The Affordable Care Act (ACA) – What Would a Replacement Program Look Like – And Is One Needed?

Georgia Congressman Tom Price, a fierce critic of the ACA and a leading advocate of repealing and replacing the controversial 2010 health care law, recently was chosen by President-elect Donald Trump to lead the Department of Health and Human Services (HHS).  On track to be behind the wheel at HHS, Price may be the one who authors final rules implementing whatever legislation ultimately replaces the ACA (known informally as “ObamaCare”).

Congressman Price, a former orthopedic surgeon, personally introduced legislation to repeal and replace ObamaCare in the current Congress and previous sessions.  His 2015 proposal is called the Empowering Patients First Act and served as the basis for a subsequent health care proposal unveiled in June of this year by House Speaker Paul Ryan.

A key feature of ObamaCare is that it spreads out the costs of health insurance across generations, with subsidization of older sicker people who use more health care by healthier young people.  Prior to the ACA’s implementation, most states permitted an age band rating with a 5:1 ratio; meaning that insurers could charge insureds at the highest issue ages up to five times what the youngest insureds pay in premium.  The ACA compressed the permitted age band rating to a 3:1 ratio, forcing companies to subsidize older people with higher premium levels for younger people.  Price’s proposal would eliminate that, which might be viewed favorably even by ObamaCare's proponents who now recognize they are fighting an uphill battle trying to convince young adults to buy coverage at an exorbitant premium cost.

Price has spoken out against the ACA’s approach to insert the government in the middle of the doctor-patient relationship.  In June of this year Price stated, “They believe the government ought to be in control of health care” and continued with "we believe that patients and doctors should be in control of health care.  People have coverage, but they don't have care."  More recently, he declared “ObamaCare is failing” in a November 1st op-ed on the Townhall website.

Some of the key points from Prices' health care proposal are as follows:

• Fixed tax credits for people to use to buy insurance on the private market, with credits starting at $900 a year below age 18 and rising with age.  People on Medicaid, Medicare, Tricare or the Veterans Affairs (VA) program could opt for tax credits to buy private insurance.

• Expansion of health savings accounts, which allow people to save money for health care costs on a pre-tax basis.  People covered by existing government programs including Medicare and the VA could contribute to their health savings accounts to pay for premiums and copayments.

• No denying coverage to people with pre-existing medical conditions provided they had maintained continuous insurance for 18 months prior to selecting a new policy.  Otherwise, for people who had not maintained such continuous insurance, coverage of a pre-existing condition could be excluded for up to 18 months after enrolling in a new health plan.

• Companies can take a tax deduction of up to $20,000 for a family health plan and $8,000 for an individual.  The limit is intended to discourage overly generous employer health insurance plans.

• States would receive federal funds to create “high-risk pools”, which are government-run health plans for people with pre-existing medical conditions who cannot find affordable health insurance on the private market. 

Effective implementation of Price’s plan seemingly would require an initial open enrollment period that achieves broad success in covering Americans not already insured under employer-sponsored programs or government health care plans such as Medicare and Tricare.  Following the initial program enrollment, Price’s plan would make it difficult for people to try to game the new system by purchasing insurance only upon discovery of an illness.

Price concluded his op-ed with the following:

“We solve the insurance challenges of portability and pre-existing conditions by applying the same coverage rules that already exist in the employer-sponsored market – real, sustainable protections that mean no one can be priced out of the health insurance market if they have a bad diagnosis or injury.  And, for those on a government health care program, we offer reforms that will empower states with the flexibility to best serve their Medicaid populations while offering Medicare beneficiaries more choices that will help save, strengthen, and secure this vital program in the years to come.”

Let us hope that Price’s words do not prove to ring hollow, like President Obama’s statement from March 2010 in his Weekly Address: Health Reform Will Benefit American Families and Businesses This Year:  “What won’t change when this bill is signed this:  if you like the insurance plan you have now, you can keep it.  If you like your doctor, you can keep your doctor.  Because nothing should get in the way of the relationship between a family and their doctor.”

For the record, as a licensed sales agent I have assisted dozens of Americans in obtaining insurance through the ACA’s Health Insurance Marketplace.  I have been authorized to conduct Marketplace business since the fall of 2013 when agents initially were certified.  Since that time, my existing individual policy was canceled, and the premium for the lowest cost (non-subsidized) ACA compliant plan for sale in my area is more than double what I had paid prior to 2014.  Further, my 2017 plan (I chose the lowest cost) does not include coverage for the orthopedic surgeon who successfully repaired a torn labrum for me more than a decade ago; nor does my plan include coverage for any physician I have visited in nearly 20 years living in Florida.  To add insult to injury, today I often work harder for an individual or family to assist with a health insurance plan enrollment; yet my compensation is less than a third of what I received for similar work performed prior to ObamaCare.  I do not believe that insurance company executives are making less money now, and I definitely do not recall hearing President Obama admit that his proclamation noted above turned out to be totally false.  It is disappointing to me that accountability only applies to regular people, and not to those at the highest positions in our country.

