ACA Penalty/Tax: Study Reveals Even After Factoring The Subsidy It Is Cheaper For Most Young People To Forego ACA Coverage and Pay the Penalty

‘The conservative American Action Forum (AAF) released a study on Tuesday saying that the individual mandate penalty may never be substantial enough an incentive to get young adults to buy into the ObamaCare exchanges.

The study finds that after accounting for cost-sharing and subsidies in 2014, it would still be cheaper for 86 percent of young adults to forgo coverage and to pay the individual mandate instead. That percentage decreases to 71 in 2015, and 62 in 2016, as the individual mandate penalty goes up.

“Even after the mandate penalty is fully implemented, a majority of young adult households will find that it is financially advantageous for them to forgo health insurance, pay the mandate penalty, and personally cover their own health care expenses,” the study says.

While this would leave young adults vulnerable to extremely high medical bills if they endured a catastrophic illness or accident, the study highlights the challenge the Obama administration has in its push to enroll the “young invincible.”’ - Study: Young adults lack incentive to buy ObamaCare coverage, thehill.com, 01/22/2014
Link to the entire article appears below:

http://thehill.com/blogs/healthwatch/health-reform-implementation/196104-study-young-adults-lack-incentive-to-buy#ixzz2r8yBUjBc

Grand Valley State University Study: ACA Lead to 1000 Less Jobs and Slower Economic Growth in Western Michigan

Link to Grand Valley State University Final Summary Report, ACA Employer Survey study:

http://gvsu.edu/gvnow/files/ckfinder/userfiles/files/Priority%20Final%20Report%20B2.pdf
 

Happy Valentine‘s Day! Send Money! Obtain Qualifying Coverage by Valentine’s Day, 2014 or Face the ACA Tax [Penalty]

"You'll have to get coverage by Valentine's Day or thereabouts to avoid penalties for being uninsured, the Obama administration confirmed Wednesday.

That's about six weeks earlier than a Mar. 31 deadline often cited previously.”

“The Jackson Hewitt tax preparation company first pointed out the wrinkle with the health care law's least popular requirement.

An administration official confirmed it. The official spoke on condition of anonymity because they were not authorized to speak publicly.

It's the latest tweak involving complex requirements of President Barack Obama's health care law, known as the Affordable Care Act. Previous adjustments have ranged from the momentous to the mundane. The biggest one was a one-year delay of a requirement that larger employers offer coverage, announced this summer. More recently, the administration has postponed some Spanish-language capabilities of its enrollment website, as well as full functionality on the site small businesses use to sign up.

Brian Haile, senior vice president for health policy at Jackson Hewitt, said government agencies initially had different interpretations of the enrollment deadline. The Health and Human Services department, which is taking the lead in implementing the law, kept referring to a Mar. 31 deadline. But the Internal Revenue Service, which handles most of the financial aspects, suggested that the deadline had to be in February.

"There were inconsistencies," said Haile, adding it took several inquiries by Jackson Hewitt over the last few weeks to clear up the uncertainty.” - Administration: Penalties for Obamacare Kick in on Valentine's Day, Newsmax, 10/09/2013

Link to entire article appears below:

http://www.newsmax.com/Newsfront/US-Health-Overhaul-Penalties/2013/10/09/id/530156?ns_mail_uid=62439580&ns_mail_job=1540953_10092013&promo_code=1521C-1










　

　






　

Obamacare: To Buy or Not To Buy…..use to be the question.

The chart above is Thomas Lambert’s buy/don’t buy matrix regarding Obamacare. The formula finds its basis in: family income, maximum percent of income to be spent on insurance, dollars to be spent on insurance, insurance cost as the percent of penalty, resulting in a “buy”/”don’t buy” likely decision matrix. **

 **The complete essay, How the Supreme Court Doomed the ACA to Failure, The Roberts “tax” ruling undermines the new health care law by Thomas Lambert, law professor, University of Missouri. that yields the buy/don’t buy matrix, appears in the link below:

 www.cato.org/…s/files/regulation/2013/1/v35n4-5.pdf

　

Putting the formula into its action phase, assume a family income of $75,000. You supposedly spend $7,125 on health insurance. You pay the fine and have plenty of money remaining to manage everyday medical expenses. If the year goes by and you remain healthy, which the vast majority of people do, then you are ahead of the game.


However, if disaster strikes, you merely “buy” coverage as no pre-existing condition clause can stop coverage from going into force. Once the disaster passes, you return to the “don’t buy” position.


The matrix surely has nuances and doesn’t work in every last case e.g. chronic condition. However, in the past a rough estimate put forward by pundits and talking heads was that “some people” will not buy Obamacare coverage and merely pay the fine and buy coverage when needed. That proposition may well become “most people” will not buy Obamacare coverage and merely pay the fine and buy coverage when needed. That is to say, the mere fact someone has worked out a “buy” - “don’t buy” Obamacare purchase matrix means it becomes not a “some people” rational decision not to buy, given particular parameters, it becomes a “most people” rational decision not to buy, given particular parameters.

