Post by jeffolie on May 5, 2010 10:47:03 GMT -6
I recently received the following email:
I've rethought my position, and I think this new healthcare program is going to work out just fine for me.
The $2,500 annual fine for not having insurance is a LOT less than I'm paying for insurance now. And that is even if the IRS can actually figure out how to enforce the law and collect the fine.
At the same time, since insurance companies cannot exclude me for having a preexisting condition, there is really no reason to buy insurance until AFTER I know I need it.
So I think the best thing for me personally is going to be to drop my health insurance. It will be cheaper to pay cash for some routine office visits.
If I get injured or am diagnosed with some serious illness, THEN I will go buy insurance to cover the costs of my expensive treatment and care.
This probably puts about $10,000 a year back into my pocket compared to maintaining health insurance I might never fully need.
This seems like a good enough idea that I'm wondering if we might convince our president to do something similar with home, auto, and life insurance. Imagine how great it would be if we didn't need to buy home insurance until AFTER our homes burned down, or if we didn't need to pay for auto insurance until after we were involved in a crash. And imagine all the misery mitigated if our loved ones could buy life insurance for us AFTER we are already dead. "Why yes, I would like a $1 million policy on my beloved husband's life. He died yesterday and I will be needing you to pay out this policy immediately after you issue it and I make my first $150 monthly payment."
Yup, this is a GREAT program. What could possibly go wrong with it?
Obviously, the sender was being somewhat facetious, particularly towards the end, but she raises a good point, and I suspect many people have had the same idea even if they wouldn’t actually do it. By “it,” I mean dropping your current health insurance and waiting to buy it again until after you need it. So it’s worth exploring if the idea is possible. Yesterday evening and this morning, I sat down with Obamacare to find out just that, and along the way I uncovered several other interesting tidbits worth mentioning.
First we need to clarify what Obamacare actually is. Obamacare consists of the following two pieces of legislation:
1. H.R. 3590: The 906-page “Patient Protection and Affordable Care Act,” which became public law no. 111-148; and
2. H.R. 4872: The 55-page “Health Care and Education Reconciliation Act of 2010,” which became public law no. 111-152.
Although the combined legislation is just shy of 1,000 pages, it’s not the 2,500-page behemoth you often read about. When you hear about the 2,000+ page health care bill, what’s probably being referred to is the 2,454-page H.R. 3200, “America’s Affordable Health Choices Act of 2009,” which never made it into law. (I’ve done ample research to ensure that this is correct, but if I’m wrong, please email me at woodc@caseyresearch.com and let me know.)
Now on to the bit about whether that idea put forth in the email above is possible. As it turns out, yes, it appears so.
Sec. 1501 of H.R. 3590 is titled “Requirement to maintain minimum essential coverage.” Under this section you find Sec. 5000A, which describes the requirement and amount of the penalty if you do not maintain “minimum essential coverage.”
According to the document, if an individual fails to maintain minimum essential coverage for one or more months during any calendar year beginning after 2013, there is a penalty imposed on him or her (for each month) in an amount equal to 1/12 of the “applicable dollar amount” for the calendar year. The “applicable dollar amount” is $95 for 2014, $350 for 2015, and $750 for 2016, increased by a cost of living adjustment thereafter. And the amount of the penalty for any taxable year cannot exceed 300% of the “applicable dollar amount.” So it appears that the maximum penalty that could be imposed on you for not having minimum essential coverage would be $285 in 2014, $1,050 in 2015, and $2,250 in 2016.
Furthermore, since Sec. 2705 of H.R. 3590 prohibits discrimination against individuals or groups on the basis of health status, medical condition, claims experience, receipt of health care, medical history, genetic information, evidence of insurability, disability, and any other health status-related factor deemed appropriate by the secretary of Health and Human Services, waiting to buy insurance until after you need it could possibly save you (a bunch of) money. But I don’t recommend going this route, we’re just addressing it as theoretical exercise.
Before moving on to some of the other interesting bits I came across while scrolling through Obamacare, I’d like to reiterate a point I’ve made before, about the whole idea of not letting insurance companies exclude applicants with preexisting conditions, i.e., what’s laid out in Sec. 2705 of H.R. 3590.
In a very real way, Sec. 2705 outlaws the health insurance industry as a whole, plain and simple. Real insurance allows you to hedge against financial ruin by pooling your risk of misfortune with others. To be actuarially sound, insurance must discriminate on the basis of risk. If the government bars insurers from discriminating against people with preexisting conditions, these companies become nothing more than forced subsidizers.