After having conducted a thorough examination of the issues, I would say that a program to replace ObamaCare indeed is needed.

Until next time,

Andrew Herman

2017 Medicare Parts A, B and D Updates

The official 2017 Medicare and You handbook published by CMS (Centers for Medicare and Medicaid Services) is available in several formats.  Here are links to the English and Spanish versions:

English:  https://www.medicare.gov/pubs/pdf/10050-Medicare-and-You.pdf

Español:  https://www.medicare.gov/pubs/pdf/10050-S-Medicare-and-You.pdf

 

The chart below provides a summary of 2017 Medicare deductibles and co-insurance amounts, along with the Medicare Part B premium and average monthly increase to Social Security benefits:

Medicare Part A
Inpatient hospital deductible and co-insurance		$1,316 deductible for each benefit period
		Days 1 - 60 co-insurance for each benefit period $0
		Days 61 - 90 co-insurance per day for each benefit period $329
		Days 91 and beyond; $658 co-insurance per "each lifetime reserve day"
Skilled Nursing Facility		$0 for days 1 - 20; thereafter, days 21 - 100 $164.50 per day
Part B Premium		2017 standard Part B premium will be $134 (or higher based on your income). However, most people who receive Social Security benefits will pay less than this amount ($109/average)
Part B Deductible		$183.00
Part D		Initial deductible: $400
		Initial coverage limit: $3,700
		Out of pocket threshold: $4,950
		Coverage gap: begins once you reach your Medicare Part D plan's initial coverage limit ($3,700 in 2017) and ends when you spend a total of $4,950 in 2017.
		In 2017, Part D enrollees will receive a 60% discount on the total cost of their brand-name drugs purchased while in the donut hole. The 50% discount paid by the brand-name drug manufacturer will apply to getting out of the donut hole, however the additional 10% paid by your Medicare Part D plan will not count toward your TrOOP.
		Minimum cost sharing in Catastrophic portion: 5% or $3.30 for generic or preferred drug that is multi-source drug and the greater of 5% or $8.25 for all other drugs.
Average Monthly Social Security Increase		0.3% increase to $1,360 (from $1,355)

Until next time,

Andrew Herman, President
AH Insurance Services, Inc.

Questions and Answers about Health Care Forms 1095-A, 1095-B, and 1095-C

This Post re-prints information from the IRS website published on January 11, 2016.  Here is a Link to the Source Page:

https://www.irs.gov/Affordable-Care-Act/Questions-and-Answers-about-Health-Care-Information-Forms-for-Individuals

We suggest you consult with a Tax Accountant to be sure that your 2015 health insurance premiums -- in particular any federal health insurance premium subsidies received -- are reported and reconciled as required on your 2015 tax return.

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Q&A:

1. Will I receive any new health care tax forms in 2016 to help me complete my tax return?

Starting early in 2016, you may receive one or more forms providing information about the health care coverage that you had or were offered during the previous year.  Much like Form W-2 and Form 1099, which include information about the income you received, these new health care forms provide information that you may need when you file your individual income tax return.  Also like Forms W-2 and 1099, these new forms will be provided to the IRS by the entity that provides the form to you.

The new forms are:

·        Form 1095-A, Health Insurance Marketplace Statement.  The Health Insurance Marketplace (Marketplace) sends this form to individuals who enrolled in coverage there, with information about the coverage, who was covered, and when.

·        Form 1095-B, Health Coverage.  Health insurance providers (for example, health insurance companies) send this form to individuals they cover, with information about who was covered and when.

·        Form 1095-C, Employer-Provided Health Insurance Offer and Coverage.  Certain employers send this form to certain employees, with information about what coverage the employer offered. Employers that offer health coverage referred to as “self-insured coverage” send this form to individuals they cover, with information about who was covered and when.

2. When will I receive these health care tax forms?

The deadline for the Marketplace to provide Form 1095-A is February 1, 2016.  The deadline for insurers, other coverage providers and certain employers to provide Forms 1095-B and 1095-C has been extended to March 31, 2016.  Individual taxpayers will generally not be affected by this extension and should file their returns as they normally would.
 

