Tuesday, June 29, 2010

Health Care in America: A Layman Reads the Health Care Bill - Part 6

Well it's been a little while since I last posted, but I wanted to make sure that everyone had plenty of time to read, reread, and then reread again the last post, since it was so stinking long...and interesting. I know you appreciated it, and now I think you've had enough time. You're welcome. Really, it was no problem.

But now I'm back with Subtitle E - Affordable Coverage Choices for All Americans. This is exciting stuff. Also, it sounds a lot like the general title of the bill, but whatever. Anyway, let's get started. There are 2 main parts to Subtitle E. The first deals with individuals, and the second with small businesses. Part 1, for individuals, in short, sets up a refundable tax credit for eligible folks under a qualified health plan, and sets up cost sharing reductions for eligible people under a qualified health plan. Then there is the obligatory stuff at the end of Part 1 that deal with details of those plans. Part 2, for small businesses, sets up a tax credit designed to help defray the costs of meeting the requirements of employer sponsored health insurance plans. Let's break them down.

Part 1 - Individuals, Tax Credits, and Cost Reducing

People are eligible for the tax credit if they earn between 1 and 4 times the poverty line (for a family their size) in the relevant year. The credit is equal to the lesser of the following 2 options:
  1. The cost of the monthly premiums purchased through an Exchange
  2. A really complicated equation to figure out the amount of your monthly income spent on insurance. I'm not going to get into it here, but if you ask really nicely, I'll go so far as to show you where exactly in the legislation it can be found, so you can muddle through it like I had to.
There are a lot of restrictions on the credit, like whether or not you get a refund for dependents in certain cases, or if your household income levels change, and tax issues and ratings that I don't think I really understand. But that's the basic idea.

The cost reductions work a little differently. You have to be enrolled in a Silver level plan or higher, and have an income between 1 and 4 times the poverty line again. The primary goal of cost reductions is to lower the actual out-of-pocket spending on health care. There are levels of reduction based on income level. If your income level is at:
  • 1-2x poverty line - cost is reduced by 2/3
  • 2-3x poverty line - cost is reduced by 1/2
  • 3-4x poverty line - cost is reduced by 1/3
The caveat - these reductions shouldn't raise the actuarial value higher than .7, .8, or .9 respectively for sliver, gold, platinum plans.

It appears the federal government picks up the tab on this one, except for the parts of plans in states that require more than the essential health benefits outlined in this legislation. The federal government does not pick up the bill for those parts of those plans, because it doesn't require that they be there.

Once again, none of this is available for illegal aliens (or any other name for anyone here illegally).

In order for the proper info to be gathered to establish the amount of tax credit or cost reductions, people will have to submit info like citizenship/immigration status, family size/household income level, name, address, etc. I think you only have to submit this info if you are specifically applying for this stuff, and I think it is submitted with your taxes. Also included with this info is data on your employer-sponsored health plan so it can be determined what part of your income actually goes to health care premiums. And employers have to meet certain requirements of providing options for health plans that are affordable for their employees and will cover essential health benefits. If they don't, they'll have to pay a tax on the difference between what they offer and what their employees can afford.

There is a steep penalty for providing fraudulent information here - up to $25,000 fine, and if it can be proved that you did it willfully and intentionally, you owe up to $250,000. This is in addition to any civil penalties already standing for fraud like this.

We finish Part 1 with some housekeeping sections on streamlining enrollment procedures, dealing with advanced payment of tax credit/cost-reduction, and other fine print that doesn't really make a lot of difference to normal people.

Part 2 is the shorter of the two. It's pretty simple. Essentially, beginning in 2014 a tax credit will be available to small businesses to help subsidize the cost of providing health plans that meet the federal standards for their employees. The way I read it, employers are required to pay at least 50% of the cost of sponsored health plans, and then get a credit of 1/2 of the amount they pay on behalf of employees. So if I'm doing my math right (seriously a possibility that I'm not) then potentially they could only be paying 25% of that health plan. Not bad.

The rest of this subtitle is, once again, tidying up details about the interceding years (before 2014) and how to work out the equations to figure out who will pay what. It's boring, and really isn't worth getting into. Suffice it to say, there will be a gradual increase of these numbers so small businesses won't jump straight to the 50% number.

So that's it! After that last post, this one is really like a walk in the park. In fact, I bet you'll want to go read a part of the dictionary or an encyclopedia now just to really get a challenge in. Well let me tell you, I support you in that decision (kinda), though even I have never done something like that. And I'm reading legislation, so if you really feel that way there might be something wrong with you. Just something to think about until the next post.