Now on to some of the more interesting and economically painful aspects of Obamacare.
Sec. 1411 of H.R. 4872 imposes a 3.8% annual tax on investment income on individuals making $200,000 or more and families making $250,000 or more. Apparently, this applies to real estate transactions as well, and middle-income people pay the full tax even if they are only “rich” the day they sell their house.
Sec. 4191 of H.R. 4872 imposes a 2.3% tax on the sale of medical devices by the manufacturer, producer, or importer.
And here’s a list of other penalties cited in this article titled “Health law’s heavy impact.”
Penalties on employers. Business owners with more than 50 employees must buy government- acceptable health coverage or pay a yearly penalty of $2,000 per employee if at least one employee receives a tax credit.
Tax on “Cadillac” health plans. Starting in 2018, Obamacare imposes a 40 percent annual tax on health care plans valued at $10,200 for individuals and $27,500 for families.
Medicare tax increase. Requires single people earning $200,000 or more and couples earning $250,000 or more to pay an additional 0.9 percent in Medicare taxes.
It’s going to take awhile for all the economically destructive aspects of Obamacare to reveal themselves. But in several years’ time, I think even staunch Democrats will look upon the legislation as an abomination.
us.mc534.mail.yahoo.com/mc/welcome?.gx=1&.tm=1273077739&.rand=6l1cq7qvf86s4#_pg=showMessage&sMid=2&fid=%2540B%2540Bulk&filterBy=&.rand=811193494&midIndex=2&mid=1_73477_1307971_ADAlvs4AALz4S%2BC02Q2g%2BybYSlA&fromId=subscribers%4081783-mail.caseyresearch.com&m=1_97965_1308069_ADMlvs4AACtsS%2BGVhw8gf3nixJM%2C1_86593_1308004_ADQlvs4AADCPS%2BFToA6Dkj6z51U%2C1_73477_1307971_ADAlvs4AALz4S%2BC02Q2g%2BybYSlA%2C&sort=date&order=down&startMid=0&hash=8b19a3e542b017c6e8c46e53076b0d18&acrumb=KzrCiHwtXCo&blockimages=none&nsc=1&enc=auto&.jsrand=3706925
I've rethought my position, and I think this new healthcare program is going to work out just fine for me.
The $2,500 annual fine for not having insurance is a LOT less than I'm paying for insurance now. And that is even if the IRS can actually figure out how to enforce the law and collect the fine.
At the same time, since insurance companies cannot exclude me for having a preexisting condition, there is really no reason to buy insurance until AFTER I know I need it.
So I think the best thing for me personally is going to be to drop my health insurance. It will be cheaper to pay cash for some routine office visits.
If I get injured or am diagnosed with some serious illness, THEN I will go buy insurance to cover the costs of my expensive treatment and care.
This probably puts about $10,000 a year back into my pocket compared to maintaining health insurance I might never fully need.
This seems like a good enough idea that I'm wondering if we might convince our president to do something similar with home, auto, and life insurance. Imagine how great it would be if we didn't need to buy home insurance until AFTER our homes burned down, or if we didn't need to pay for auto insurance until after we were involved in a crash. And imagine all the misery mitigated if our loved ones could buy life insurance for us AFTER we are already dead. "Why yes, I would like a $1 million policy on my beloved husband's life. He died yesterday and I will be needing you to pay out this policy immediately after you issue it and I make my first $150 monthly payment."
Yup, this is a GREAT program. What could possibly go wrong with it?
Obviously, the sender was being somewhat facetious, particularly towards the end, but she raises a good point, and I suspect many people have had the same idea even if they wouldn’t actually do it. By “it,” I mean dropping your current health insurance and waiting to buy it again until after you need it. So it’s worth exploring if the idea is possible. Yesterday evening and this morning, I sat down with Obamacare to find out just that, and along the way I uncovered several other interesting tidbits worth mentioning.
First we need to clarify what Obamacare actually is. Obamacare consists of the following two pieces of legislation:
1. H.R. 3590: The 906-page “Patient Protection and Affordable Care Act,” which became public law no. 111-148; and
2. H.R. 4872: The 55-page “Health Care and Education Reconciliation Act of 2010,” which became public law no. 111-152.
Although the combined legislation is just shy of 1,000 pages, it’s not the 2,500-page behemoth you often read about. When you hear about the 2,000+ page health care bill, what’s probably being referred to is the 2,454-page H.R. 3200, “America’s Affordable Health Choices Act of 2009,” which never made it into law. (I’ve done ample research to ensure that this is correct, but if I’m wrong, please email me at woodc@caseyresearch.com and let me know.)
