Storm & Security

PROTECT/YOURSELF | by Don Leggett | The New Era of Health Care Plan now for big changes beginning in 2014. The votes are all counted and The Affordable Care Act, which includes health care for every American, will begin to have major affects in 2014. Health care for all Americans is not a new idea. President Truman originally had it as one of his presidential goals in the 1950s, but it was deemed politically unacceptable and potentially harmful to the American economy. Seventy years later, national health care has been approved and although the plan will undoubtedly cost U.S. jobs, the revenue generated by implementing the law is projected to reduce the national debt by $180 billion. Debt reduction occurs because the U.S. Supreme Court ruled the government can���t issue penalties but does have the power to tax, and so individuals who do not have health care are no longer going to be penalized ��� they are going to be taxed. The Congressional budget office is projecting six million Americans will be paying new health care related taxes when the plan becomes fully operational in 2016. While the national health care plan will present many challenges to American businesses as they try to stay competitive in the world market, there are two sectors of the economy���who happened to vote heavily in favor of the Democratic Party in the last two elections���that will not be affected by it. They are persons under the age of 26 who will be allowed to continue on their parents��� policies, and persons who pay no federal income tax. These two sectors will not be required to purchase the mandatory��benefits or be penalized for failing to purchase those benefits, and are not part of the six million persons who will face the new tax. Several strategies will provide advantages for American businesses to flourish in this new era. They are centered on pre-hiring activities and sustaining healthy programs for your employees. But before we get to these strategies, here are the general provisions for penalties and health choices available to all Americans and businesses that will affect your bottom line beginning in 2014. Individuals: ��� Applicable individuals must ensure minimum essential coverage for self and any dependents each month beginning 1/1/2014 ��� Failure to maintain coverage results in a monthly tax calculated as 1/12 of the greater of: 2014: $95 per uninsured individual or 1 percent of household income over IRS filing threshold 2015: $325 per uninsured individual or 2 percent of 22 STORM & SECURITY PROTECTION / IBS PREVIEW 2013 household income over IRS filing threshold 2016: $695 per uninsured individual or 2.5 percent of household income over IRS filing threshold ��� Tax is cut in half for individuals under 18 ��� Tax amount capped at 300 percent of per adult amount or the national average premium for Bronze level coverage through the Exchange Health Care Exchanges: State or national exchanges will offer up to four plans: Bronze, Silver, Gold and Platinum. The current outline for the state or national health care exchanges has all the plans offering the same level of coverage; the differences in plans will be the portion of the care covered by an individual and the price. For a Bronze plan, the insurance would cover 60 percent of all health care costs for an average person. The Silver plan will pay 70 percent of the health care cost, the Gold will pay 80 percent, and the Platinum plan will pay 90 percent. With any plan selected, the individual will pay the percentage of health care coverage that the selected plan does not. Thus, someone selecting the Platinum plan will receive 90 percent coverage and will be responsible for 10 percent. In theory, the Platinum plan will be the most expensive and be proportionately priced with the other plans. What the government doesn���t seem to understand is that the person who expects to use the most amount of services will choose the highest level of benefits causing the rates for the highest coverage plans to grow at a faster rate than the lowest level of benefits. This function of utilization is known as adverse selection. An example is when a person knows that he or she will need treatment, he will choose the plan that presents the least level of economic participation on his part because the individual would rather pay a higher premium than a higher percentage of an expensive medical course of treatment. So, every year the high level plans will have higher utilization of expensive care forcing the premiums in the exchanges to increase in order to maintain the solvency of the medical program, or taxes outside the program will increase to subsidize the cost of treatment in higher level plans. If the government subsidizes the price, even more patients who need care will join the higher levels further increasing the pressure on the pricing mechanism. Increasing the pricing spiral, the government is formalizing a program that will allow young persons under 30 years to take a catastrophic plan. If implemented, the healthiest portion of our

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