By Frank D. DeMarco –
In my last article published in December 2013, I wrote of the new healthcare law which has been implemented and is now effective as of January 1, 2014.
As the result of that article I received a great deal of negative comments from readers. The negative comments included we are becoming a socialistic nation, it will be expensive for the country, it will not work, medical providers will not accept it..but the one that I loved was from a 54 year old who said that I was ” a ******* Communist.” I did receive one call from a 42 year old woman who is employed in a professional position and has no health insurance. She is an insulin dependent diabetic and as of January 1, 2014, she has health insurance which will cover her medication and medical consultations. She qualifies for a subsidy and having the subsidy paid to the insurance carrier each month by the United States Government, her insurance premium is $ 19.00 per month.
All of the health plans have deductibles and maximum out of pocket costs. Once the deductible is reached in many plans, the program may have a co-insurance which may be a percentage of cost usually 5%-10%. Once the deductible reaches the maximum out of pocket costs, all health care costs are covered by the insurance carrier.
There are numerous strategies that one can utilize to offset the high cost of deductibles and maximum out of pocket expenses.
Health Care Cost $ 500.00 per month
Subsidy $ 250.00
Actual Cost $ 250.00
Deductible is $ 2000.00
Maximum out of pocket is $ 6350
Co Insurance is 10% meaning that the individual must pay 10% of all health care costs until the deductible is met at $6,350.00.
Critical care and accidental care reimbursement of $10,000.00 will cost approximately $75.00 each month. Thus the total cost is $325.00.
Health Care Cost $ 600.00 per month
Actual Cost $600.00 per month
Deductible is $ 2000.00
Maximum out of pocket is $6,350.00
Again, co-insurance is 10%.
Recommendation is to obtain a program with a higher deductible and if qualified purchase critical care programs to offset the cost of the high deductibles.
Health Care Cost $600.00 per month
Subsidy $0.00 per month
Deductible is $2,000.00
Recommendation is to increase the deductible to minimize the premium cost, create an approved Health Savings Account plan and explore obtaining critical care plans for reimbursement in the event of catastrophic illness and hospitalization.
Actual cost would be the following:
Health Care Cost $600.00 per month
HSA contribution $275.00 per month
(credit for income taxes)
Total out of pocket $325.00
The Health Savings Account is a tax credit from income and grows tax deferred. It may be rolled over each year, and funds from the plan must be used to pay for all types of medical expenses, i.e….medical co pays, prescriptions, dental, eyeglasses.
In various published articles pertaining to extended care, statistics reflect that approximately 70% of the population will incur a short or long term extended care scenario after a prolonged illness or accident. Of the population currently in extended care settings, approximately 40% are under the age of 65.
No healthcare program either through private insurance, the marketplace or Medicare will encompass the costs for an extended period of time.
With our everchanging society, including the change of the family dynamics, this is an area that is often overlooked by the individual and/or financial professionals.
My parents both experienced Alzheimer’s disease which was diagnosed when they were in their late 60’s. in their mid 70’s they moved into an extended care setting. The total cost was in excess of $ 500,000.00 for both. Fortunately, they both planned for the event and had a plan in place to offset the cost.
When I meet with prospects, I approach each case with the aforementioned strategies in mind to ensure that the client and his or her family’s assets are insulated and protected through various programs offered by the insurance industry.
Please feel free to contact me for a complimentary interview through the telephone numbers listed in this publication.
The premise for the entire Patient Protection and Affordable Care act include the following:
A. No health insurance carrier may exclude individuals or persons from coverage based upon pre existing conditions, and the same premium price is to be offered to all applicants by the insurer regardless of gender or pre-existing conditions excluding tobacco use.
B. Minimum Standards for health insurance policies are established.
C. All individuals are to secure an approved private insurance policy or pay a penalty, unless the individual is covered by an employer sponsored health plan, Medicare, Medicaid, or other public insurance program. If the individual does not have an exemption, or not a member of a protected status, a penalty may be levied for failure to comply with the mandate. The mandate also provides for individuals with low incomes for subsidies to offset the expense of the insurance.
D. Businesses do not have to comply with the law until 2015.
All health insurance policies with an effective action date of January 1, 2014 and subsequent dates thereafter, there are no health insurance qualifiers required to be approved for a plan.
Each individual health insurance program must have 10 Essential Health Benefits included in the plan. These benefits include and are not limited to the following: prescription coverage, mental health coverage, well being programs which include preventive care, dental care for children, and routine medical diagnostic tests.
Individuals who do not select a program in compliance with the Act after March 31, 2014, will be penalized monetarily as little as $ 95.00 or 1% of gross household income. The penalties will increase each year for a maximum of 3 years.
Based upon the subsidy levels, individuals should inquire of the Affordable Care Marketplace to determine subsidy eligibility. However, the computer program has not functioned since its implementation and has been under increased criticism since its implementation.
Another manner to determine subsidy eligibility is to complete an approved paper application. I have found this to be an easy and more effective manner to expedite the process. Once the subsidy is approved, then the applicant will be able to determine which health care program will benefit them and the premium cost.
The subsidy work in two ways.
1. The insured can elect to use the subsidy as a Tax Credit at the end of the tax year. or
2. Can elect to have the subsidy remitted to the insurance carrier as part of the premium payment.
At the time of this writing, I have received no clarification or information as to how the subsidy payments will be remitted to the insurance carrier.
One of the most equitable benefits of the law is that each health insurance carrier must spend at least 80% of all premiums on the insured’s’ health care. Otherwise, excess premiums must be returned to the premium payer.
Frank D. DeMarco, is an independent licensed life, health and annuity agent in the State of Florida, with 12 years of experience serving the community for their personal insurance needs. In addition to this experience, Mr. DeMarco possesses a Graduate Degree in Management with experience as a Part Time faculty member for a major Catholic University lecturing in course subjects to include Management, Financial Management, Government and Business Ethics, and Public Policy Administration. Mr. DeMarco is currently certified by the Department of Health and Human Services, Centers for Medicare and Medicaid Services to market, and enroll eligible persons into all approved Medicare and Affordable Care Act Programs within the State of Florida.
The referenced article are his opinions and are not reflective of this publication or any entity that is affiliated with the writer.
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