, engineered by the IRS to make the ACA's cost more palatable.

Leaving families out of the affordable care crusade shaved $48 billion off the bill.

[SHRED]

15. Your post suggests to me...

...that the IRS was involved in a political sense with the ACA?

[Barack_America]

17. The IRS made the decision to apply the 9.5% to the individual only...

...though, for some reason, to count the entire household's income in that calculation.

Why this decision was left to the IRS is somewhat beyond my current understanding.

This does a good job of explaining the IRS's role (note the date...this wasn't a surprise to anyone)

http://www.nytimes.com/2012/08/12/us/ambiguity-in-health-law-could-make-family-coverage-too-costly.html?pagewanted=all

[SHRED]

11. Maybe my employer could...

...cover dependant care 100% and say nothing over 90% of an employee's pay in cost?

That way they could have the choice.

[BlueStreak]

7. What you say is true. However, consider

Once the exchanges actually get working -- and Healthcare.gov is virtually dead at this point, utterly unusable -- employees will be able to see what the "fair market price" of coverage is. If your employer has a crappy group plan, employees can use the information from the exchange to petition the company to get a better program.

In reality, I think you will find that the UNSUBSIDIZED prices on the exchanges are almost always going to be higher than the net cost employees pay under their group plans.

All these "low, low prices" you hear about are the heavily subsidized policies for those who are very low on the income ladder.

[SHRED]

8. Our rates are determined by our overall group's cost

That's what they tell us. We have Kaiser and Anthem as the choices.
These insurance companies took into account what our group has cost recently and recently we've had at least two long term cancer treatments and more. These are multi-million dollar coverage costs incurred. So they tell us our cost due to disease and an aging workforce are to blame.

[BlueStreak]

16. Right. That can happen in small-to-medium group policies

The larger the group, the more things average out. I think there are provisions in ACA that allow smaller businesses to join larger pools. I am not up on that.

And if your plan is way out of line with what is on the exchange, there is the option of asking your employer to stop offering coverage and instead help fund HSA accounts that could be used for the employees to buy individual policies from the exchange. I'm not suggesting that is a good idea. I bet in most cases, it would be better off to remain with the company plan.

[Puzzledtraveller]

9. Save it, some here do not care.

Well, most here.

I do however, I knew this would happen. I was trained on it.

[Barack_America]

12. Until Republicans use it as "proof" Democrats don't care about middle class families...

...only poor people benefit from Obamacare, etc.

Coming soon to an election near you, bank on it.

[SHRED]

13. count on it

[DevonRex]

23. I care. I've been researching this all day.

See below. I think they shouldn't assume they don't qualify for the exchanges. Talk to ACA people on the 24hour Call Center or at the state exchanges.

Another avenue is the state insurance people. In Colorado it's the Division of Insurance Consumer Assistance:

http://cdn.colorado.gov/cs/Satellite/DORA-DI/CBON/DORA/1251631140623

[HuckleB]

10. So, let's offer the Repugs a "compromise."

Let's fix this part of the ACA, and pass the dang budget. Either that, or let's pass single-payer to replace the ACA and pass the dang budget.

[Puzzledtraveller]

31. I'm with you.

[JimDandy]

34. Yes, this would be an obvious and well-deserved 'feature'

for democrats to bargin with in any compromise disscusion.

Over the last several months, some DUers have gotten upset and posted OPs deriding companies that have dropped insurance coverage, but many of their employees were probably glad they did that, because of this dependent care problem. My son answers incoming calls from the public on the ACA and can't help anyone with this problem. It's so unfair.

[robinlynne]

18. Can't his wife and children join the exchange if they want to?

[leftstreet]

24. Nope. It's called the 'Family Glitch'

WASHINGTON — A "family glitch" in the 2010 health care law threatens to cost some families thousands of dollars in health insurance costs and leave up to 500,000 children without coverage, insurance and health care analysts say.

That's unless Congress fixes the problem, which seems unlikely given the House's latest move Friday to strip funding from the Affordable Care Act.

Congress defined "affordable" as 9.5% or less of an employee's household income, mostly to make sure people did not leave their workplace plans for subsidized coverage through the exchanges. But the "error" was that it only applies to the employee — and not his or her family. So, if an employer offers a woman affordable insurance, but doesn't provide it for her family, they cannot get subsidized help through the state health exchanges.

http://www.usatoday.com/story/news/politics/2013/09/23/aca-family-glitch-issues/2804017/

Sounds like more than a 'glitch'

[robinlynne]

25. That actually does not make sense. Two married people can have (and do) different jobs and different

health insurance.

