Well, we’ve survived the first day of partial government shutdown. As I had no intent to go to the Statue of Liberty today or any of our national parks, the impact has been limited for me. And as I don’t have a civilian job with the Federal Government, my paycheck is unaffected. My sympathy to those Federal employees whose checks will be delayed. But if previous shutdowns are any indication, they will get paid retroactively for their time off and have a little extra unscheduled vacation.
I was up until the wee hours this morning, listening to all the rhetoric over the shutdown. This was good for the Obama administration, clouding as it did, the “rollout of Obamacare” as the state insurance exchanges opened for business this morning at 5:00 local time. I couldn’t wait until they were up and running so that I could make a first hand analysis of the goodies that they had on display.
In all fairness, any new computer program is likely to have “glitches.” That is neither a surprise nor is it a reason for condemning Obamacare. There are plenty of other reasons to do that. But the intelligent IT department is going to make sure that they have subjected any new system to extensive beta testing before making it public. Perhaps that is what happened with the state exchange programs, but if so, the State of Nevada, whose site I checked, needs to hire people with better skills than those who put this program together
My first encounter with the system was that it simply didn’t respond to my clicking on their links. I thought to myself, “Perhaps they are overwhelmed with inquiries, more than the system was designed to handle.” Maybe that is what happened. So after repeated attempts, I was about to give up when the system finally responded.
What I had in front of me was a list of all insurers whose insurance plans were approved for sale in the State of Nevada for calendar year 2014. These plans, many from insurers of whom I had never heard, all indicated the level of coverage – Bronze, Silver, Gold and Platinum, as well as Catastrophic. Not all insurers offered every plan – but in toto there were well over 100 for sale in the state.
Rather than work through that extensive a list, I decided to go to the insurance exchange only plans to get an idea of what was being sold. There were four providers, three of whom I had never heard. The only insurer who was recognizable was Anthem – Nevada’s version of Blue Cross Blue Shield.
By the time I had progressed this far, I did learn something. There is a new, PC term that has entered the vocabulary. That term is “Cost Sharing.” Once upon a time, this was called co-insurance and was the amount that an insured person would have to pay out of pocket for covered medical services. For someone purchasing a Bronze policy, the amount of Cost Sharing is 40%; for Silver policies, 30%; for Gold policies, 20% (this used to be the standard for co-insurance for every policy I purchased for myself and my employees); and for Platinum plans, 10%.
So, I randomly clicked on one of the Silver policies to get the details. As we all know, the devil is in the details – but, unfortunately, the only detail was the monthly premium cost and no specifics as to what was covered, what was not, how much of a deductible applied to this policy and what, if any, was the maximum out-of-pocket cost to the insured in the event of a serious medical condition. In other words, it was impossible to make any sort of intelligent decision as to whether this (or any of the other policies listed) was appropriate.
In my business, I handled all the benefits for my employees – so I believe it is fair to say that if I am having difficulties navigating this system, the less conversant consumer is going to have a more difficult and frustrating time. And while we might realistically expect some improvement over time, there is one underlying factor that will determine the success or failure of this Obamanation of a law. That is whether younger people will actually sign up for this at overly-inflated rates in order to subsidize the undersized premiums being charged to those who are older or who have significant health problems. I predict that if it means giving up their Starbucks lattés, we shouldn’t expect to see a massive influx of young eager people looking for health insurance.
Perhaps you’ve had some experience reading the rules and regulations issued by the IRS to “assist” us in preparing our individual tax returns. Oh, wait – they’re the ones who are involved in writing the regulations that pertain to Obamanationcare. So the following regulation which determines whether someone is entitled to receive a “subsidy” should feel very familiar to you:
42 CFR–PART 435
View Printed Federal Register page 77 FR 17206 in PDF format.
Amendment(s) published March 23, 2012, in 77 FR 17206
Effective Dates: January 1, 2014
22. Section 435.603 is added to read as follows:
§ 435.603 Application of modified adjusted gross income (MAGI).
(a) Basis, scope, and implementation. (1) This section implements section 1902(e)(14) of the Act.
(2) Effective January 1, 2014, the agency must apply the financial methodologies set forth in this section in determining the financial eligibility of all individuals for Medicaid, except for individuals identified in paragraph (j) of this section and as provided in paragraph (a)(3) of this section.
(3) In the case of determining ongoing eligibility for beneficiaries determined eligible for Medicaid coverage to begin on or before December 31, 2013, application of the financial methodologies set forth in this section will not be applied until March 31, 2014 or the next regularly-scheduled renewal of eligibility for such individual under § 435.916 of this part, whichever is later.
(b) Definitions. For purposes of this section—
Code means the Internal Revenue Code.
Family size means the number of persons counted as members of an individual’s household. In the case of determining the family size of a pregnant woman, the pregnant woman is counted as herself plus the number of children she is expected to deliver. In the case of determining the family size of other individuals who have a pregnant woman in their household, the pregnant woman is counted, at State option, as either 1 or 2 person(s) or as herself plus the number of children she is expected to deliver.
