Health Insurance and Tax Breaks: New Rules for the Self-Employed

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If you, your spouse or an adult child is self-employed, no doubt you already know just how expensive insurance is in the individual market.  Moreover, you know how difficult is to find comprehensive coverage when you’re buying your own insurance.  For example, most policies don’t cover pre-natal care, or child-birth– a huge problem for young women.

But under the Affordable Care Act everything changes. Beginning in January, you will be able to purchase a policy in your state’s Exchange—a one-stop marketplace where you can shop for plans. They will be easy to compare because all policies sold in the Exchanges must cover “10 essential benefits”  including pre-natal care, maternity, dental and vision care for children, rehab and mental health care.  There will be no no co-pays for preventive care and the deductible does not apply.No matter how much care you or your family need, there will be a cap on your out-of-pocket expenses of roughly $6,000 for a single individual or $12,000 for a family. (These rules apply to anyone buying their own insurance in the Individual Exchange, whether they are self-employed, unemployed, or work for an employer who doesn’t offer affordable, comprehensive health benefits.)

                                 Lower Premiums, Subsidies

In the Exchange, you will automatically become part of a large group, and as a result, premiums will be lower than the premiums you would papy today for similar coverage.

 Moreover, depending on your income, you may be eligible for a subsidy. For example, a 30-year-old couple with joint income of $45,000 would receive a subsidy of roughly $2700 and wind up paying $4,000 a year for comprehensive coverage that includes free preventive care. (This is a national average)  

 What You May Not Know about Health Insurance and Tax Deductions

You probably are aware that if you are self-employed and buy your own medical, dental or long-term care insurance, you can deduct premiums for an individual or a family plan on your income tax.

But did you know that if:  

You Have Children under 27, you also can deduct premiums you pay for  them–even if they are no longer your dependents?  

 You or  Your Spouse Receive Medicare, the IRS has now ruled that you can deduct Medicare premiums for Parts A, B, C and D?  This is in addition to the deduction for insurance that you or your spouse buy in an  Exchange.

                              How Much Can You Deduct?

To must calculate your allowable health insurance deduction, take your self-employment income, and subtract the 50% deduction for self-employment taxes. Then subtract any retirement contributions made to SEP-IRA, SIMPLE-IRA, or Keogh plan. The remainder is how much you can deduct for health insurance expenses.

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Health Wonk Review: Oncologists Tell the Truth about Cancer Drugs; Will There Be Enough Plans to Choose From in the Exchanges? What Does Oregon’s Research on Medicaid Tell Us? And More . . .

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The newest edition of Health Wonk Review  is up on Managed Care Matters.

There, host Joe Paduda calls attention to an eye-opening post by The Health Business Group’s David E. Williams. 

Williams reports on what oncologists say about cancer drugs in “The Price of Drugs for Chronic Myeloid Leukemia (CML); A Reflection of the Unsustainable Prices of Cancer Drug.” The article, which was published in the journal, blood, includes candid comments from more than 100 experts  They tell us  that:.

  • Many costly treatments aren’t worth the money
  • New treatments with tiny orno benefits often cost a multiple of existing therapies
  • Despite their reputation for penny-pinching, health plans are often not aggressive in negotiating price
  • Patients are already suffering mightily from high costs –and it impacts quality of life and survival as well as financial health
  • Society as a whole cannot afford to pay the high prices charged for so many of the new therapies

 (I’m reminded of “A Very Open Letter from an Oncologist published on HealthBeat in 2009.)  It’s encouraging to see more oncologist stepping forward to telll the truth about cancer drugs..)

.As Williams observes these insights “come from people who know what they’re talking about and who have traditionally been sympathetic to drug makers and unperturbed about costs.”  

But now, the companies that make these drugs have taken greed too far.

