Beginning in 2018, companies will have to pay Uncle Sam an excise tax of 40% on every dollar spent annually on health plan premiums in excess of $10,200 for individuals and $27,500 for families. In 2018, the ... tax is projected to bring in $5 billion ... That amount is expected to double in 2019, and increase ... to as high as $30 billion in ... 2024. The tax will offset federal subsidies ... for ... Obamacare health insurance plans ...
Nearly 3 out of 4 companies polled in a new survey ... said they're either "somewhat" or "very" concerned they will get whacked with that hefty tax targeted at high-cost health plans, either because of what those plans already cost or where they are headed. Based on the definition today, and based on the trajectory most employers are on, sooner or later everybody is going to pay.
...the tax is indexed to roughly the general rate of inflation—which ... is worrisome because health-care costs for years have easily outpaced the overall consumer price index. Companies polled ... expect their health-care costs for active employees to rise by an average of 4 percent in 2015 if they make changes to the design of their plans ... without making such changes, those costs are expected to rise an average of 5.2 percent. The latest reading of the consumer price index ... shows ... increases of 2 percent over the past 12 months before seasonal adjustments, according to the U.S. Bureau of Labor Statistics.
In other words, medical expenses are rising at 2.5 times the rate of inflation, and by 2018, we (and many like us) will be paying the 40% excise tax on top of the crummy overpriced medical plan from Blue Shield that we are already paying. Right now we are paying a premium of $21,000 per year for a plan with a $2,000 per person deductible and a maximum out of pocket of $6,000. That could easily rise from in 2018 to the level of $27,500 where the 40% tax kicks in. Let's do some math:
2014 Insurance Premium: $21,000
2015 +5.2% = $22,092
2016 +5.2% = $23,240
2017 +5.2% = $24,449
2018 +5.2% = $25,720 (okay, it's not quite at $27,500, but close)
2018 + 40% excise tax = $36,008
In the above calculations, the odds that our premium increases will "only" be 5.2% are ludicrous, as ours have been rising recently at about 20% per year or so. Assuming that we pay our full out of pocket costs (like we will be doing this year in 2015), that adds another $6,000, plus prescription drugs at about $1,000 per year, gets us to $43,000 per year in 2018, using round numbers.
Paying $43,000 per year for Health Insurance Premiums and out of pocket expenses is like buying a new luxury car every year, or 2 brand new mid-size sedans (like 2 new Honda Accords) EVERY YEAR. At this rate, we can never retire because we cannot figure out how to pay for medical care.
The only possible way that we would be saved from this excise tax of 40% is if Hillary gets elected President after Obama. Why? Well, because the excise tax will hit the progressives beloved union workers the hardest, and we can't have that. Plus, with Obama's precedent setting administrative changes to ObamaCare, Hillary too would have her "phone and her pen" and give a gift to union workers of repealing the "Cadillac Tax of 2018" without any say from the Congress or the people.
*****2/7/2015 Update: ObamaCare and the insurance industry is totally screwing over people like us who buy small business health insurance plans. We normally never share private personal information like this on the internet, but it has gotten so bad that we no longer care who knows who screwed over we are.
Here are some recent numbers for us:
- Blue Shield PPO 2000 plan: 12 months insurance premium $20,721
- Tim and Sue made 10 doctor visits total between the 2 of us for the year
- Blue Shield insurance paid a total of $746 for all 10 doctor visits
- We paid $2,460 for all 10 doctor visits
Totals for entire year:
- we paid $23,181 for crappy health insurance that hardly covers anything
- Blue Shield shelled out $746, allowing them to net $22,435 from us: wonderful
- Thanks, Obama!
For this year, we have the same cr*ppy plan as we did previously. We changed health insurance brokers, hoping that they could find us something better. Nope. Wish we had the option for a self-insured cash plan (i.e, you go without insurance and pay all expenses in cash to the doctor), except that ObamaCare does not allow it - you have to pay the "penalty tax" if you self-insure. This s*cks totally.
Normally, we never share such personal information, except this blows so bad, that I feel compelled to put it out there. Don't get me wrong: we are grateful to be able to afford to overpay for health insurance in order to subsidize ObamaCare plans. However, it means we will never be able to retire until Medicare health insurance kicks in for us far down the road. Hey, we don't mind working, it's just that we've been working for 40 years and want to do something else.
Before ObamaCare, we used to pay less for better health care plans. Paying for health insurance with ObamaCare is equivalent to making a monthly 30 year mortgage at 4% on $400,000 forever (yep, payment on a $400,000 loan for 30 years at 4% is roughly $1,900 per month). In fact, its worse, because it only keeps going up, unlike a fixed rate mortgage. Sad.
This sucks so bad that I shall not adorn this bland text-only post with a beautiful photo.
Before ObamaCare, we used to pay less for better health care plans. Paying for health insurance with ObamaCare is equivalent to making a monthly 30 year mortgage at 4% on $400,000 forever (yep, payment on a $400,000 loan for 30 years at 4% is roughly $1,900 per month). In fact, its worse, because it only keeps going up, unlike a fixed rate mortgage. Sad.
This sucks so bad that I shall not adorn this bland text-only post with a beautiful photo.
*****3/27/2014: Another day, another change in ObamaCare - they are exceedingly hard to track! Basically, whatever is written in the law is subject to change without notice - ad infinitum! HHS announced on 3/25/2014 that the open enrollment period for ObamaCare which began in October 2013 and was supposed to end at the end of March, 2014, will be extended indefinitely. All a citizen has to do to receive this open enrollment extension is check a box, indicating that they had difficulty signing up. HHS said that it would be on the "honor system", and there would be no verification process - nice.
