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  #11  
Old 11-15-2019, 01:49 PM
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exponentialpi exponentialpi is offline
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Originally Posted by Pamela Wells View Post
It's not an income cap specifically. I would have to go look up the specifics to be certain, but I believe it's set such that a family should pay no more than 9% of their income in premiums, provided their income is below 400% FPL. FPL is set based on family size, and is uniform everywhere except Alaska. But the premium component is variable, and it depends on the benchmark premium in that rating area, not the state as a whole. The benchmark premium is the price that a given family would pay for the second lowest cost silver plan sold in their rating area (even if it's not sold in their county).

The calculation the cost of the 2nd lowest silver for the family, and subtracts 9% of their income. The result of that then is the "bucket of money" subsidy - the same amount is applied to whichever plan they actually choose. In the event that the family chooses a plan that costs less than the total bucket of money available for their subsidy, they pay $0, but they don't get extra money.

This has some interesting side effects. When the price of silver plans in the market go up, then so does the subsidy amount. When areas get more competitive, and the prices of silver plans goes down, then the subsidy also reduces. This means that for a highly subsidized low income family, they could end up paying more for coverage when premiums are low than when premiums are high.

Additionally, because premium varies by age, but neither poverty level nor income necessarily does, this also means that older people get much larger subsidies than younger people do. At very low incomes, close to the bottom end of 133% FPL, this is proportionally reasonable. But as incomes approach the upper limit of 400% FPL, there's a disproportionate effect. Younger people see their portion of premium increase in a way that is relatively smooth, and approaches the full amount. Older people, however, end up with a high subsidy until they reach 400% FPL, at which point they can see a dramatic cliff in their premiums.
The one other dynamic is the family glitch that uses the income cap as well. If a family member is employed and receives affordable single coverage under the income cap but the entire family is not, the entire family will still be deemed subsidy ineligible.
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  #12  
Old 11-15-2019, 01:57 PM
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Why is that? Are insurers just now taking advantage of the increased 66-72% de minimis range for silver plans?
There are a multitude of reasons. The biggest driver I have seen in some markets is a new competitor coming in that squashes the silver gap a sole carrier may have had as a strategy and provided substantial subsidies.
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  #13  
Old 11-15-2019, 02:28 PM
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Originally Posted by Pamela Wells View Post
It's not an income cap specifically. I would have to go look up the specifics to be certain, but I believe it's set such that a family should pay no more than 9% of their income in premiums, provided their income is below 400% FPL. FPL is set based on family size, and is uniform everywhere except Alaska. But the premium component is variable, and it depends on the benchmark premium in that rating area, not the state as a whole. The benchmark premium is the price that a given family would pay for the second lowest cost silver plan sold in their rating area (even if it's not sold in their county).

The calculation the cost of the 2nd lowest silver for the family, and subtracts 9% of their income. The result of that then is the "bucket of money" subsidy - the same amount is applied to whichever plan they actually choose. In the event that the family chooses a plan that costs less than the total bucket of money available for their subsidy, they pay $0, but they don't get extra money.

This has some interesting side effects. When the price of silver plans in the market go up, then so does the subsidy amount. When areas get more competitive, and the prices of silver plans goes down, then the subsidy also reduces. This means that for a highly subsidized low income family, they could end up paying more for coverage when premiums are low than when premiums are high.

Additionally, because premium varies by age, but neither poverty level nor income necessarily does, this also means that older people get much larger subsidies than younger people do. At very low incomes, close to the bottom end of 133% FPL, this is proportionally reasonable. But as incomes approach the upper limit of 400% FPL, there's a disproportionate effect. Younger people see their portion of premium increase in a way that is relatively smooth, and approaches the full amount. Older people, however, end up with a high subsidy until they reach 400% FPL, at which point they can see a dramatic cliff in their premiums.
i'm approaching this situation. mrs yoyo and i are retiring next year, say Q2 sometime, and will do cobra for the remainder of that calendar year. we both turn 62 during that year, so we have some years to go before medicare is available. one possibility we're looking at for the following year is managing income so as to maximize aca subsidy and minimize health insurance costs. we have cash on the side to supplement our spending, cash that doesn't flow through as income for aca premium subsidy calculation purposes.

may bag aca entirely and go with one of those not quite insurance cost sharing plans, dunno yet

would appreciate any thoughts y'all might have on economically navigating health insurance costs post employment and pre medicare.
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  #14  
Old 11-15-2019, 08:54 PM
ImSpartacus ImSpartacus is offline
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Originally Posted by Pamela Wells View Post
I doubt that's the dynamic. The risk adjustment transfers in the market place vary by the metallic level as well as by the level of cost share reduction on that plan (among several other factors). Payers get a higher effective risk level for having more customers in higher AV plans. The highest CSR level for silver is at 94%, which is quite a bit higher than the 80% for Gold. Additionally, customers are faced with lower point-of-service cost shares on the CSR plans if they qualify.