 Paduda also highlights Health Affairs just-released research indicating that the decline in inflation could result in a reduction of $770 billion (yup, that’s “billion” with a B) in public program health care costs over ten years. “

But is the trend sustainable? John Holahan and Stacy McMorrow of the Urban Institute are “cautiously optimistic.” Paduda agrees: “there’s no question there are fundamental changes occurring that are affecting care delivery, pricing, and reimbursement.”

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The Independent Payment Advisory Board and Medicare Spending: New Research Suggests a Change in Our Medical Culture

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Launch of the ACA’s controversial Independent Advisory Board– a  panel charged with  recommending ways to curb Medicare inflation — has been delayed until 2016. Does this means that the IPAB’s critics have won?

No. IPAB was, from the beginning, only meant to serve as a backstop. The law says that the board will be asked to recommend places where we could pare Medicare spending if—and only if—Medicare inflation begins to outstrip inflation in the rest of the consumer economy.

But over the past three years Medicare spending has decelerated; it is no longer growing faster than the economy as a whole. This is why Medicare’s chief actuary has decided to put IPAB on hold.

Some observers argue that as the economy recovers from the Great Recession, the nation’s health care bill is bound to climb. I disagree. Particularly in the case of Medicare, I don’t think that the economic downturn explains most of the slowdown. 

 I believe that reform is already having  an effect on health care inflation:  Four years of debate over the Affordable Care Act has made us more aware of the waste in our health care system. Patients are asking more questions, and providers know that they are going to be held accountable for that waste.

                                 We Still Need IPAB as a Backstop

That said, in the future, spending could pick up–and we may need IPAB. This is why President Obama has made it clear that he will veto any attempt to eliminate the Board.

It is important to know that IPAB exists, as a reminder to drug companies, device makers, nursing homes and others that, one way or another, we can no longer afford a system that is wasting $1 out of $3 of our health care dollars on over-priced, unnecessary tests and treatments that, too often, put patients at risk without benefits.

If, and when, IPAB is asked to recommend cuts it will use medical evidence to decide where to trim. IPAB is likely to recommend lower payments for certain services and products that medical research tells us are now “overvalued”–based, not on cost-benefit analysis, but on patient outcomes. If patients who fit a particular medical profile are not helped, Medicare should not cover the treatment for those patients.

As I have explained in the past, IPAB is not the panel of bean counting bureaucrats that Obamacare’s opponents suggest.  IPAB will not “ration” care; it is charged with making care more rational by letting Science–rather than lobbyists– decide what Medicare should cover.  Moreover, Congress can veto IPAB’s recommendations, if legislators can agree on  ways to achieve equal savings– without rationing care, or shifting costs to seniors.

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PSA Testing: An About-Face

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If you thought U.S. doctors would never accept evidence-based medicine, consider this: Just last week, in a stunning about-face, the American Urological Association(AUA) announced that it no longer recommends routine annual PSA testing for men under 55.   

The organization added that “men ages 55 to 69 who are considering the PSA test” for prostate cancer “should consult their doctors about the test’s benefits and risks.”

The potential “benefit of preventing prostate cancer mortality in 1 man for every 1,000 men screened over a decade” should be weighed  “against the known potential harms associated with screening and treatment [which include side effects such as incontinence and impotence }  For this reason, “ shared decision-making is recommended for men age 55 to 69 years that are considering PSA screening,”  The AUA stressed that “ patients’ values and preferences” should direct a final decision.

.In addition,  the AUA announced that “to reduce the harms of screening, a routine screening interval of two years or more may be preferred over annual screening in those men who have participated in shared decision-making and decided on screening.

I wrote about “shared decison-making” and how it could help patients considering a PSA test make an informed choice  here on HealthBeat back in 2007.(Readers interested in why this protocol is so important to patient-centered medicine may be interested in this story that I wrote for Dartmouth Medicine: “Making Choice An Option.” )  Congratuations to the AUA for having the courage to take this giant step forward into the future of medicine.

“The new guideline is significantly different than previous guidance,” the organization acknowledged, noting that it “was developed using evidence from a systematic literature review rather than consensus opinion.” In other words, urologists didn’t take a vote; they looked at the Science.