　

　

　

Obamacare: the rise of the 29’ers, 49’ers and the Death of Small Business Full-Timers

“From January 1, 2014, Obamacare requires firms with 50 or more ‘full-time-equivalent workers to offer health plans to employees who work more than 30 hours a week. Employers who cross the 50 employee threshold and fail to offer health insurance confront a $2,000 annual penalty for each uncovered worker beyond 30 employees. So, by hiring the 50th worker, the firm pays a penalty on the previous 19 workers as well.

As is too frequently the case when socialists legislate to control the private sector, enormously high perverse incentives are created. Thousands of small businesses will confront a $40,000 tax penalty should they expand and hire a 50th worker. A simple example illustrates the magnitude of the disincentive to expand.

　

Suppose that a firm with 49 employees hires a new worker for $12 per hour for 29 hours per week. There is no Obamacare health insurance requirement. Now suppose that that worker moves to 30 hours per week, becoming ‘full-time, under the Act. This triggers the full penalty. So, in order to obtain 52 hours of extra work from that worker, the extra cost rises from $12 per hour to %52 per hour. In terms of rational choice, what would you expect profit-seeking firms to do?

　

Well the answer is already there for all to see. Although Obamacare starts in 2014, the measurement period utilized by the Feds to determine a firm’s average number of full-time employees, began on January 1, 2013. And here is what is happening, most especially among fast-food restaurants that typically register annual profits of only between $50,000 to $100,000.

In a growing number of McDonalds and Burger King outlets, each such outlet hires employees to operate the cash register or to flip burgers for 20 hours per week. Those worker then head to the other outlet for another 20 hours per week. This exchange of employees avoids the Obamacare health insurance/tax. Many other such outlets are now known as the 49'ers because they cap their employees at 49. Businesses that hire young less-skilled workers put a ceiling on the work-week below 30 hours. These firms are known as the 29'ers.

　

Among the fast food franchises that now engage in such rational behavior are: McDonalds, Burger King, Red Lobster, KFC, Dunkin’ Donuts, Taco-Bell, Red Lobster and Olive Gardens. And they are just the trail-blazers among the small business sector.” - Charles Rowley, economist, George Mason University

Dr. Rowley’s blog post entitled Obamacare kills small-business full-time hires can be seen in its entirety at the following link:

http://charlesrowley.com/2013/02/23/obamacare-kills-small-business-full-time-hires/

　

ObamaCare: The Individual Mandate

ObamaCare hinges upon the individual mandate. The mandate is the legal requirement of every American to obtain health insurance coverage that meets the government's "minimum essential coverage". The problem is that the U.S. Constitution, established long before any living legislator voted to pass ObamaCare, does not require individual citizens to purchase any particular good or service. (1)

Besides a certain group of legislators somehow having "special knowledge" enabling them to pick and choose a particular good or service for individual citizens, let us investigate the individual citizen's failure to meet the mandate. We have heard of the fine but exactly who is at risk of being fined? What exactly is the fine?


Who is at risk of being fined by ObamaCare?

If you do not receive coverage through a government sponsored program, or your employer does not offer coverage, or some other group sponsored setting (e.g. union, association, etc.), then you must buy coverage. Failure to buy coverage results in a fine. (2)


What exactly is the ObamaCare fine?

In 2014 the fines begins at $95 or 1% in annual income which ever is the greater. In 2015 the fine become 2% of annual income or $325 which ever is greater. In 2016 and later the fine becomes $695 or 2.5% of income . (3)

What about families? An ObamaCare fine-formula exists for families. The formula is as follows:

Family fine formula: (uninsured adult = 1 fine unit) + { uninsured children = 1/2 fine unit) x $695 = ObamaCare fine.

Plugging a family of four into the above formula, in the year 2016, the family would pay an ObamaCare fine of $2,085. The fine is prorated if you, your spouse, or children were covered for a number of months during the year e.g. covered for three months means 3/12 x $695 times number of fine units. (4)

There is an exemption. Apparently, those between some slim line, the line of qualifying for government sponsored health-care and the line of income inability to buy "essential coverage" receive an exemption from the ObamaCare fine. The exemption is: an exemption income threshold will be applied (yet unknown) by the secretary of Health and Human Resources. Presumably the poverty level threshold will be applied.

What might surprise you is that ObamaCare has already calculated the total fine that will enter government coffers. According to the Congressional Budget Office (CBO), ObamaCare expects $17 billion in ObamaCare fines in 2019. (5)


Notes:

(1)http://politifi.com/news/Federal-judge-denies-Holder-request-to-dismiss-Obamacare-constitutionality-challenge-UPDATE-Cuccinelli-reacts-992678.html


(2) Bad Medicine, A Guide to the Real Costs and Consequences of the New Health Care Law, Michael D. Tanner, Cato Institute, page 2.


(3) Ibid.


(4)Patient Protection and Affordable Care Act, public law 111-148, subtitle F, part 1, section 1501.


(5) March 20. 2010, director of the Congressional Budget Office, Douglas Elmendorf, in a letter to House speaker Nancy Pelosi .