American Health Care Act

[DANRVAN]

https://www.govtrack.us/congress/bills/115/hr1628/text

In digesting the text of the American Health Care Act passed by House of Representatives, I see that the individual mandate would be repealed retro to tax years beginning after 12/31/15 (section 205).

However, section 133, "Continuous health insurance coverage incentive", would create a new penalty in the form of a 30% surcharge added to the cost of a policy for those who have previously been without insurance for 64 days or more. It appears the penalty would be calculated by multiplying the premium by the number uninsured months (not to exceed 12) times 30%.

So for example if a married couple had a 12 month period in which they were not insured and their premium is going to be $1,000 per month; the surcharge would be 12*30%*$1,000=$3,600. It appears the surcharge would begin in the year 2019 and for "enrollments during a special enrollment period, beginning with plan year 2018".

I am curious if anyone has a different interpretation or has seen a published analysis of it.

Dan

[jklcpa]

This is sec 133 from HR bill1628: https://www.congress.gov/bill/115th-congress/house-bill/1628

Yes, I think your thinking is correct, it increases the premium for a full 12 months, charged by the insurance company.  From what I've read, there are no exemptions for hardship.

I really think it's too early to discuss this since the Senate is working on their own version of the law.

[BulldogTom]

I know this is venturing into politics, and I will stop if you tell me to, but I really think this is the way the penalty should work.  It is the insurance company that is taking on the risk of the person who goes without insurance until they get the sickness that requires big health care layouts, then they sign up and go to the doctor.  Once they are well, they drop out again.  So, by making the penalty part of the insurance premium to make up for the time they did not have insurance, I think that is fair.

Sorry Judy, I could not stop myself.

Tom
Newark, CA

[Jack from Ohio]

Discussion about the current legislation concerning health insurance is just like watching the old show "Time Tunnel."

A total waste of time and effort until the laws are passed.

Americans will find every way to "game" or "work around" whatever laws cause them to pay anything.  Anyone who does not believe this is a few fries short of a happy meal. 

[Roberts]

4 hours ago, jklcpa said:

I really think it's too early to discuss this since the Senate is working on their own version of the law.

Agree 100%.

[DANRVAN]

9 hours ago, Jack from Ohio said:

 

A total waste of time and effort until the laws are passed.

Call it what you want.  I am wasting my time responding to you.

[DANRVAN]

11 hours ago, jklcpa said:

 

I really think it's too early to discuss this since the Senate is working on their own version of the law.

I am aware of the process Judy.  I write a weekly column and a lot of the readers are interested in hearing about what's going on in Washington as it relates to taxes and health care since the two have been so closely tied together.  Some actually write to their congressman and attend town hall meetings.

[DANRVAN]

10 hours ago, BulldogTom said:

I know this is venturing into politics, and I will stop if you tell me to, but I really think this is the way the penalty should work.  It is the insurance company that is taking on the risk of the person who goes without insurance until they get the sickness that requires big health care layouts, then they sign up and go to the doctor.  Once they are well, they drop out again.  So, by making the penalty part of the insurance premium to make up for the time they did not have insurance, I think that is fair.

Sorry Judy, I could not stop myself.

Tom
Newark, CA

I don't thing you are crossing the political line Tom. The House version would remove the enforcement of health care cover off the shoulders of tax preparers. That is significant, but I won't make any comments on what I think is fair in regards to the surcharge.

[RitaB]

19 hours ago, BulldogTom said:

It is the insurance company that is taking on the risk of the person who goes without insurance until they get the sickness that requires big health care layouts, then they sign up and go to the doctor.  Once they are well, they drop out again.

I made this point on a Facebook post last year and you would think I killed a puppy and his unicorn best friend.  I compared it to buying homeowners' insurance after your house burns down or asking your neighbors who have paid insurance premiums for 30 years to build you a new house.  It seems completely logical to me for people who get more health care to pay more than those who get less.  If you get three gallons of milk at the store, you should pay more than someone who gets one gallon of milk.  Safety nets yes.  Hammocks no.

 

[DANRVAN]

I agree with Tom and Rita there are cases where individuals might wait until they are sick to buy insurance, but I believe for most people it is a matter of economics. The problem I see with the surcharge is a one size fits all solution. Unlike the individual mandate, there are not exemptions for hardships like loss of employment.

With the risk of sounding political while discussing potential financial  impact on clients, I am surprised to see the surcharge as part of the AHCA proposal.  As you might recall, the individual mandate was at the heart of the case before the supreme court to repeal the ACA in 2012. The argument was made that congress did not have the authority to impose the penalty.  Chief Justice Roberts shot that argument down as he construed the "penalty" was  in fact a "tax" imposed on those who do not have health insurance;  and, since congress had the authority to impose a "tax", that made it OK.

Now there is a proposed 30% penalty that is called a surcharge which will go into the pockets of insurance providers.  So individuals who are struggling to get ahead enough to purchase insurance will have an additional 30% to pay for up to 12 months.

However, it comes as no surprise that the health insurance industry is a strong supporter of the surcharge.

 

[joanmcq]

Under the proposed law I believe that since the coverage for preexisting conditions goes away, one can't 'game the system by only buying insurance when they get sick'.  You wouldn't be covered for that condition AT ALL.  

[DANRVAN]

34 minutes ago, joanmcq said:

Under the proposed law I believe that since the coverage for preexisting conditions goes away, one can't 'game the system by only buying insurance when they get sick'.  You wouldn't be covered for that condition AT ALL.  

Here is a link to a discussion of that issue.   https://www.bna.com/require-continuous-health-n57982085507/