Punctuation Counts

Are you the type that pays attention to punctuation? How about an asterisk that directs you to a footnote.

If you just ignore them, you should consider changing.

Here's a wake up call about your Social Security statement.

At first glance, the statement did not appear menacing. I was told I could expect to receive a benefit of “about $2,136 a month” upon reaching age 70 — which certainly seems like good news. But immediately I thought of a parallel of President Obama’s infamous Obamacare promise: “If you like your Social Security, you can keep your Social Security.” - National Review

Get ready for the asterisk.

The law governing benefit amounts may change because, by 2033, the payroll taxes collected will be enough to pay only about 77 percent of scheduled benefits.

That's 18 years away. So what? They can just increase FICA taxes on the working class, right? That's only a 30% increase.

Yes, but they can also do this.

I could not believe I was seeing the equivalent of what I was just thinking, but with a new twist, “If I like my Social Security, I can keep 77 percent of it.”

Yeah, that's going to hurt a bit.

About that promise

So I'm currently going through a batch of renewals for clients with Grandmothered individual medical plans. Briefly, these are older plans that are exempt from some (but not all) SCOTUScare requirements. In general, they have much lower out-of-pocket maximums and (for co-pay plans) unlimited co-pays for doctor's visits and the like.

The downside is that, although these can (currently) be renewed, they can't be changed in any substantive way (such as increasing the deductible to lower the premium). This creates a challenge: my clients want to keep plans that are becoming increasingly less affordable.

So, no problem, we'll just shop around for a new plan with a different carrier; in the past, this was nearly guaranteed to save dollars. The problem is that the reason that this strategy worked is no longer operative.

Allow me to explain:

Pre-ACA, as years went by, the initial underwriting went "stale;" that is, insureds aged, had claims, developed health problems (or not). Information that was true when the policy began was no longer operative. Applying for a new plan meant the underwriter for the new policy got new, current information, and could then make an informed decision. Healthy folks benefited from this because they could then get new plans with lower rates (in general).

This is no longer operative - can you guess why?

Exactly: ObamaPlans are Guaranteed Issue, so there is no underwriting, and hence no way to effectively assess the risk. So, no new underwriting means no new savings.

A couple examples:

Client 1's plan was written when both he and his wife smoked; she's subsequently quit, but neglected to let me know. That's a shame, because we could have asked the company to adjust her to non-smoker rates (yeah, there's some paperwork, but it's minimal). Their HSA-compliant plan has a $6,000 maximum family out-of-pocket, and their renewal rate is $900. They're not subsidy-eligible, so have the privilege of paying full freight for their plan.

Shopping should be easy: after all, I can plug her in as a non-smoker [ed: yes, I know, industry lingo is now "non-tobacco." Get off my lawn]. Turns out, not so much:

Company A's comparable plan, with a $12,800 family max (more than twice their current plan) is $938, and that's with the wife unit as non-smoker.

Company H's is $914, again as non-smoker.

Company H does offer a plan with "only" $7,300 family max, but it's over $1,000 a month. Some bargain.

Needless to say, Client 1 got me the non-smoker paperwork tout suite.

Client 2 is subsidy eligible, but that may not help him much; he has a slightly different problem. His grandmothered co-pay plan has a maximum $10,000 family out-of-pocket, and unlimited co-pays for doc visits. His renewal rate just broke the $1,000 barrier ($1110, to be precise). Thing is, even with the subsidy, he's only able to lower the premium by about $100 or so per month.

But Henry, that's $1,200 a year savings - what's not to love?

Well, his new plan would be effective September 1. His family's already met a good portion of their 2015 deductible, which would then reset to zero under the new plan in September, and then again in January. So they'd have three deductibles in 12 months.

Still sound like a good deal?

Yeah, didn't think so.

Gee, SCOTUScare's been such a boon for working folks, no?

Don't Believe Everything

Just because you saw it on the internet, does not mean it's true. - A. Lincoln

Headline reads, "Obamacare rates only going up 4%".

However .............

While average premiums will rise only 4 percent statewide, rates will climb as high as 12.8 percent in Santa Cruz County, 7 percent in Santa Clara County and more than 6 percent in Alameda and San Mateo counties, exchange officials revealed. - Washington Times

Even then, it could be worse.

But he acknowledged that Northern California would be harder hit in 2016. So did others.
“Particularly in the Bay Area and Sacramento there is a lack of choice among providers, putting the health plans in a difficult place in terms of getting a good price,” 

Guess we will wait until October to learn the truth.

LTCi in 1,000 words

Interesting Long Term Care insurance infographic (although they missed one in the "Care Giver Troubles" category: loss of Social Security and other retirement plan buildup, payout):

[Click image to embiggen]

[Hat Tip: FoIB Allison Bell]