Some tips, no easy answers: Experiences vary by age, income, zipcode, family size

The flip has flopped: How ACA has produced a new class of ‘uninsured’ and ‘under-insured’ – The middle-aged, middle-incomed, middle-America who have paid in all their lives now have trouble accessing health insurance and affordable care.

 

Reprinted from Farmshine, Dec. 30, 2016

BROWNSTOWN, Pa. — From discussions in person and by posts to Facebook and Twitter, farmers and small business owners — deemed self-employed in Pennsylvania and across the country — were finding a rude awakening ahead of the December 15 deadline to enroll for January 1, 2017 health care insurance coverage.

In addition, those who had a plan in 2016, were automatically enrolled in new plans with premiums that increased by 30 to 60%, for which they have already received bills and were not permitted to cancel (until after December 21) – without first working with a marketplace administrator to replace the automatic plan with something else “from the market.”

From personal experience, I can say this was a cruel joke.

The Patient Protection and Affordable Care Act (Obamacare) marketplace exchange — otherwise known as “the marketplace” at healthcare.gov — conducts open enrollment only once a year from Nov. 1 through Jan. 31. The first of the deadlines, Dec. 15 for Jan. 1 coverage, was extended to Dec. 19. Those enrolling between Dec. 20 and Jan. 15 could start coverage Feb. 1, and those enrolling Jan. 16 to 31, could start coverage March 1. After Jan. 31, the whole deal closes – until next year.

Thoughts on the marketplace coverage vary depending on one’s age, zipcode, income and the number of family dependents.

From firsthand experience, the 50-something empty-nesters, like my husband and I, have found that in our zipcode of 17519, the lowest plan available was $1609 per month with a $12,000 deductible. In fact it was the only “bronze plan” available. The gold and silver options were upwards of $2200/month.

While families with multiple dependents have a higher income threshold for getting a government subsidy to pay part of the premium, couples of middle age with no dependents have a subsidy income threshold of $65,000 combined total income. But at $70,000 a year, a $1609/month premium is 27% of annual income. Now add in some health care bills all the way up to the deductible of $12,000 and the combined out-of-pocket for both care and premiums would be 44% of annual income.

When inquiry for catastrophic coverage only, the marketplace administrator said this option is available only for individuals 30 years of age and younger.

It is no wonder that many farmers and self-employed small business owners responded to my request for feedback on their marketplace experiences with this sentiment: “We are opting out of the insurance for 2017 and paying the fine and hoping that the new administration will fix the insurance mess.”

Those without qualifying insurance in 2017 will be fined 2.5% of their income when filing their 2017 income taxes, but that is certainly less than the 27% the premium would cost a couple of humble means. The government deems that you can afford said insurance if you make more than $20,800 a year for a couple and $10,400 a year for an individual.

While the results of the recent presidential and congressional elections bring the potential for replacement of the Obamacare system that is clearly squeezing the middle-aged and middle-income of middle-America, there are some immediate concerns voiced by farmers and small family business owners.

For starters, the ability to purchase group plans for businesses made up of family members has ended. That ended in 2014. Today, a farm that employs full-time family members without any full-time W-2 employees getting coverage on payroll cannot purchase group plans.

Inquiries to the Pennsylvania Farm Bureau indicate that farms can continue to qualify for a group plan as long as they have one W-2 employee being covered by the plan in addition to an unlimited number of family member employees.

Such group plans are far more cost-effective than what is available to individuals, couples and families on the Obamacare marketplace or through an insurance broker.

There are commercial brokers selling insurance, but the plans they offer still go back to the terms of the Obamacare marketplace. In fact, in our personal example, the Highmark plan we had this year was of course discontinued (this was the case with almost every plan as new pieces of the Obamacare legislation came online this year). The lowest-priced option through Highmark would have cost us $1609/month for $12,000 combined deductible. The lowest-priced option through the marketplace at healthcare.gov was $1608/month for $12,000 combined deductible. A difference of one dollar a month and virtually no difference in terms.