Authors of the new guidelines have “learned very quickly that there really was no high-level evidence supporting the use of screening with PSA,” said urologist H. Ballentine Carter, who chaired the panel that wrote the new guidelines.”                         

When I last wrote about PSA testing, in July of 2012, such a radical shift in the AUAs positions would have been unthinkable.  At the time, the U.S. Preventive Services Task Force (USPSTF) had given PSA testing a grade of “D”—suggesting that benefits did not outweigh risks. 

 In response, urologists joined forces with Republicans to threaten the autonomy of the USPSTF by supporting  a House bill (H.R. 5998)  that proposed to mandate “greater role for specialists and advocacy groups” in developing guidelines”  while ”eliminating the Department of Health and Human Services’ secretarial discretion to withhold Medicare funding for interventions that lack convincing evidence for benefit.”      

What a difference a year makes.

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The Affordable Care Act and the Smokers’ Penalty

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Under the ACA smokers  buying insurance in the Exchanges will have to pay a 50% “Premium Surcharge.” For a 55-year-old smoker, the penalty could reach nearly $4,250 a year. http://news.yahoo.com/penalty-could-keep-smokers-health-overhaul-205840155.html Does this mean that Americans who smoke won’t be able to afford coverage?

No. In the end, most smokers should be able to get health insurance without paying a stiff penalty.

For one, it’s up to individual states as to whether they want to let insurers charge smokers more. By early April of 2013, Rhode Island, Vermont, Massachusetts and D.C. had voted to eliminate smoking premiums in their health care exchanges:  The American Cancer Society, which is opposed to the surcharge, is working to persuade other states to ban it. (The ACS explains: “We’re anti-smoking, not anti-smoker.”)

I agree with the ACS that the penalty is counter-productive.  If it makes insurance unaffordable for some smokers, this means that they won’t have access to smoking cessation programs, nicotine patches and other drugs that could help them quit.  Keep in mind that most smokers want to quit, and these programs have proved extremely successful.

The good news is that many Americans who are addicted to nicotine will be eligible for Medicaid. In the U.S. 39 percent of adult smokers live below the poverty level. . Many more live below 133 percent of the poverty level. As states expand Medicaid, they, too, will become eligible for the program. Since Medicaid charges no premiums, they will not pay a premium surcharge.

Meanwhile, new research by the George Washington University School of Public Health and Health Services indicates that including comprehensive tobacco cessation benefits in Medicaid insurance coverage can result in substantial savings for Medicaid. The study found that every dollar spent on tobacco cessation program costs resulted in an average program savings of $3.12, which represents a $2.12 return on investment. 

Under the Affordable Care Act all state Medicaid programs are required to cover tobacco cessation medications, beginning in 2014.

Finally smokers who receive health benefits from their employer are likely to find that they don’t have to pay the premium if they join a smoking cessation program.

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Breast Cancer “Awareness”: Marketing Fear — Part 1

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 Peggy Orenstein is a brave woman. A breast cancer survivor, she has faced up to the fact that perhaps, if she hadn’t had a mammogram that revealed a tiny tumor when she was 35, it might have vanished on its own. She would not have known that it existed—and would not have undergone a lumpectomy plus six weeks of radiation.  Nor would she have suffered the emotional consequences of being told, at age 35, that she had breast cancer.

At that age few of us are ready to come face-to-face with our own mortality.  In last Sunday’s New York Times Magazine, she writes: “Recalling the fear, confusion anger and grief of that time is still painful.”

But sixteen years after her diagnosis we have learned more about breast cancer, and Orenstein is willing to look the truth in the eye:  “As study after study revealed the limits of screening — and the dangers of overtreatment — a thought niggled at my consciousness. How much had my mammogram really mattered? Would the outcome have been the same had I bumped into the cancer on my own years later?”