3. Must I wait to file until I receive these forms?

If you are expecting to receive a Form 1095-A, you should wait to file your 2015 income tax return until you receive that form.  However, it is not necessary to wait for Forms 1095-B or 1095-C in order to file.

Some taxpayers may not receive a Form 1095-B or Form 1095-C by the time they are ready to file their 2015 tax return.  While the information on these forms may assist in preparing a return, they are not required.  Individual taxpayers will generally not be affected by this extension and should file their returns as they normally would.

Like last year, taxpayers can prepare and file their returns using other information about their health insurance.  You should not attach any of these forms to your tax return.

4. What are the health care tax forms that I might receive and how do I use them?

Health Care Form	Sent To	Sent By	What to do with this form
Form 1095-A, Health Insurance Marketplace Statement	Individuals who enrolled in health coverage for themselves or their family members through the Marketplace	Marketplace	This form provides information about your Marketplace coverage. Use Form 1095-A to complete Form 8962 and reconcile advance payments of the premium tax credit or claim the premium tax credit on your tax return. Use Form 1095-A for information on whether you and your family members had coverage that satisfies the individual shared responsibility provision. ·       If Form 1095-A shows coverage for you and everyone in your family for the entire year, check the full-year coverage box on your tax return. ·       If there are months when you or your family members did not have coverage, determine if you qualify for an exemption or must make an individual shared responsibility payment. Do not attach Form 1095-A to your tax return – keep it with your tax records.
Form 1095-B, Health Coverage	Individuals who had health coverage for themselves or their family members that is not reported on Form 1095-A or Form 1095-C.	Health Coverage Providers – ·       Insurance companies outside the Marketplace ·       Government agencies such as Medicare or CHIP ·       Employers who provide certain kinds of health coverage (sometimes referred to as “self-insured coverage”) but are not required to send Form 1095-C (see below). ·       Other coverage providers	This form provides information about your health coverage. Use Form 1095-B for information on whether you and your family members had health coverage that satisfies the individual shared responsibility provision. ·       If Form 1095-B shows coverage for you and everyone in your family for the entire year, check the full-year coverage box on your tax return. ·       If there are months when you or your family members did not have coverage, determine if you qualify for an exemption or must make an individual shared responsibility payment. Do not attach Form 1095-B to your tax return - keep it with your tax records.
Form 1095-C, Employer-Provided Health Insurance Offer and Coverage	Certain employees of applicable large employers (See next column).	Applicable large employers– generally those with 50 or more full-time employees, including full-time equivalent employees	Form 1095-C provides information about the health coverage offered by your employer and, in some cases, about whether you enrolled in this coverage. Use Form 1095-C to help determine your eligibility for the premium tax credit. ·       If you enrolled in a health plan in the Marketplace, you may need the information in Part II of Form 1095-C to help determine your eligibility for the premium tax credit. ·       If you did not enroll in a health plan in the Marketplace, the information in Part II of your Form 1095-C is not relevant to you. Use Form 1095-C for information on whether you or any family members enrolled in certain kinds of coverage offered by your employer (sometimes referred to as “self-insured coverage”). ·       If Form 1095-C shows coverage for you and everyone in your family for the entire year, check the full-year coverage box on your tax return.  ·       If there are months when you or your family members did not have coverage, determine if you qualify for an exemption or must make an individual shared responsibility payment. Do not attach Form 1095-C to your tax return - keep it with your tax records.

5. How will I receive these forms?

The Marketplace, health coverage providers and applicable large employers will mail (or hand deliver) these forms to you or provide them electronically to you, if you have consented to electronic delivery.

6. My employer or health coverage provider has suggested that I opt to receive these forms electronically rather than on paper.  Are they allowed to ask me that? 

Yes. Employers and health coverage providers may ask for your consent to receive the forms electronically. This is entirely acceptable and may be more convenient for you. Electronic forms provide the same information that is provided in the paper forms.

7. Will I get at least one form?

Maybe.  If you were enrolled in health coverage for 2015, you should receive a Form 1095-A, 1095-B, or 1095-C.  In addition, if you were an employee of an employer that was an applicable large employer in 2015, you may receive a Form 1095-C.  If you don’t fall in either of these categories, you won’t receive a form.

8. Will I get more than one form?

Maybe.  You are likely to get more than one form if you had coverage from more than one coverage provider or if you worked for more than one employer that offered coverage. You are also likely to get more than one form if you changed coverage or employers during the year or if different members of your family received coverage from different coverage providers.

