MY QUEST FOR OBAMACARE HEALTH INSURANCE COVERAGE - WHAT A FRUSTRATING PITA!

For more than 40 years I have been dealing with federal and state governments, as a driver, a college student, an investor, a professional tax preparer, and an individual citizen.  During this time nothing has ever been as frustrating as trying to apply for health insurance under “Obamacare” (aka the “Affordable Care Act”).  Dealing with the IRS and, yes, even the NJ Division of Taxation (although NJDOT has been much more frustrating than my encounters with the IRS) has been a walk in the park compared to my experience with Obamacare.

My saga begins on the morning of October 1, 2013.

For weeks the airwaves and internet had been full of stories and articles telling us we would be able to apply for healthcare and an advance payment of the “Premium Tax Credit” at the online Health Insurance Marketplace beginning on October 1st.

I had used an online calculator I came across in my wanderings on the web to estimate the cost of insurance and the amount of the Premium Tax Credit I would receive based on my location and income.  I learned I would receive a substantial credit.  My total premium would be more than I was currently paying, for additional coverage, but after the advance payment of the credit was applied I would be spending much less “out of pocket”.

I went to HealthCare.gov at 8:00 AM on the morning of October 1 to submit my online application.  I was unable to complete the application process.  I continued trying the rest of the morning and into the afternoon, and finally gave up at about 2:30 PM.

I next called the 800 number listed on the website and, to my complete surprise, I got a live person almost immediately.  I provided all the required information and answered all the questions.  When we were done the person to whom I was speaking told me that my identity was verified and I would receive a notice listing the insurance options available, and the amount of credit to which I would be entitled, in the mail, and perhaps also online, “shortly”.  Nothing ever arrived, either via postal mail or email.

The country soon learned that, despite all the advance publicity, the Health Insurance Marketplace website was not ready to begin processing applications on October 1^st and was eventually shut down due to the large volume.  We were promised that the site would be fixed and running properly by the end of November.

During the third week of November I received two emails (one after the other) from HealthCare.gov telling me “You have a new message waiting for you in your Marketplace account. Click here to log in and read the message.”  I did as instructed, but there was no message to be found.  I could not even find a “message center” under my account to look for any message. 

While I was on the site I attempted unsuccessfully to complete the application and verify my identity twice, but “an unexpected error occurred when we tried to verify your information”.  I was instructed to call the Marketplace Call Center.  When I tried my call was promptly “auto-answered”, but I was promptly cut off.

I went back to my Marketplace account on December 10^th to try again.  But I got the same message when attempting to verify my identity.  “An unexpected error occurred when we tried to verify your information.”  This time I decided to try a “live chat” and after venting my frustration and telling my story I was told to go to a certain website (click here) and download a paper application, which I did.

I wished I had been made aware of the paper filing option much earlier.  Perhaps I missed this alternative on the website or in the publicity, but I do not think so. 

I promptly completed the paper application and mailed it with copies of my Social Security card, Driver’s License, health insurance card, and my most recent premium bill (this was not requested in the instructions, but I figured it couldn’t hurt) to the Department of Health and Human Services in London, Kentucky on the morning of December 11^th.

On December 16^th I received an 11-page form letter in the mail from the Health Insurance Marketplace telling me that I was “eligible to purchase health coverage through the Marketplace”.  The letter also indicated that I was also eligible for a tax credit and identified the amount of the credit.  Under the category of next steps was “choose a health plan and make first month’s payment”.

On the top of Page 2 was the heading/question “What should I do next?”.  This is exactly what I wanted to know.  However the only item under this heading concerned “if the table above tells you that you are or may be eligible for Medicaid or Pennsylvania CHOP”.  It did not so tell me, so this did not apply.  The remaining 9+ pages of the letter was pro-forma information and disclaimers.  The letter did not tell me “what should I do next”!

With no instructions provided I reluctantly returned to the website, but found nothing there.  I initiated a live chat and asked what to do next.  I was told to “log in” using the “Application ID” number that was provided in the letter.  I clicked on “log in” but was not asked to enter an ID number.  It asked me to log in using my username and password.  I did so and was told my application was still being processed.  This was not true – according to the letter my application had been fully processed and approved.  I went back to “live chat” and was told to call the 1-800 number.

