Did health insurance deliver you a sucker punch? Do you know what a sucker punch is? Now, I haven’t been in a physical fight before. Yet when I read or even hear the term sucker punch, I am confident in believing it means hitting someone unexpectedly with a blow!
Let me break this down and you decide if you’ve been delivered a sucker punch.
The Patient Protection and Affordable Care Act aka Obamacare aka Affordable Care Act was started because there were 53 million uninsured Americans without health insurance. The individual mandate was to reduce the number of people who didn’t have health insurance as well as provide them with quality and affordable health insurance.
Stop right there!
Were you delivered a sucker punch based on what the mandate is? The mandate was designed to provide people with affordable health insurance not health care. I realize the majority of the time when the media was talking about the Affordable Care Act (“Obamacare”), the terms health insurance and healthcare were pretty much used synonymous. Health insurance and health care ARE NOT the same thing. As a matter of fact, having health insurance does not guarantee you healthcare.
Before the first enrollment period, everyone was told if you like your health insurance, you could keep it. We all saw how that turned out. People’s health insurance was getting canceled left and right!! The public outcry demanded action. President Obama came back and said consumers who were affected could keep their plan for one year and not be penalized. However, it would be up to the local State Insurance Commissioners if they would let those policies remain in place.
The mandate said if you don’t have health insurance, you would be penalized for not carrying health insurance. There were people getting health insurance because they didn’t want to pay the penalty. Watch what happened. During the first enrollment period, people who got the subsidy (advanced tax credit) used estimated numbers on their income. They were told they qualified for a certain amount of subsidy EACH month to help with the cost of health insurance. Other people said they couldn’t afford health insurance. This group of consumers chose to take the penalty which was more affordable for them. The penalty is ONE time a year.
Fast forward to tax time 2015 for 2014. Suzie goes to get her taxes done. She is confident she is safe from the penalty because she carried health insurance. Lo and behold, Suzie has to provide the Form 1095-A, Health Insurance Marketplace Statement showing who in your household received health insurance through the marketplace, coverage start date and end date as well as the number of monthly enrollment premiums, monthly second lowest cost sliver plan and monthly advance payment of premium tax credit. This form has to be filed with Form 8962 when her taxes are done.
Suzie takes Form 1095-A to H & R Block so she can get her taxes done. The tax preparer then reconciles Form 1095-A against Form 8962. Suzie is the recipient of bad news, SHE owes money on her taxes for getting too much of an advanced tax credit AND she didn’t go to the doctor once all year. Why did Suzie have to pay back part of the advanced tax credit? She had a change in income and was not aware that she needed to report the change to the health exchange so an adjustment could be made with her subsidy (advanced tax credit). Suzie is mad and vows NOT to get health insurance for 2015. She’s not alone!
Prior to the enrollment period for 2015, insurance companies were asking for RATE increases. The plans were not changing, yet consumers would be paying more for the exact same policy.
For 2015, people who utilized the health insurance exchange for 2014 could be automatically re-enrolled for the current year. Here’s the down side to that! If consumers were automatically re-enrolled and the premium increased, they would not know about the premium increase UNTIL they saw their first draft come out of their bank account.
Do you feel like you have been sucker punched?
Stay Tuned for Part 2.