Now on to the bit about whether that idea put forth in the email above is possible. As it turns out, yes, it appears so.
Sec. 1501 of H.R. 3590 is titled “Requirement to maintain minimum essential coverage.” Under this section you find Sec. 5000A, which describes the requirement and amount of the penalty if you do not maintain “minimum essential coverage.”
According to the document, if an individual fails to maintain minimum essential coverage for one or more months during any calendar year beginning after 2013, there is a penalty imposed on him or her (for each month) in an amount equal to 1/12 of the “applicable dollar amount” for the calendar year. The “applicable dollar amount” is $95 for 2014, $350 for 2015, and $750 for 2016, increased by a cost of living adjustment thereafter. And the amount of the penalty for any taxable year cannot exceed 300% of the “applicable dollar amount.” So it appears that the maximum penalty that could be imposed on you for not having minimum essential coverage would be $285 in 2014, $1,050 in 2015, and $2,250 in 2016.
Furthermore, since Sec. 2705 of H.R. 3590 prohibits discrimination against individuals or groups on the basis of health status, medical condition, claims experience, receipt of health care, medical history, genetic information, evidence of insurability, disability, and any other health status-related factor deemed appropriate by the secretary of Health and Human Services, waiting to buy insurance until after you need it could possibly save you (a bunch of) money. But I don’t recommend going this route, we’re just addressing it as theoretical exercise.
Before moving on to some of the other interesting bits I came across while scrolling through Obamacare, I’d like to reiterate a point I’ve made before, about the whole idea of not letting insurance companies exclude applicants with preexisting conditions, i.e., what’s laid out in Sec. 2705 of H.R. 3590.
In a very real way, Sec. 2705 outlaws the health insurance industry as a whole, plain and simple. Real insurance allows you to hedge against financial ruin by pooling your risk of misfortune with others. To be actuarially sound, insurance must discriminate on the basis of risk. If the government bars insurers from discriminating against people with preexisting conditions, these companies become nothing more than forced subsidizers.
Now on to some of the more interesting and economically painful aspects of Obamacare.
Sec. 1411 of H.R. 4872 imposes a 3.8% annual tax on investment income on individuals making $200,000 or more and families making $250,000 or more. Apparently, this applies to real estate transactions as well, and middle-income people pay the full tax even if they are only “rich” the day they sell their house.
Sec. 4191 of H.R. 4872 imposes a 2.3% tax on the sale of medical devices by the manufacturer, producer, or importer.
And here’s a list of other penalties cited in this article titled “Health law’s heavy impact.”
Penalties on employers. Business owners with more than 50 employees must buy government- acceptable health coverage or pay a yearly penalty of $2,000 per employee if at least one employee receives a tax credit.
Tax on “Cadillac” health plans. Starting in 2018, Obamacare imposes a 40 percent annual tax on health care plans valued at $10,200 for individuals and $27,500 for families.
Medicare tax increase. Requires single people earning $200,000 or more and couples earning $250,000 or more to pay an additional 0.9 percent in Medicare taxes.
It’s going to take awhile for all the economically destructive aspects of Obamacare to reveal themselves. But in several years’ time, I think even staunch Democrats will look upon the legislation as an abomination.
us.mc534.mail.yahoo.com/mc/welcome?.gx=1&.tm=1273077739&.rand=6l1cq7qvf86s4#_pg=showMessage&sMid=2&fid=%2540B%2540Bulk&filterBy=&.rand=811193494&midIndex=2&mid=1_73477_1307971_ADAlvs4AALz4S%2BC02Q2g%2BybYSlA&fromId=subscribers%4081783-mail.caseyresearch.com&m=1_97965_1308069_ADMlvs4AACtsS%2BGVhw8gf3nixJM%2C1_86593_1308004_ADQlvs4AADCPS%2BFToA6Dkj6z51U%2C1_73477_1307971_ADAlvs4AALz4S%2BC02Q2g%2BybYSlA%2C&sort=date&order=down&startMid=0&hash=8b19a3e542b017c6e8c46e53076b0d18&acrumb=KzrCiHwtXCo&blockimages=none&nsc=1&enc=auto&.jsrand=3706925