Friday, October 11, 2013

Lies, Damn Lies and WTFs

My friend Becca reposted the following frightening note on her Facebook page and asked me to respond.  Becca is a really good project manager, which means her job is to get other people to do work, so here goes.  :)

The horror story is this:

From a friend, PAY CLOSE ATTENTION...posted on the Obamacare website today "I actually made it through this morning at 8:00 A.M. I have a preexisting condition(Type 1 Diabetes) and my income base was 45K-55K annually I chose tier 2 "Silver Plan" and my monthly premiums came out to $597.00 with $13,988 yearly deductible!!! There is NO POSSIBLE way that I can afford this so I "opt-out" and chose to continue along with no insurance. I received an email tonight at 5:00 P.M. informing me that my fine would be $4,037 and could be attached to my yearly income tax return. Then you make it to the "REPERCUSSIONS PORTION" for "non-payment" of yearly fine. First, your drivers license will be suspended until paid, and if you go 24 consecutive months with "Non-Payment" and you happen to be a home owner, you will have a federal tax lien placed on your home. You can agree to give your bank information so that they can easy "Automatically withdraw" your "penalties" weekly, bi-weekly or monthly! This by no means is "Free" or even "Affordable.

Wow, that would be horrible...  if it were remotely true.  But without even resorting to, let's take a look at this.

Let's start with the IRS-will-do-horrible-things-to-you email.  The reality is that fines for not purchasing insurance max at $95 per person or 1% of family income (whichever is greater) in 2014.  Income is defined as the amount OVER the filing threshold ($10K) so the max fine for this mythical person would be $400 (assuming the middle of the income range they stated), not $4000.  And the fact is that the IRS has very little leverage to collect those fines.  Your driver's license will not be suspended (that doesn't even make sense as they're issued by states, not the Fed), your wages will not be garnished, your home will not be taken away - NONE of that can happen.  The only things the IRS can do is withhold the fine from your tax refund IF you get a refund and the note is correct that they can put a lien on your home (doesn't mean they can take your house, just means you have to pay the fines if/when you sell).  So, part bullshit and part scary-sounding stuff.  More details here.

So what about the cost of the insurance itself?  Certainly sounds like a damn high monthly premium for crap insurance (Silver is the next lowest of the four tiers of ACA-approved coverage).  But the best I can tell, the highest monthly premium for a single person is $342 (happens to be in Wyoming) so roughly half what this mythical person states.  See here.  And the worst deductible I could find for the Silver plan was $3000, not $14,000.  See here.  $3000 is still pretty high but the idea of the lower-cost plans is to keep a major injury or illness from bankrupting you or your family.  And they still cover doctor visits with $40-$60 copays - high compared to my company-provided coverage but better than paying the full cost of an office visit.  Again, assuming this mythical person has no kids or dependents, they're likely just about at the threshold for receiving any subsidies, but I'm not positive about that as some of their income may be exempt from those calculations - it's possible they'd receive some help in paying their premiums.

The oddest thing about this though is the note about a pre-existing condition.  Without the ACA, this mythical person would likely be unable to purchase insurance at any price or at best case they might find something that cost them more than the $600 month/$14K deductible they're complaining about.  So a real person in this situation would likely be quite happy with the opportunity to purchase health insurance that the ACA affords.

I'm not an expert in the ACA since I do have company-provided coverage, so you guys feel free to correct anything I've gotten wrong here.  Or check Snopes for me - I'm too lazy.  :-D

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