The following examples illustrate when you may get more than one Form 1095 and what to do with the information on those forms.

Example 1:  You are single with two dependent children.  At the beginning of 2015, you were unemployed, and you and your children were enrolled in coverage through the Marketplace.  You received the benefit of advance payments of the premium tax credit to help pay for your coverage.  In August of 2015, you started working 40 hours per week for an employer with 300 employees (an applicable large employer) that offered health insurance coverage to you and your children.  However, that offer of coverage was considered unaffordable to you for purposes of the premium tax credit, so you did not enroll in it and instead continued your Marketplace coverage with advance payments of the premium tax credit.  Early in 2016, you receive Form 1095-A (from the Marketplace) and Form 1095-C (from your employer).

When you complete Form 8962, Premium Tax Credit, you will use the information on Form 1095-A to reconcile advance payments of the premium tax credit and to verify that you had health coverage for the entire year.  You will use Form 1095-C to verify that your employer coverage was unaffordable for you.  You will not attach Form 1095-A or 1095-C to your return, but you should keep these forms with your tax records.

Example 2:  You are single with no dependents. At the beginning of 2015, you were employed by employer A, which has 20 employees (and therefore is not an applicable large employer).  You had coverage through A’s employer-sponsored plan, which is insurance that A purchases from health insurance issuer Q (i.e., not a “self-insured plan”).  In June of 2015, you changed jobs and started working 40 hours per week for employer B, which has 500 employees (and so is an applicable large employer).  You immediately began receiving coverage through that employer’s plan, which is insurance it purchases from insurance issuer R.  Early in 2016, both insurance companies will send you a Form 1095-B providing information about the coverage in which you were enrolled.  You also will receive a Form 1095-C from employer B, the applicable large employer, providing information about the health coverage B offered you.

You will use the information on Forms 1095-B to verify that you had health coverage for each month during the year and will check the full-year coverage box on your tax return.  You will not need to use Form 1095-C to help complete your return because the information about the offer of health coverage made by your employer relates to whether you are eligible for the premium tax credit and you cannot get a premium tax credit if you were not enrolled in a health plan in the Marketplace.  You will not attach Form 1095-B or Form 1095-C to your tax return, but you should keep both forms with your tax records.

9. Will I get a Form 1095-C from each of my employers?

Not necessarily.  You will only receive a Form 1095-C from your employer if that employer is an applicable large employer, meaning it had 50 or more full-time employees (including full-time equivalent employees) in the year before the year to which the form relates.  Most employers have fewer than 50 employees and therefore are not applicable large employers required to provide Form 1095-C to their full-time employees.

Even if your employer is an applicable large employer, you will only receive a Form 1095-C for that employer if you were a full-time employee for that employer for at least one month of the year or if you are enrolled in an applicable large employer’s self-insured health plan, even if you are a part-time employee. 

10. How are the forms similar?

·       They all provide information about your health coverage during the prior year.

·       They are all used to determine if you, your spouse and your dependents had health coverage for the entire year and if not, for which months you did have coverage.  (The Form 1095-C includes this information only if your employer is an applicable large employer and the coverage you enrolled in was a certain kind of coverage referred to as “self-insured coverage”).

·       None of these forms should be filed with your tax return; they should be kept for your records with your other tax documents.

11. How are the forms different?

·         The forms are provided by different entities.         

o    Form 1095-A, Health Insurance Marketplace Statement, is provided by the Marketplace to individuals who enrolled or who have enrolled a family member in health coverage through the Marketplace.

o    Form 1095-B, Health Coverage, is provided by insurance companies and other coverage providers.  However, if your coverage was insurance purchased through the Marketplace or was a type of coverage referred to as “self-insured coverage” that was provided by an applicable large employer, you will receive a different form.

o    Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, is issued by applicable large employers to their full-time employees and, in some cases, to other employees.

·      The forms are provided to different groups of people.

·       Form 1095-A - Only individuals who enroll in coverage through the Marketplace will get this form.

·       Form 1095-B – Individuals who have health coverage outside of the Marketplace will get this form (except for employees of applicable large employers that provide self-insured coverage, who will receive Form 1095-C instead).

·       Form 1095-C - Individuals who work full-time for applicable large employers will get this form.  Also, part-time employees also will get this form if they enroll in self-insured coverage provided by an applicable large employer.

·       The forms contain some different information.  Form 1095-A, Form 1095-B, and some Forms 1095-C show who in your family enrolled in health coverage and for what months. Form 1095-A also provides premium information and other information you will need to reconcile advance payments of premium tax credit and claim the premium tax credit on Form 8962.  And Form 1095-C shows coverage that your employer offered to you even if you chose not to take that coverage.