Tax dependent has the meaning provided in § 435.4 of this part.
(c) Basic rule. Except as specified in paragraph (i) and (j) of this section, the agency must determine financial eligibility for Medicaid based on “household income” as defined in paragraph (d) of this section.
(d) Household income —(1) General rule. Except as provided in paragraphs (d)(2) and (d)(3) of this section, household income is the sum of the MAGI-based income, as defined in paragraph (e) of this section, of every individual included in the individual’s household, minus an amount equivalent to 5 percentage points of the Federal poverty level for the applicable family size.
(2) Income of children and tax dependents. (i) The MAGI-based income of an individual who is included in the household of his or her natural, adopted or step parent and is not expected to be required to file a tax return under section 6012(a)(1) of the Code for the taxable year in which eligibility for Medicaid is being determined, is not included in household income whether or not the individual files a tax return.
(ii) The MAGI-based income of a tax dependent described in paragraph (f)(2)(i) of this section who is not expected to be required to file a tax return under section 6012(a)(1) of the Code for the taxable year in which eligibility for Medicaid is being determined is not included in the household income of the taxpayer whether or not such tax dependent files a tax return.
(3) In the case of individuals described in paragraph (f)(2)(i) of this section, household income may, at State option, also include actually available cash support, exceeding nominal amounts, provided by the person claiming such individual as a tax dependent.
(e) MAGI-based income. For the purposes of this section, MAGI-based income means income calculated using the same financial methodologies used to determine modified adjusted gross income as defined in section 36B(d)(2)(B) of the Code, with the following exceptions—
(1) An amount received as a lump sum is counted as income only in the month received.
(2) Scholarships, awards, or fellowship grants used for education purposes and not for living expenses are excluded from income.
(3) American Indian/Alaska Native exceptions. The following are excluded from income:
(i) Distributions from Alaska Native Corporations and Settlement Trusts;
(ii) Distributions from any property held in trust, subject to Federal restrictions, located within the most recent boundaries of a prior Federal reservation, or otherwise under the supervision of the Secretary of the Interior;
(iii) Distributions and payments from rents, leases, rights of way, royalties, usage rights, or natural resource extraction and harvest from—
(A) Rights of ownership or possession in any lands described in paragraph (e)(3)(ii) of this section; or
(B) Federally protected rights regarding off-reservation hunting, fishing, gathering, or usage of natural resources;
(iv) Distributions resulting from real property ownership interests related to natural resources and improvements—
(A) Located on or near a reservation or within the most recent boundaries of a prior Federal reservation; or
(B) Resulting from the exercise of federally-protected rights relating to such real property ownership interests;
(v) Payments resulting from ownership interests in or usage rights to items that have unique religious, spiritual, traditional, or cultural significance or rights that support subsistence or a traditional lifestyle according to applicable Tribal Law or custom;
(vi) Student financial assistance provided under the Bureau of Indian Affairs education programs.
(f) Household —(1) Basic rule for taxpayers not claimed as a tax dependent. In the case of an individual who expects to file a tax return for the taxable year in which an initial determination or renewal of eligibility is being made, and who does not expect to be claimed as a tax dependent by another taxpayer, the household consists of the taxpayer and, subject to paragraph (f)(5) of this section, all persons whom such individual expects to claim as a tax dependent.
(2) Basic rule for individuals claimed as a tax dependent. In the case of an individual who expects to be claimed as a tax dependent by another taxpayer for the taxable year in which an initial determination or renewal of eligibility is being made, the household is the household of the taxpayer claiming such individual as a tax dependent, except that the household must be determined in accordance with paragraph (f)(3) of this section in the case of—
(i) Individuals other than a spouse or a biological, adopted, or step child who expect to be claimed as a tax dependent by another taxpayer;
(ii) Individuals under the age specified by the State under paragraph (f)(3)(iv) of this section who expect to be claimed by one parent as a tax dependent and are living with both parents but whose parents do not expect to file a joint tax return; and
(iii) Individuals under the age specified by the State under paragraph (f)(3)(iv) of this section who expect to be claimed as a tax dependent by a non-custodial parent. For purposes of this section—
(A) A court order or binding separation, divorce, or custody agreement establishing physical custody controls; or
(B) If there is no such order or agreement or in the event of a shared custody agreement, the custodial parent is the parent with whom the child spends most nights.
(3) Rules for individuals who neither file a tax return nor are claimed as a tax dependent. In the case of individuals who do not expect to file a Federal tax return and do not expect to be claimed as a tax dependent for the taxable year in which an initial determination or renewal of eligibility is being made, or who are described in paragraph (f)(2)(i), (f)(2)(ii), or (f)(2)(iii) of this section, the household consists of the individual and, if living with the individual—
(i) The individual’s spouse;
(ii) The individual’s natural, adopted and step children under the age specified in paragraph (f)(3)(iv) of this section; and
(iii) In the case of individuals under the age specified in paragraph (f)(3)(iv) of this section, the individual’s natural, adopted and step parents and natural, adoptive and step siblings under the age specified in paragraph (f)(3)(iv) of this section.