[leftstreet]

26. Right

This would apply to family members without other insurance

[robinlynne]

27. looks to me as if the idea is to keep thousands of extra people who don't need the exchange from

going to the exchange?

[leftstreet]

28. No, actually they're people who NEED the exchanges

The 'glitch' concerns family members NOT COVERED by an employer plan

[robinlynne]

32. but covered by theuir spouses'. I was referring to the whole section; people (and families) covered

by their employers don't (yet) have access to the exchanges. There must be a reason that was put in there.

[Roland99]

30. But isn't that referring only to *subsidized* coverage?

One can still dump employer coverage (or continue without if as many do) for coverage off the exchange but will forego subsidies. But if it's cheaper on the exchange, why not.

[cilla4progress]

21. AbsoFREAKINlutely!

I got into it with a state health care authority rep over this today.

My husband's share of his employer provided insurance is < 9.5%, "affordable" in the parlance of ACA.

To cover our daughter and me is $1300, close to 20% of his gross income. No subsidies available!

[JimDandy]

35. Be nice to the reps, if you can!

My son is one and it tears him up about this glitch... he and all the reps can't do a damn thing about it, but they're doing the best they can to help.

This is awful, really, because with 70% of people on employer health plans, that's a HUGE, HUGE number of dependents that will still end up using emergency rooms for their care, which ends up ruining what was supposed to be one of the ACA's positive aspects -- reducing emergency room visits!

[DevonRex]

22. I have 2 articles on how to determine Minimum Value and Affordability - the things

that decide whether or not the insurance coverage provided by the employer is good enough.
If the insurance does not provide minimum essential coverage and meet minimum value standards. it looks like the employee can shop the exchanges. Or if it's not affordable based on the formulae provided. There's a link to the CFR on all of this in the first article. You can download the PDF so you can figure this out for yourself.

http://www.lexology.com/library/detail.aspx?g=d8dac987-e22a-49d2-837b-8218bf295859

What is affordable health coverage and why does it matter?

If your company is an applicable large employer and your health coverage is not "affordable," you may incur an unaffordable/inadequate coverage penalty. The penalty is $250 per month ($3,000 per year) times the number of full-time employees receiving federal premium assistance to buy health insurance on an exchange.
To determine "affordability," you divide a numerator by a denominator:
Number: The employee contribution for single health coverage
Denominator: The employee's actual household income, or one of three proxies for household income:

The employee's hourly rate of pay times 1,560 hours (or annual salary);
The federal poverty level (currently, $11,490); or
Box 1 of Form W-2.

A result that does not exceed 9.5% is deemed to be "affordable" for purposes of the unaffordable/inadequate coverage penalty.

The second article explains a lot of stuff in depth about affordability and minimum value and coverage. But the most important thing is Safe Harbor plans. They're sort of packaged plans that are guaranteed to meet minimum requirements and not much more. Safe Harbor guidelines:

http://www.lexology.com/library/detail.aspx?g=c2eec094-8da5-4014-ba18-ae614f4edde6
Safe Harbor – The proposed regulations indicate that certain safe harbor plan designs that satisfy MV will be specified in additional guidance. The safe harbors are intended to provide an easy way for sponsors of typical employer-sponsored group health plans to determine whether a plan meets the MV threshold without having to use the MV calculator. The preamble proposed the following three safe harbor plan designs: (1) a plan with a $3,500 integrated medical and drug deductible, 80% plan cost-sharing and a $6,000 maximum out-of-pocket limit for employee cost-sharing; (2) a plan with a $4,500 integrated medical and drug deductible, 70% plan cost-sharing, a $6,400 maximum out-of-pocket limit and a $500 employer contribution to an HSA; and (3) a plan with a $3,500 medical deductible, $0 drug deductible, 60% plan medical expense cost-sharing, 75% plan drug cost-sharing, a $6,400 maximum out-of-pocket limit and drug co-pays of $10/$20/$50 for the first, second and third prescription drug tiers, with 75% coinsurance for specialty drugs.
Actuarial Certification – Plans with nonstandard features that cannot determine MV using the MV Calculator or a safe harbor must use the actuarial certification method.

So, after looking at all of this my advice to people whose employer based insurance is crap would be to call and talk to an ACA rep on the 24 hour helpline or ask your state exchange people. You still could qualify. Don't assume you don't qualify.

[Liberal_Stalwart71]

29. Randi Rhodes had a great conversation about this a few weeks ago...

She agrees--as do I--that the employer mandate be rescinded. Allow everyone to go on the exchanges rather than employers deciding plans that may not be suitable for every one of their employees!!

[JimDandy]

36. Reccing so DU can understand this big glitch. n/t