Over the past six weeks, we, like others, received emails and phone calls from companies offering insurance plans, only to find out that these plans were not available to folks in our zipcode, after attempting to apply.

UPMC is one example. Upon hearing that a dairy producer in western Pennsylvania was able to secure better insurance for half of Highmark’s price through UPMC, I applied. After filling out all of the information and pushing the tab, a screen popped up: “Not available in your area.”

The zipcode struck again. Our area doesn’t qualify for multi-state plans.

As one farm family found in Pennsylvania’s northern tier, multi-state plans are available in only some zipcodes of the state. A multi-state plan is essential for families relying on doctors and health care providers on the other side of the state border. In some cases, these doctors and health care providers are far more accessible than anything in Pennsylvania, but finding insurance that allows use of these services was difficult, and expensive, for some border-dwellers.

One option people are exercising is off-farm employment. One producer noted that she specifically went back to work in an off-farm job for the sole purpose of providing health insurance for her family. “Everyone misses mom at home,” she writes. “But if we can save $1700 a month, it just made sense.”

Several producers reported hiring a part-time employee to cover ‘mom’s’ farm chores while mom gets a job to provide health care was a necessary trade off to get coverage this coming year.

On the other hand, an ag-related small business owner notes that his wife was going to pick up some extra hours at her part-time job to help pay the escalation in the premium cost of their marketplace plan. Upon further analysis, this extra income would put them over the threshold for the government subsidy, meaning that they would end up paying even more for their insurance if his wife worked more hours.

“In a way this system serves as a dis-incentive to work and earn income,” he wrote.

(That is true here as well. If my husband and I worked less at our self-employed businesses, we could perhaps qualify for a subsidy and be able to afford the rock-bottom bronze plan at a subsidized rate. Our combined income is about $5,000 over the annual threshold for our age with no dependents. So, instead of being incentivized to work and earn more to continue to build self reliance for our future retirement, we actually contemplated working less to get the subsidy. That contemplation lasted all of five minutes because it is diametrically opposed to everything we believe in and stand for as hard-working Americans.)

“I have clients doing a variety of things,” a dairy nutritionist reports. “My plain clients get their insurance through a church group plan. A few have a spouse taking a full time job and then hire part-time labor to do the farm chores.”

He observes that health insurance costs “have always been a problem for farmers, made worse since the ‘un-affordable healthcare act.’”

Some have suggested milk cooperatives offer member health insurance plans. A quick survey reveals this is easier for large multi-state cooperatives that already provide a long list of member benefits that can be purchased. For example, dairy farm member-owners of Dairy Farmers of America can purchase group plan insurance through DFA’s Agri-Services Agency.

ASA works with a long list of health insurance carriers across the country, and offers quotes for DFA members at its website. But these are group plans, not individual family plans.

Several members have reported this works fine for farms seeking group plans that include at least one W-2 employee; however, for farms that rely on all family labor, with or without part-time student labor, the alternative, again is to head back to the Obamacare marketplace exchange for a personal plan.

Some dairy producer associations are looking into developing group plans that can be made available to individuals and families in their states. Kentucky Dairy Development Council, for example, just began offering a group plan to the state’s dairy farm families. Director Maury Cox notes that the future of this program is uncertain, but that as the number of participants potentially increases, the plan available could become better and more affordable.

Meanwhile, many farmers and self-employed folks responded to my inquiry with reports of converting from conventional insurance to “health sharing” plans through Samaritan Ministries and Christian Healthcare Ministries (CHM). These options qualify as insurance to avoid the tax penalty, however the operate differently from conventional insurance. Some farmers reported using CHM as their sole health insurance while others give to CHM to obtain help sharing their deductible costs of their regular insurance.