I called the number and promptly connected with a real person.  I gave her the information and she proceeded to provide me with my policy options and, according to her, successfully enrolled me in the plan I chose.  I had selected the lowest price policy in the top “platinum” category.  I was told I would receive a bill from the insurance company in the mail in a few days. 

On the day after Christmas (today) what to my wondering eyes should appear but a letter from my new health care provider welcoming me and telling me that I must submit payment for the first premium “before your insurance can be put into effect” and indicating the amount due.  I sat right down and wrote out the check and rushed to the local Post Office.

I finally successfully acquired Obamacare insurance partially funded by an advance tax credit.

As a point of information, the cost of my current insurance premium increased, without notice or explanation, by 33.5% with the November 1^st invoice.  It was not my policy’s “anniversary” date.  I can only assume that was because the plan had to change to meet Obamacare requirements.  I did turn age 60 in mid-November, but I do not think this affected the premium cost.

The final result of my frustrating saga is that, beginning January 1, 2014, thanks to the advance tax credit available to me, I will be paying less out of pocket for my health insurance than I was prior to the November 1^st price increase for more and better coverage than I previously had.

So what can we take away from my saga?

If I was not eligible for coverage and a credit via the Marketplace my private health insurance cost would have increased by 33.5%.

The healthcare.gov website was a total waste of time. 

My first call to the 1-800 number on October 1^st was also a total waste of time.  The person to whom I spoke apparently lied to me when he said my application was received and processed, my identity was verified, and I would be receiving information on my eligibility in the mail within a few weeks.  I never received anything. 

The live chat function was only partially helpful – telling me where to go to get a paper application.

I had to go “old school” and submit a paper application in order to get any results.  This process was easy and I got a prompt response.  I should have done this on October 1^st! 

Whatever problems that had made my October 1^st call to the 1-800 number a total waste of time have apparently been fixed – my December 16^th call actually got results.  Or maybe it was just the competence of the person I spoke to that made the difference.

And the bottom line – the US Tax Code is not the only mucking fess to come out of Washington.

Just so you know here is my opinion on “Obamacare” in general.

“Obamacare” is not the spawn of the devil, nor is it the answer to all our problems.  It is a flawed piece of legislation that was passed by flawed idiots in both houses of Congress (and upheld as constitutional by the Supreme Court) who did not actually read in full the bill they were voting on (it appears that this is also a common practice in Washington).  The Act was not well thought out and was created and pushed through Congress in haste (more common practices in Washington).   

While the Act itself is a convoluted mess, the basic underlying concept is a good one.  Universal health insurance coverage is good for the individual American and good for the country as a whole.  It is good public economic and health policy to encourage and assist individuals to acquire health insurance coverage, whether through direct individual purchase or employer group coverage.  But individuals should not be forced to sign up for health insurance, and businesses should not be forced to provide coverage for employees, by being assessed a penalty for not doing so.

TTFN

MY 2 CENTS ON THE HEALTH CARE ISSUE

The Republicans have begun their campaign to kill BO’s convoluted health care “reform” bill. The House has already voted to repeal the Act.

While I agree that something must be done regarding health care I am not a supporter of further complicating the already mucking fess of the Tax Code to do so.

The major problem with health care in the US that needs to be addressed promptly is that many individuals cannot afford to purchase health insurance (especially here in New Jersey). Because of the increased and increasing cost of health insurance it is no longer regularly offered as a free employee benefit. Many of the “uninsured” are self-employed individuals.

The only way to encourage the purchase of health insurance is by actually giving the uninsured cash to pay for the premiums. I propose that the idiots in Congress enact a direct government payment to insurance companies of the first $X,XXX of premiums for every household.

The Cash for Clunkers program of a few years back proved that the government could provide credits to individuals for a specific purpose without going through the Tax Code. I discussed how a similar program to provide a direct credit for health insurance premiums back in September of 2008 in my post “I Guess There Is Always An Exception” -

“How would this work? I would go to the Horizon Blue Cross and Blue Shield website, for example, and apply for health insurance. After entering my information and choosing the coverage and deductible I would receive a quote. If I chose to enroll the annual premium would be reduced by the amount of the government credit ($2,500 or $5,000 proposed by McCain), and my monthly premium would be determined accordingly.