Regret is a tough one. After making a major decision that has life-changing consequences, few of us want to consider that we might have made the wrong call.  Instead, most women in Orenstein’s position say: “I’m so glad I had that mammogram. It saved my life!”

 Orenstein herself confesses, “that is what I used to say. I even wrote that in the pages of this magazine.

But if she hadn’t had the mammogram, and the cancer wasn’t discovered until she felt a lump, wouldn’t it have spread? Wouldn’t she be dead?

No. As Orenstein point out, “Breast cancer in your breast doesn’t kill you; the disease becomes deadly when it metastasizes, spreading to other organs or the bones.  Early detection is based on the theory, dating back to the late 19th century that the disease progresses consistently, beginning with a single rogue cell, growing sequentially and at some invariable point making a lethal leap.”

But science has advanced since the late 19th century, and we now know that just isn’t true. Sometimes breast cancer invades other parts of the body. Sometimes it doesn’t. The problem is that mammograms can’t tell us which cancers will spread.

                                  The Likelihood Of Over-Treatment               

What many women don’t realize is how commonplace the harmless cancers are. When someone is told she has breast cancer, she is likely to imagine a large, ugly lump, buried somewhere in her breast. Yet as Dr. David H. Gorski,  a surgical oncologist at the Barbara Ann Karmanos Cancer Institute who specializes in breast cancer explains: today approximately 30% to 40% of breast cancer diagnosis”  are examples of “ductal carcinoma in situ (DCI)”—cancers that begin in the milk ducts and “stay in place” (in situ). If they don’t spread, they are not life-threatening.  Some researchers call DCIs “Stage Zero” cancer. 

A recent study found that DCIS incidence rose from 1.87 per 100,000 in the mid-1970s to 32.5 in 2004,” he adds. “That’s a more than 16-fold increase over 30 years, and it’s pretty much all due to the introduction of mammographic screening.” (Mammograms are especially good at spotting DCIs. Unfortunately, they are not as good at finding the very aggressive cancers that are most likely to kill us.) )

“When it comes to DCIS, we don’t have a good handle on what percentage of DCIS will progress to invasive cancer, but we do know that a significant percentage will not.” For that reason, some argue that we should not tell patients that DCIS are “pre-cancerous.”  Labeling them “Stage Zero” would be more accurate.

Nevertheless, precisely because we don’t know, “oncologists tend to treat them all the same,” says Gorski.  “In other words, over diagnosis leads to overtreatment.”

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Navigators: The Folks Who Will Help You Surf the New Insurance Exchanges

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Over at Healthinsurance.org, I’ve addressed some “frequently asked questions” about the “navigators” who will help individuals and small business find the coverage they want in the new Exchanges. 

– Who Will Become Navigators?

–  Can Insurance Agents and Brokers Apply to Be Navigators? (Wouldn’t that create a conflict of interest?)

–  Just How Will Navigators Help People Sort Out Their Options in the Exchanges?

–  How Much Training Will They Receive?

–Finally, many people worry that the “navigators” just won’t be able to handle the heavy traffic. Giving the American public the information it will need about Obamacare is an enormous task. Will these navigators be up to it?

The answer to that last question is that the navigators will have help.  Patient advocacy groups, the states, and county health agencies will pitch in.  The federal government  also is launching a marketing program, “Enroll America” that will urge mothers to nag their uninsured 20-something and 30-something sons. (Seriously– and I expect that in many cases, this will be effective.)

Meanwhile insurers will be eager to draw young, healthy customers into the Exchanges. This means that they will invest in marketing campaigns designed to let 20-somethings and 30-somethings know that the vast majority will be eligible for generous government subsidies.

Just one example: Blue Cross and Blue Shield of Illinois already has launched a “Be Covered Illinois” campaign. The campaign is being funded by the insurer, and carried out by various community groups:  

Keep in mind that if insurers mislead customers about their offerings, those customers will have an opportunity to pick a different plan a year later. And under the ACA, they will have “navigators” to help them make a better choice.

