So many people were waiting in great anticipation that Obama Care was going to lower health care cost through Insurance Exchanges beginning in 2014. There have been projections that New York had seen average costs through the Exchange have dropped 25% by some reports. Reports forgot to mention that medical insurance costs in New York are about 200% higher then just about anywhere else in the nation. A 25% drop in rates in any market could easily be an insurer becoming aggressive to purchase market share or as some like to say ” buy business” The insurance company will market low rates knowing that they could lose money the first couple of years control market share and adjust rates in the future. How many people will switch insurance companies every year? How many people switch cell phone or cable companies when their rates creep up?
One very important thing that has not been addressed is the delay of the 50 plus employer mandate? This delay has a major ripple effect on Obama Care. For several reason:
- Less people will be insured through their employer which means they will seek medical insurance through the Insurance Exchanges, which means tax payers will be footing the bill
- There are a series of taxes that added up just under $6.00 per insured that take effect on 1/1/2014 that were suppose to fund the Insurance Exchanges and help out the insurance companies because they were taking such a tremendous risk by accepting all those that apply. These dollars will be greatly reduced because employers will not be providing coverage until 2015
- Non Compliance penalties for companies that didn’t offer medical insurance to their employees are estimated to be around 10 to 15 billion dollars in 2014. Companies faced penalties between $2000 and $3000 per person annually. This money again was supposed to fund the Obama Care program. Employers don’t have to provide coverage but people have to purchase coverage so where will the money come from to pay for the plan.
Many people had thought that medical insurance costs would be reduced because more people would be covered. How can insurance lower premium costs when the government just pulled billions of dollars out of the system the first year?
Affordable Care Act in 2014
- Health insurance exchanges operative: An person can purchase health insurance directly from a state or federal affordable insurance exchange. An exchange is a state established marketplace in which individuals and small businesses can purchase medical insurance programs that are supposed to be affordable.
- Individual tax credit: There are subsidies for certain qualifying individuals purchasing coverage on the health insurance exchange.
- Individuals penalties that are not covered by “essential health benefits” effective 2014 will face a fine of $95 or 1% of their house hold income
- Small employers tax credit: Since 2010 small group employers were eligible for a tax credit of up to 35% if they contributed more then 50% of the cost towards their employees medical insurance. Beginning in 2014 that percentage rises to a maximum of 50%
- Individual Coverage Mandate or Individual Responsibility/Penalty: Those who decide not purchase health insurance will be subject to an annual penalty tax, starting at $95 per adult or one percent of family income, whichever is greater. People that are covered under group programs, Medicare, Medicaid and Military programs will be exempt from purchasing coverage
- Wellness coverage: Wellness coverage will be enhanced
More changes are sure to come
We quote “essential health benefit programs”
“We reduce medical insurance costs for employers and individuals”
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