Or coverage would begin immediately, but monthly premium payments would begin once the credit amount was used up (i.e. the credit would pay the first three to five months of premiums). At some point the insurance company would apply to the federal government for direct payment of the credit amount.

Of course there would have to be a system to determine if any portion of the credit amount had previously been used by the insured during the appropriate calendar or fiscal period (it would have to be decided if the credit amount is applied on a calendar year or policy year basis).”

Of course this seems too simple for the idiots in Congress to consider. And we know that they can never do anything simple (although based on performance many of the members of Congress could be so described).

What do you think?

TTFN

A LOAD OF CRAP!

My fellow tax bloggers and I are constantly reporting on emails allegedly from the IRS that are in reality “phishing” scams, and reminding you that the IRS will NEVER initiate contact with a taxpayer via email.

But those are not the only emails you need to worry about. I am often forwarded tax-related emails that clients have themselves been forwarded, often from friends or family, with the question, “Is this true?”.

I would say that 99.9% of the time the email is pure reality tv (i.e. excrement).

My advice to clients is – Never believe what you read in an email about taxes unless the email comes from me! Similarly, you should never take an email about taxes seriously unless it comes from your own tax professional.

This is along the same lines as what I have identified as my best tax advice – DON’T ACCEPT TAX ADVICE FROM ANYONE OTHER THAN A PROFESSIONAL TAX PREPARER.

Often the person sending of forwarding the email to you is well meaning, and doing so with the best of intentions. They are just ignorant of the true facts. However, occasionally the email will purposely contain incorrect or misleading information for purely political reasons.

Here is an email that a client recently forwarded to me with the usual question. Please note that the part highlighted in red is my highlight, and not that of the author, the reason for which will appear clear later -

“2011 W-2 Tax Forms

Should you want to verify this, go to http://www.thomas.gov/, enter "HR 3590" in the search box and look for "CRS Summaries." This is what you'll find.

Title IX Revenue Provisions—Subtitle A: Revenue Offset

‘(Sec. 9002) Requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer-sponsored group health coverage that is excludable from the employee's gross income (excluding the value of contributions to flexible spending arrangements).’

Starting in 2011—next year—the W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are provided.

It doesn't matter if you're retired. Your gross income WILL go up by the amount of insurance your employer paid for. So you’ll be required to pay taxes on a larger sum of money that you actually received. Take the tax form you just finished for 2009 and see what $15,000.00 or $20,000.00 additional gross income does to your tax debt. That's what you'll pay next year. For many it puts you into a much higher bracket. This is how the government is going to buy insurance for fifteen (15) percent that don't have insurance and it's only part of the tax increases, but it's not really a "tax increase" as such, it a redefinition of your taxable income.

Also, go to Kiplinger's and read about the thirteen (13) tax changes for 2010 that could affect you.

Why am I sending you this? The same reason I hope you forward this to every single person in your address book. People have the right to know the truth because an election is coming in November. So vote intelligently, based on your values.

But also adjust your tax withholding, or increase your savings, so that you aren't surprised and put in a jam when your federal income taxes are due on April 15, 2012.”

Poppycock!

The reporting of the value of employer-provided health insurance benefits on the W-2 is for information purposes only – it is to provide evidence that the employee has health insurance coverage. This amount will NOT be added to the federal taxable wages reported in Box 1 of the W-2. You will NOT be taxed on this amount.

If you read the section I highlighted in red you will see that it clearly identifies this amount as the “cost of applicable employer-sponsored group health coverage
that is excludable from the employee's gross income”.

As pointed out in Snopes.com –

“Section 9002 of PPACA, the patient Protection and Affordable Care Act (H.R. 3590), requires that all employers, beginning in 2011, report the aggregate cost of employer-sponsored health benefits they provide to employees on those employees’ W-2 forms. However, the monetary values so reported will neither be counted as gross income nor will they be taxed; they will be included for informational purposes only. (Section 106A of the Internal Revenue Code states that, in general, employer-provided health coverage is not taxable to the employee.)”