There are many moving parts, but generally speaking, payers are in better net financial positions if they can get as many people as possible into higher AV plans. This intersects with selection on the part of the customer, where generally healthier people tend to choose leaner plans (Bronze) and sicker people tend to choose richer plans (Gold). Once the subsidy and the CSRs are incorporated though, that relationship gets very murky. What we see, in general, is that unsubsidized sick people will tend to choose Gold plans, and that very healthy people will choose Bronze plans, regardless of whether they're subsidized or not. Sicker subsidized people will choose Silver plans.

But if carriers can bring the cost of the Silver plans down in the market, they can attract a portion of the subsidized healthy people to Silver plans, where the carrier receives a higher risk score.

Lowering Silver prices while keeping Bronze and Gold fairly flat is a tactic to increase risk level relative to the market, which leads to somewhat better financial positions overall.

But it's not without risks of its own. As mentioned to yoyo above, lower prices on Silver plans also means lower subsidy levels, which leads to increased perceived cost on the part of subsidized individuals. If only one carrier makes this move, it can be advantageous. For example, if a carrier has one very low cost silver plan that comes in materially below a competitor's silver, then the competitor becomes the benchmark, but the carrier with the lowest cost silver is more likely to see an increase in membership in their silver plan from highly subsidized moderate to unhealthy customers, which can be a good thing. On the other hand... if other competitors use the same tactic, then the entirety of the subsidy in that market decreases, and the risk transfers effectively re-balance themselves. None of the carriers win... and customers lose subsidy.

ACA is an inherently unstable market. This dynamic between pricing, risk transfer, and subsidy is one of the factors that makes it unstable.
Whew, that's fascinating!

I don't work on the carrier side, so my understanding of marketplace rick adjustment is cursory at best. I wasn't aware of the strategies available to carriers on the marketplace.

My only question is "why now?" Why are we seeing this shift now? Or has this been a relatively steady trend over the past few years?

Quote:
Originally Posted by Pamela Wells View Post
It's not an income cap specifically. I would have to go look up the specifics to be certain, but I believe it's set such that a family should pay no more than 9% of their income in premiums, provided their income is below 400% FPL. FPL is set based on family size, and is uniform everywhere except Alaska. But the premium component is variable, and it depends on the benchmark premium in that rating area, not the state as a whole. The benchmark premium is the price that a given family would pay for the second lowest cost silver plan sold in their rating area (even if it's not sold in their county).

The calculation the cost of the 2nd lowest silver for the family, and subtracts 9% of their income. The result of that then is the "bucket of money" subsidy - the same amount is applied to whichever plan they actually choose. In the event that the family chooses a plan that costs less than the total bucket of money available for their subsidy, they pay $0, but they don't get extra money.

This has some interesting side effects. When the price of silver plans in the market go up, then so does the subsidy amount. When areas get more competitive, and the prices of silver plans goes down, then the subsidy also reduces. This means that for a highly subsidized low income family, they could end up paying more for coverage when premiums are low than when premiums are high.

Additionally, because premium varies by age, but neither poverty level nor income necessarily does, this also means that older people get much larger subsidies than younger people do. At very low incomes, close to the bottom end of 133% FPL, this is proportionally reasonable. But as incomes approach the upper limit of 400% FPL, there's a disproportionate effect. Younger people see their portion of premium increase in a way that is relatively smooth, and approaches the full amount. Older people, however, end up with a high subsidy until they reach 400% FPL, at which point they can see a dramatic cliff in their premiums.
One thing to note is that the "9%" varies on a sliding scale as income drops from 400% FPL to 100% FPL. Also, the whole sliding scale is indexed, so it varies a little bit every year. The complete scale for 2019 & 2020 is here.

Quote:
Originally Posted by yoyo View Post
i'm approaching this situation. mrs yoyo and i are retiring next year, say Q2 sometime, and will do cobra for the remainder of that calendar year. we both turn 62 during that year, so we have some years to go before medicare is available. one possibility we're looking at for the following year is managing income so as to maximize aca subsidy and minimize health insurance costs. we have cash on the side to supplement our spending, cash that doesn't flow through as income for aca premium subsidy calculation purposes.

may bag aca entirely and go with one of those not quite insurance cost sharing plans, dunno yet

would appreciate any thoughts y'all might have on economically navigating health insurance costs post employment and pre medicare.
If you're retiring, then wouldn't your income disappear and you'd be eligible for Medicaid?

Or if you live in a state that hasn't expanded Medicaid and you have taxable investments, then you could control your income to get within 100-400% of the FPL (lower is better, if you can manage it). That would qualify you for premium tax credits (i.e. subsidies).
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  #15  
Old 11-18-2019, 09:39 AM
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Originally Posted by ImSpartacus View Post
If you're retiring, then wouldn't your income disappear and you'd be eligible for Medicaid?

Or if you live in a state that hasn't expanded Medicaid and you have taxable investments, then you could control your income to get within 100-400% of the FPL (lower is better, if you can manage it). That would qualify you for premium tax credits (i.e. subsidies).
this is what i was saying - manipulate taxable income so as to gain max subsidies for ACA, supplement spending with cash reserves that don't flow through the income calculation for ACA premium determination.
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