Paul Gould: The insanity of signing up for Obamacare

I just finished up applying for my Obamacare healthcare insurance through the Healthcare.gov website. I had almost given in to just paying the penalty, but I researched the program, and in the end I came away with a pretty decent plan. It’s costing me more than I wanted, but I’m covered. Now that I truly understand the system, I am blown away at how incredibly stupid it really is.

To begin with, the system is based on applicants making a “ballpark estimate” of what their income will be in 2015. I own a small business. That makes my ballpark really big. How absurd to ask people to guess their year’s end income by Feb. 15. Life happens. This, alone, makes the program an abject failure, and we haven’t looked at it yet.

Obamacare is a welfare program, which is a big part of why I was so reluctant to get on board in the first place. I don’t make a lot of money, but I’ve always been somewhere in middle-class America. At 54, I have no business being on welfare; but the new system took away the major medical policy I had for the last 10 years and is imposing a pretty hefty fine for not doing anything. Paying penalties and being without coverage are not good options for me right now, so I’m pretty much forced into this. I don’t know who’s left to actually pay the taxes, but thank you for your generosity.

There are two types of income-based subsidies to help people pay for a plan once they find their best deal. The first one is the Advanced Premium Tax Credit, which most people are familiar with. As with any welfare program, the less you make, the more you get. The government gives you a tax credit based on your income to supplement your healthcare coverage. If you guess your income at, say, $30,000, the government will give you a tax credit of just under $4,400 to offset your insurance plan. The cheapest “Bronze” plan available costs about $5,300 — so your cost is about $900. If you want, the government will “advance” that credit directly to your insurance company each month so that your monthly premium will be paid as $365 from the tax credit and your payment will be about $75. If your guess is high, and you only make $25,000 in 2015, your credit will be higher – about $5,200, and the government will “reconcile” the difference and add about $800 to your tax credit. That means the plan only costs you $100 for the year. If you guess low and you make $35,000, your credit will be about $3,900, and you will owe another $500. In that scenario, the difference is $1,300. So depending on what life bring this year, the plan should cost somewhere between zero and $5,300. No more, no less.

Personally, when I make my big life purchases, I like to have at least a “ballpark figure” of the cost, before I buy it — not after. That’s just me, though. It is important to know that your income is based on modified adjusted gross income, not adjusted gross income. You will need to know if that affects you.

The system is based off of levels of the Federal Poverty Level. This year, FPL is $11,670 for an individual. It goes up as you add household members. If you earn $11,670, you earn 100 percent FPL. If you make twice that, your income is 200 percent FPL. To qualify for “marketplace” insurance, you must earn 138 percent of FPL, or $16,105. Below that, you go to Medicaid.

The think that scares me the most of all this insanity is this, right now, millions of low-income people are being sucked into this system with little or no understanding of it. They qualify for the best deals because they are in the lowest bracket. Most often, their insurance will be free. Next year, when tax time rolls around, many of these people will be in their local H&R Block offices anxiously waiting to find out what their refund will be, only to be told that they did not reach the $16,105 threshold and therefore did not qualify for marketplace insurance. “I’m sorry, ma’am, but that is correct — you should have been on Medicaid. Not only don’t you get a refund, you owe the government $4,800. Would you like to pay that today? Ma’am … ma’am! Are you okay?”

Anyone who has made a lot of money signing people on to this program this year would be wise to invest a portion of it in t a good bulletproof vest. This is scary. These are the same vulnerable people the system was trying to protect. If the government doesn’t fix this, there could be chaos starting early next year.

The plan that worked best for me was a Silver plan with “Cost Sharing Reductions Subsides.” CSR subsidies are the second type of subsidies — the hidden ones. These subsidies cover plan holders cost share expenses and bring down the price of out-of-pocket expenses like deductibles, co-pays and drugs. Unlike the Premium Tax Subsidy, the Cost Sharing Reductions do not have to be reconciled. Read that last sentence again, please. And again. One more time. CSR subsidies only come with Silver plans so you have to pay more for the plan. Again, the less you make, the more you get. The best CSR subsidies can be found in income brackets between 138 and 150 percent of FPL. When I found that out, I recalculated my ballpark figure and suddenly became much more pessimistic about my potential earnings this year. With my new $17,000 projected earnings, I qualify for a plan with $5 co-pays, $10 drugs and a $600 out-of-pocket maximum. It costs about $130 more per moth than the cheapest Bronze plan which was otherwise the best deal; and I’ll have to reconcile the Premium Tax Subsidy later if I make more than $17,000, but my original Bronze plan had a $6,300 deductible and a $6,300 out-of-pocket, making it a simple major medical policy. The new plan has an “actuarial value” of 94 percent as opposed to the 70 percent that the Bronze plan offers; 94 percent AV makes the plan more valuable than the Gold and Platinum plans. And in case you missed it, unlike the Premium Tax Subsidy, the Cost Sharing Reductions do not have to be reconciled. My biggest concern now? God forbid I should stay healthy and make a lot of money this year. That would ruin everything.

If you haven’t made the plunge yet, don’t be afraid — the water is actually real comfortable in the welfare pool. I’m even considering an early retirement. Section 8 housing, food stamps, free healthcare and maybe a low-income attorney to handle the paperwork while I sit on the beach with my margarita. It’s the new American Dream.

So the middle class is now being forced to go on welfare in order to purchase a major life investment with no way of knowing what it will cost until after they own it, or face a ridiculous fine with no way of knowing how much it will be until they owe it. In the meantime, the insurance companies suck up all the tax money. What more could we expect from a government that works for the bribes of the money holders? It was doomed to fail before it ever got started. Who would even dream about discussing something as big as healthcare while every elected official in this country is working for the campaign contributions they need to raise to pay for the lies they have to tell to get elected? So much for a government of the people, by the people and for the people. Those days are over.

Paul Gould lives in Carson City.