12. What do I need to do with these forms?

·      You will use the information on these forms to verify that you, your spouse and any dependents had coverage for each month during the year.

·       Like last year, if you and your family members had minimum essential coverage for every month of the year, you will check a box on your return to report that coverage.  If you or any family members did not have coverage for the entire year, a coverage exemption may apply for the months without coverage.  If you or any family members did not have coverage or an exemption, you may have to make an individual shared responsibility payment.

·       If you or anyone in your family receives a Form 1095-A from the Marketplace, you will use the information on the form to complete a Form 8962 to reconcile any advance payments of the premium tax credit or to claim the premium tax credit.
·       Do not file these forms with your tax return.  Keep them in your records with your other important tax documents.

13. What should I do if:

·         I have a question about the form I received,

·         I think I should have gotten a form but did not get it,

·         I need a replacement form, or

·         I believe the form I received has an error?

In any of these situations, you should contact the provider of the form (or the entity that you think should have provided you a form, if you think you should have gotten a form but did not get it):

·       For questions about the Form 1095-A, contact the Marketplace.

·       For questions about the Form 1095-B, contact the coverage provider (see line 18 of the Form 1095-B for a contact telephone number).

·       For questions about the Form 1095-C, contact your employer (see line 10 of Form 1095-C for a contact telephone number).

14. Can I file my tax return if I have not received any or all of these forms?

If you enrolled in coverage through the Marketplace you will need the information on Form 1095-A to complete Form 8962 to reconcile any advance payments of the premium tax credit or claim the premium tax credit, and to file a complete and accurate tax return.  If you need a copy of your Form 1095-A, you should go to HealthCare.gov or your state Marketplace website and log into your Marketplace account, or call your Marketplace call center.  Although information from the Form 1095-C – information about an offer of employer provided coverage -  can assist you in determining eligibility for the premium tax credit, it is not necessary to have Form 1095-C to file your return.  See Publication 974 for additional information on claiming the premium tax credit. 

You do not have to wait for either Form 1095-B or 1095-C from your coverage provider or employer to file your individual income tax return.  You can use other forms of documentation, in lieu of the Form 1095 information returns to prepare your tax return.  Other forms of documentation that would provide proof of your insurance coverage include:

·       insurance cards,

·       explanation of benefits

·       statements from your insurer,

·       W-2 or payroll statements reflecting health insurance deductions,

·       records of advance payments of the premium tax credit and

·       other statements indicating that you, or a member of your family, had health care coverage.

If you and your entire family were covered for the entire year, you may check the full-year coverage box on your return.  If you or your family members did not have coverage for one or more months of the calendar year, you may claim an exemption or make an individual shared responsibility payment.

You will not need to send the IRS proof of your health coverage.  However, you should keep any documentation with your other tax records.  This includes records of your family’s employer-provided coverage, premiums paid, and type of coverage.

15. Am I required to file a tax return if I receive one of these forms?

If you receive a Form 1095-A, Health Insurance Marketplace Statement, showing that advance payments of the premium tax credit were paid for coverage for you or your family member, you generally must file an individual income tax return and submit a Form 8962 to reconcile those advance payments, even if you would not otherwise be required to file a tax return.  You also must file an individual income tax return and submit a Form 8962 to claim the premium tax credit, even if no advance payments of the premium tax credit were made for your coverage.  For more information, see the instructions to Form 8962,

However, you are not required to file a tax return solely because you received a Form 1095-B or a Form 1095-C.  For example, if you are enrolled in Medicaid you will receive a Form 1095-B.  If you do not have a tax filing requirement, you do not have to file a tax return solely because you received the Form 1095-B reflecting your Medicaid coverage.

The health care law tax filing requirements are the same as last year. 

·       If you enrolled in coverage through the Marketplace, you must file a tax return and reconcile any advance payments of the premium tax credit that were paid on your behalf. 

·       If you have a filing requirement and everyone in your family had coverage for the entire year, you should check the full-year coverage box on your tax return. 

·       If you or any family members did not have coverage for the entire year, you should claim any applicable coverage exemption or make an individual shared responsibility payment.

16. Should I attach Form 1095-A, 1095-B or 1095-C to my tax return?

No.  Although you may use the information on the forms to help complete your tax return, these forms should not be attached to your return or sent to the IRS.  The issuers of the forms are required to send the information to the IRS separately. You should keep the forms for your records with your other important tax documents.

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Until next time,

Andrew Herman, President
AH Insurance Services, Inc.