Those who have been with CHM for several years seem to have very positive things to say about health sharing. But there are caps. For severe situations where health care needs exceed $125,000, the outcomes are less predictable. The health sharing systems are not contracts to pay. Once costs are above the cap, members can donate to help that member cover their costs. In this way, the health sharing plans follow the Christian example of caring and sharing.

Meanwhile, there are those who have found the new Obamacare system and its subsidized marketplace plans to be of great benefit.

Two dairy farmers contacted me anonymously for this report — one from Pennsylvania and the other from the Midwest. They shared with me the details of their positive experiences. Both are in their 40s and have school-age and college-age children. Both qualify for the subsidy and will pay around $600 to $700/month to insure their entire families with a much smaller deductible (gold plan).

One of the two respondents indicated his thankfulness for the Obamacare insurance that allowed his wife’s severe medical needs to be covered with no waiting period for pre-existing.

The other disclosed gross income of over $80,000 a year and was able to qualify for the subsidy due to having a large family of dependents. He said that some say to him that they are paying for his insurance because of the subsidy, and yet he says he does “not feel poor.” He asked whether those who are having trouble finding affordable insurance are perhaps not taking the time to completely fill out the income statements when applying.

On the other hand, another dairy farmer indicated that she did go through all of the application hoops previously, and was rudely surprised at the end of the year that they owed money after their taxes were evaluated.

When they first applied at the marketplace, they were told that their income qualified them not only for a subsidy of the insurance premium, but also for special health insurance programs for their children. Then, after the government healthcare folks went over their tax returns with a fine tooth comb, they ended up not qualifying and owing the federal government money for the subsidy that had cheapened their insurance throughout 2016.

This is a tricky accounting process for farm partnerships and LLCs where members of the partnership and LLC own and depreciate income producing assets within the LLC or partnership. An LLC member’s income tax obligation are considered differently in terms of deductions when it comes to income assessment for health insurance.

It is all so complex, and suffice it to say, the Obamacare marketplace has become a government arm linked inextricably now to the IRS. A concerning precedent. In fact, several farmers noted for this report that they spend time with their accountants a little earlier this year to look specifically at the health care issue and implications for yearend tax planning.

All across the country, people are seeking to navigate these many issues with many unknowns thrown into the brew.

As one rancher reported, their insurance agent sees the dichotomy in the current system, and that the rising costs are due in part to those who do not have coverage until they get sick, and then the company is forced to take them. This includes non-citizens whose healthcare costs are covered.

Some have suggested that instead of fining people for not having insurance, there be accountability that Americans have one year to get into a plan, and after that, insurance premiums for those previously uninsured would be at a rate that covers some of the million-plus hospital costs.

When asked about whether the Affordable Care Act can be ‘tweaked’ or if it must be started from scratch, Trent Loos, a member of President-elect Donald Trump’s ag advisory committee, says “I love driving a team of horses with my chuck wagon, and this health care system is the largest wreck of a team of horses I’ve ever seen. The wreck is so bad that the wagon has completely fallen apart.”

Just 30 days before the November 8 election, the Obama administration came out saying the average premium increase for health care insurance was 24%, “but don’t worry about it because the subsidy will cover that,” Loos recalls. “How much more disconnected can you be?”

For much of Middle-America, the premiums have gone up 30 to 60% (in our case 60%) and the working middle class largely do not qualify for the subsidy.

“I don’t know of any agriculture group that is even talking about coming up with a program for their members because they don’t know where to begin,” Loos says of the extremely complex Patient Protection and Affordable Health Care Act.

Loos expects this to be tackled within the first 100 days of the new Trump administration in Washington. “If it is not tackled in the first 100 days, then every hope for the future will seem to be gone,” he said in a phone interview with Farmshine last week. “This is affecting every family in agriculture and beyond. It affects every family that relies upon themselves instead of the government.”

The solution? “Scrap it and start over,” Loos says. “This chuckwagon is dismantled on the ground. How can we glue it back together. Duct tape and baling wire are not enough for this one. President-elect Trump is very aware that this is something that needs to be fixed.”

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