Insurers know this. They  also are well aware  that under the new ACA rules that regulate them, a health insurance company will have to draw—and keep—a large share of the market’s customers in order to survive financially. For that reason, I suspect that savvy insurers will make a major effort to provide information about specific plans that will attract customers who will want to stick with those plans.

For my answers to the first four questions above, go to Health Insurance.org, click on the question and the answer will pop up.

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Obamacare’s Opponents Spread Doubt and Confusion About Small Business Exchanges

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In the past, I have reported on misinformation about healthcare reform going viral. It has happened again, and this time, reform’s critics have outdone themselves.

In March, the Obama administration proposed revising the rules governing insurance marketplaces or “exchanges” where small business owners will be able to pool their buying power, and purchase affordable, high quality insurance for their employees. The change to the rules is small, and it is temporary.

Nevertheless, Obamacare’s critics pounced, and soon began distorting what the administration said. USA Today quoted the Chamber of Commerce (long a foe of reform), claiming that the small business exchanges “will be of little or no value to employers, or by extension, their employees.”

                                     How Small Business Exchanges Lower Premiums

Before considering the charges, let’s review what the health reform law’s Small Business Health Options (SHOP) exchanges offer. Today, insurers charge small companies 18 percent more because the administrative costs of hand-selling policies to small groups are high.

But in the SHOP Exchanges, small businesses automatically become part of large groups. Some will qualify for tax credits.  The Congressional Budget Office (CBO) estimates premiums will fall by 2 percent to 11 percent. Meanwhile those premiums will buy far better coverage. (Policies sold in the SHOP Exchanges will have to meet the high standards set for plans in the individual exchanges).

                             The Proposed Change: What the Administration Actually Said

Now consider the proposed change. Originally, the Affordable Care Act called for opening SHOP exchanges to employees in 2014. First, the employer would choose a tier of insurance. (Bronze, Silver, Gold or Platinum tiers will pay 60 percent to 90 percent of an average group’s covered benefits, with any individual’s out-of-pocket spending capped at roughly $6,000.) Employees would then pick plans from that tier.

But Washington had assumed that states would be eager to help their small businesses by setting up exchanges. Today, only 16 states and the District of Columbia have begun. Now the administration realizes it will need more time to set up the IT that millions of employees will need to navigate exchanges in 34 states.

 HHS still plans to open the exchanges in 2014, but only to employers. They will survey the many plans available, and then pick one for their employees. “Employee Choice” will be delayed – but just for one year. And the postponement will apply only to the 34 states that have not set up exchanges. In 2014, the other 16 states and D.C. can (and probably most will) open exchanges to employees.

“Nearly 40% of small businesses in this country do business in the 17 states implementing their own exchanges,” observes John Arensmeyer, president of Small Business Majority (SBM), a non-profit advocacy group. And “starting next year, small employers will still be able to pool their buying power in the exchanges, giving them the kind of clout large businesses currently enjoy.”

“This is not a failure, it’s a bump in the road,” Small Business Majority’s Rhett Buttle told me.

                                               The Attack Begins

Nevertheless, Robert Laszewski, a long-time health reform critic, jumped on the bump, telling Modern HealthCare: “Offering a single employer all of the exchange options is a complex undertaking . . . a delay means that the exchange isn’t going to offer any advantage over the employer simply staying with their existing insurer.”

Laszewski suggests that “a single employer“ will not be able to choose from all of the exchange options.” This is simply not true. Business owners will choose from all plans in the exchange. As for an employer keeping his “existing” coverage – why would he do that? The policies in the exchanges will offer better coverage for less.

Above, the opening of a post that I wrote for HealthInsurance.org.   To find out more about why Lawzewski’s is bashing small business Exchanges–and what what Time’s Joe Klein, the Wall Street Journal and Wonkblog’s Sarah Kliff had to say– read the entire post on HIO.   You’ll also find out  why some of us think that the importance of “consumer choice” may be “way overblown.”