What is true, again according to Scopes.com (the hightlight is mine) –

“In general, beginning in 2018 (not 2011), the PPACA imposes a 40% excise tax on the value of employer-sponsored medical insurance that exceeds a given threshold (initially $27,500 annually). This excise tax would be paid by the insurance company, not the employee, and is initially expected to affect fewer than 10% of families covered by health insurance.”

You can read more about this excise tax on “Cadillac” health plans at Snopes.com.

As a point of information, according to the IRS website (again the highlight is mine) –

“Starting in tax year 2011, the Affordable Care Act requires employers to report the value of the health insurance coverage they provide employees on each employee's annual Form W-2 However, to provide employers the time they need to make changes to their payroll systems or procedures in preparation for compliance with this requirement, the IRS will defer the reporting requirement for 2011, making that reporting by employers optional in 2011.”

And that is the truth!

TTFN

I'M TELLING YOU NOW

I expect I am showing my age again with the title reference. Does anyone remember how to “Do the Freddy”?

I have not joined my fellow tax bloggers on the bandwagon to post my comments on the various Health Care “reform” proposals that have been kicked around Congress mostly because I have not had the time to find and review a good “impartial” overview of the proposals.

I do not want “socialized medicine”, nor do I want a new Medicare-like government run regime. What I do want is for insurance premiums to be “equalized” throughout the US so that I do not pay more in NJ for the same coverage than someone in the same situation in Kansas, and some kind of subsidies or credits to make health insurance affordable.

Last year a small business client paid over $15,000 in health insurance premiums to cover himself, his wife and a high-school age son.

I am glad that Congress did not rush to action and pass a Health Care bill before adjourning for the summer. What I also do not want is the typical Congressional quick-fix “reaction” to the problem instead of a carefully thought out and appropriate “response” to the issue.

Because any reform must be “revenue neutral” (unlike corporate bail-outs) there has been much discussion on ways to offset the gigantic cost of the program. Among them are “sin taxes” and the ever-popular stand-by “tax the rich” because “they can afford it” via tax surcharges.

As a general principal I do not believe that the Tax Code should be used for “social engineering” or “redistribution of wealth”. That is why I am very much for the most part against refundable tax credits like the Earned Income Credit and other substitute welfare programs. I am also against refundable tax credits because they breed tax fraud faster than rabbits.

I do believe that the Tax Code can be used to “encourage” behavior that is beneficial to Society and to the Economy in general by “rewarding” such behavior with tax benefits.

I am sure that we can all agree that charitable giving, post-secondary and continuing education, saving for retirement or health emergencies, investing in the stock market, reducing energy consumption, and perhaps even owning a home are all “behaviors” that benefit society and the economy and that should be “encouraged” by providing “rewards” via the Tax Code through deductions, credits and preferred tax rates.

I am against using the Tax Code to “punish” perceived “bad” behavior. We say that smoking and alcohol are “bad”, so let’s tax cigarettes and liquor up the arse to make people stop smoking and drinking and, more importantly, raise revenues. Obesity is also “bad”, so let’s force everyone to eat properly, and filler government coffers, by excessively taxing junk food.

One of the main reasons I am against “sin taxes” is that I do not want the local, state or federal government to determine what is a “sin” or what is “bad” behavior. I do believe the phrase is “a slippery slope”. What if, God forbid (no pun intended), the extreme religious right comes to power? The possibilities are frightening.

I am also against taxing the rich simply “because they can afford it”. Recent studies have shown that the “rich” already pay more than their share of taxes. The Tax Foundation’s TAX POLICY BLOG recently posted “Tax Burden of Top 1% Now Exceeds That of Bottom 95%”.

I do not believe in a highly “progressive” tax system that “punishes” such positive behavior as ambition, entrepreneurship and just plain hard work with a higher tax rate.

It is argued that the rich should pay more because they ultimately get more benefit from the programs and protections of the government (although those who pay absolutely no income tax seem to me to be getting much more benefit from government). With a relatively flat tax system the rich would still pay more than the not so rich – 25% of $1 Million is a lot more than 25% of $50,000.

I don’t have the answer to how to pay for health care refund on the top of my head. It will take careful study and consideration.

So what do you think?

TTFN