This extension was after HHS recently and vehemently denied that they would ever extend the enrollment date, as they were receiving a successful and satisfactory level of enrollment. Note that there was already an exception in ObamaCare for late enrollment under the banner of "natural disasters" (earthquake, flood, hurricane, etc.) and have now included the HealthCare.gov website among these natural disasters, apparently (though I would argue it is an unnatural disaster!).
Another note: After the Supreme Court ruled that the penalty for not getting insurance was a "tax" and was not a "fee" or "penalty", why does everyone (and I mean everyone - left, right, center, or clueless) continue to NOT call it a tax? Just askin'!
*****3/6/2014: Changes to ObamaCare are so frequent and so confusing that its hard to keep track and keep up. The current changes appear to be for the purpose of protecting Democrats in the fall midterm elections, as opposed to trying to make the law better. When a provision of ObamaCare is delayed over and over, its not because the provision is wonderful and Obama inexplicably wants to deny the people from the splendored benefits of this wonderful health care system. Its delayed because these provisions of the law suck and people hate them.
Okay, I'll try to explain the latest delay. This latest change took place on Weds. 3/5/2014. Insurance companies can now continue selling plans that don't meet the law's more rigorous standards until 2016. This is the second time that this provision of the law has been delayed. This change is complete obfuscation. I will call Blue Shield today to ask if, based on the 3/5/2014 announcement, I can now have my old plan back. There is virtually zero chance that they will say yes - its just not possible for insurance companies to turn on a dime and turn plans on and off. The Federal government can't do it - so why expect private companies to do it 100's of times faster. ObamaCare had 4 years to get ready and couldn't do it right.
I called our agent at Morris and Garritano in San Luis Obispo and - surprise! - this "Health Overhaul Delayed Further" announcement only applies to plans on the individual market - a fact that the article I was reading failed to mention. We have a group small business plan, so we are still stuck with our "new" plan that costs 93% more than our old plan and has a much larger deduction. This is progress?
*****2/26/2014: Yet another quick update. Got a letter from our Small Business Health Insurerer, Blue Shield. Our billing has been completely screwed up: inaccurate, untimely, and just plain filled with errors. In part, here's what the letter says:
This year's rollout of the Affordable Care Act has...made this year's sign-up effort more challenging than ever before, for us and the industry. We know that you have been having service problems affecting you and your employees. We are deeply sorry. Fixing these issues is our #1 priority.
Our service challenges are related to the high volume of processing activity due to the ACA changes. We've added more employees to work in customer service and enrollment processing. We want to be open about the fact that it is going to be a while before we return to normal service levels. We are focused on returning to the quality service that brought you to Blue Shield in the first place.
*****1/30/2014: Another quick update. Our most recent Blue Shield Health Insurance Premium Bill recently came in the mail and clarified the additional ObamaCare taxes that we are paying with our health insurance starting January 1, 2014. Note that Blue Shield, a FOR-profit health insurance company, has pledged to only collect a maximum of 2% profit margin on its revenue. Note that the total NEW ObamaCare taxes comes to 3.822%, which is almost DOUBLE the profit margin of the supposedly GREEDY health insurance companies. Therefore, our government profit margin on our health insurance premiums is basically DOUBLE that of the insurance company. So who is the greedy one? The insurance company, or our federal government?
TAX --- EFFECTIVE 1/1/2014 --- COST
Health Insurer Tax --- 2.3%
Transitional Reinsurance Tax --- 1.3%
Exchange Tax --- .2%
Risk Adjustment Tax --- .02%
Note that the taxes above are on our health insurance premiums, and that it does not include the numerous other taxes imposed on us by ObamaCare, such as the medical device maker tax of 2.3%
*****1/26/2014: Another quick update. We finally got a quote on a new Blue Shield Small Business Plan recently. Our PPO 1500 plan from 2013 cost $954 for the 4 of us (2 adults, 2 child/adults in their early 20's) - pricey, but something we could somehow manage. Our updated Plan for 2014, PPO 2000, which is a WORSE plan than the PPO 1500 in terms of coverage, is now costing us $1,839 per month. Yes, that is NOT a typo. Our annual premium for a Blue Shield Plan that is WORSE than the one before ObamaCare fully kicked in, is costing us $22,068 per year! Yes, that is a 93% increase in 1 year for a plan that worse then the previous one (it has less coverage and a higher deductible). Note that just the insurance premiums are $10,620 more per year. Also, if we use any medical care, our out of pocket expenses will go up in 2014 compared to 2013 as well! Thanks, Prez!
No, we will never be able to retire at this rate - we're not the only one. The breakdown is $607 for Andrew and James, and $1,232 for Tim and Sue. Please somebody, tell me how this is an improvement? I would consider that we are upper middle class, and definitely not a 1 percenter, or even a 10 percenter - maybe a 20 percenter, though I'm not sure. We are getting screwed! Just writing the check for our 2/1/2014 payment and it is already killing us. We also have a son attending UCSB that costs us almost $30,000 per year as well. Lucky we are staying afloat - this is why 74% of those recently polled still believe our economy is in a recession, even though the recession technically ended in 2009. Not a whisper about any of this in Obama's recent state-of-the-union speech: the state-of-the-union is a mess!
You can find my posts for OBAMACARE PART I AND PART II by drilling down into older posts until you find them - just in case you are interested in reading about this ugly saga, from plan cancellation, to this new and improved plan brought to you by ObamaCare.
This sucks so bad that I shall not adorn this bland text-only post with a beautiful photo.
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