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Doctors Sue Hospitals to Protect Patients; A University Buys Insurance that Doesn’t Protect Students; What Gay Marriage Laws Mean for Gay Coverage . . . . and More

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The newest Health Wonk Review has been posted. This time around, Colorado Health Insurance Insider’s Louise Norris is the host, and it’s an excellent read.

A few highlights:

                                 Doctors Sue Hospitals, Protect Patients

Over at Healthcare Renewal, Roy Poses digs into how doctors are pushing back against hopsitals who put profits above everything else. His article describes two recent lawsuits filed by physician groups alleging that the hospital systems they worked for were sacrificing patient welfare in the name of profit. 

As Louise observes, “the details are sickening to read:  One hospital group encouraged its docs to exaggerate the severity of patient conditions and needlessly admit patients from the ER to hospital beds in order to bill more for their treatment.  Another hospital group that owns three hospitals and also partially owns an ambulance company was making patient transfers (using their own ambulance company despite slower response times) a top priority – to the extent that a doctor’s transfer rate was a factor in bonuses and performance reviews.  An admin email stated that “the performance we are looking for are transfers.”  Wow.  Transfers just for the sake of racking up revenue – patient welfare had nothing to do with it, and was likely compromised when the slower ambulance company was used in cases where the transfer was actually warranted.”

I’m just skimming the surface of the corruption Roy exposes. You really should read his entire post.

Often doctors are afraid to stand up to greedy hospital administrators.  But by banding together, physician groups can stand up for patients.

I would add that, in the past  two doctors— working at separate non-profit hospitals—have told me about hospital administrators pressuring physicians to admit ER patients, even when they did not need to be hospitalized. This is how some hospitals “put heads on beds.” 

                 When Universities Buy Inadequate Insurance for Their Students

On his blog, Duncan Cross tells the story of the Arizona State graduate student who died because his Aetna plan (a student plan purchased through the university) capped how much the insurer would pay out over the course of a lifetime at $300,000. It also didn’t cover prescription drugs.  One might be tempted to blame the insurance company,
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Problems with Health Insurance? Under the Affordable Care Act You Will No Longer Be Alone

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If you sent in your health insurance payment on time, and paid it the way you always have (as a direct withdrawal from you checking count), but made a mistake when you put the checking account number on your payment,  would you expect that your insurer would drop you?

What if your insurer sent you an email a few days after you sent in your payment saying “Your payment has been received? Wouldn’t you assume that you were still insured?

Mike Holden did. He was wrong.

Yesterday, he sent an email explaining his story.  

 “On March 16, I paid my family’s monthly health insurance bill to United Healthcare (UHC) the same way I have for almost a year now. But I was using a new bank account that we set up after a recent move. Unfortunately, I entered the account number incorrectly. It turns out I left off three digits that are part of the account number but listed separately on the checks.”

Holden had no idea that he had made a mistake. On March 20, he received an email from UHC saying “Your payment has been received.”

Yet in April, when he went online to pay his family’s April bill, he was told his coverage had been terminated. He then talked to a customer service representative at UHC and received a letter explaining that he had until March 31 to correct his mistake.

Unfortunately, the letter, which was postmarked March 27, went to his old address. .

He appealed to UHC, explaining the problem and asking that his insurance be reinstated,

He then received a letter telling him that his appeal had been denied:  “United Healthcare Benefit Services follows the guidelines for payments and grace periods defined by the Department of Labor. Your account has been reviewed and the termination remains, as payment was not received within the guidelines provided.”

                          How the Affordable Care Act Brings Us Together

Beginning in 2014, people like Mike Holden will no longer be alone, trying to stand up to insurance companies. Individuals and families who buy their own insurance will be able to purchase coverage in “Exchanges”—marketplaces where insures will be regulated and individuals and families who purchase their own insurance will become part of a large group. There, they will have far more clout than they do now.
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