(iv) The age specified in this paragraph is either of the following, as elected by the agency in the State plan—
(A) Age 19; or
(B) Age 19 or, in the case of full-time students, age 21.
(4) Married couples. In the case of a married couple living together, each spouse will be included in the household of the other spouse, regardless of whether they expect to file a joint tax return under section 6013 of the Code or whether one spouse expects to be claimed as a tax dependent by the other spouse.
(5) For purposes of paragraph (f)(1) of this section, if, consistent with the procedures adopted by the State in accordance with § 435.956(f) of this part, a taxpayer cannot reasonably establish that another individual is a tax dependent of the taxpayer for the tax year in which Medicaid is sought, the inclusion of such individual in the household of the taxpayer is determined in accordance with paragraph (f)(3) of this section.
(g) No resource test or income disregards. In the case of individuals whose financial eligibility for Medicaid is determined in accordance with this section, the agency must not—
(1) Apply any assets or resources test; or
(2) Apply any income or expense disregards under sections 1902(r)(2) or 1931(b)(2)(C), or otherwise under title XIX of the Act, except as provided in paragraph (d)(1) of this section.
(h) Budget period —(1) Applicants and new enrollees. Financial eligibility for Medicaid for applicants, and other individuals not receiving Medicaid benefits at the point at which eligibility for Medicaid is being determined, must be based on current monthly household income and family size.
(2) Current beneficiaries. For individuals who have been determined financially-eligible for Medicaid using the MAGI-based methods set forth in this section, a State may elect in its State plan to base financial eligibility either on current monthly household income and family size or income based on projected annual household income and family size for the remainder of the current calendar year.
(3) In determining current monthly or projected annual household income and family size under paragraphs (h)(1) or (h)(2) of this section, the agency may adopt a reasonable method to include a prorated portion of reasonably predictable future income, to account for a reasonably predictable increase or decrease in future income, or both, as evidenced by a signed contract for employment, a clear history of predictable fluctuations in income, or other clear indicia of such future changes in income. Such future increase or decrease in income or family size must be verified in the same manner as other income and eligibility factors, in accordance with the income and eligibility verification requirements at § 435.940 through § 435.965, including by self-attestation if reasonably compatible with other electronic data obtained by the agency in accordance with such sections.
(i) If the household income of an individual determined in accordance with this section results in financial ineligibility for Medicaid and the household income of such individual determined in accordance with 26 CFR 1.36B-1(e) is below 100 percent FPL, Medicaid financial eligibility will be determined in accordance with 26 CFR 1.36B-1(e).
(j) Eligibility Groups for which MAGI-based methods do not apply. The financial methodologies described in this section are not applied in determining the Medicaid eligibility of individuals described in this paragraph. The agency must use the financial methods described in § 435.601 and § 435.602 of this subpart.
(1) Individuals whose eligibility for Medicaid does not require a determination of income by the agency, including, but not limited to, individuals receiving Supplemental Security Income (SSI) eligible for Medicaid under § 435.120 of this part, individuals deemed to be receiving SSI and eligible for Medicaid under § 435.135, § 435.137 or § 435.138 of this part and individuals for whom the State relies on a finding of income made by an Express Lane agency, in accordance with section 1902(e)(13) of the Act.
(2) Individuals who are age 65 or older when age is a condition of eligibility.
(3) Individuals whose eligibility is being determined on the basis of being blind or disabled, or on the basis of being treated as being blind or disabled, including, but not limited to, individuals eligible under § 435.121, § 435.232 or § 435.234 of this part or under section 1902(e)(3) of the Act, but only for the purpose of determining eligibility on such basis.
(4) Individuals who request coverage for long-term services and supports for the purpose of being evaluated for an eligibility group under which long-term services and supports are covered. “Long-term services and supports” include nursing facility services, a level of care in any institution equivalent to nursing facility services; home and community-based services furnished under a waiver or State plan under sections 1915 or 1115 of the Act; home health services as described in sections 1905(a)(7) of the Act and personal care services described in sections 1905(a)(24) of the Act.
(5) Individuals who are being evaluated for eligibility for Medicare cost sharing assistance under section 1902(a)(10)(E) of the Act, but only for purposes of determining eligibility for such assistance.
(6) Individuals who are being evaluated for coverage as medically needy under subparts D and I of this part, but only for the purpose of determining eligibility on such basis.
You’ve got to say one thing about the IRS – they’re never at a loss for words. But if anyone reading this post can explain in simple English what that regulation actually means, I look forward to your elucidating me. Sadly, I don’t have an advanced degree in Governmentalese. Perhaps that’s something I should add to my “to do” list.
Oh, one last thought. One of the “waivers” that Obama has “granted” is that the IRS will not need to verify the income that an Obamanationcare insured puts on his/her application in order to obtain a “subsidy.” So this entire regulation, probably written by multiple IRS employees over multiple hours is moot.
Perhaps a government shutdown isn’t such a bad thing after all.