How to Prepare for Life Under Obamacare
Across the country, governors face two key decisions post-election: do they force the feds to implement exchanges, or do they try to do it themselves, in which case the states have to rush to make them work, to pay for them with higher taxes on premiums, and could see a good deal of political blowback; and do they implement the Medicaid expansion, which will lead to short-term benefit but in the long-term create the need for higher taxes as states’ percentage of payments increase. Governors are generally unlikely to implement the exchanges — at least 20 of them have already said no — and if they are going to expand Medicaid, governors will attempt to use their leverage to extract vastly more freedom for their Medicaid systems, along the lines of what Florida has done, which has already been endorsed in spirit by the administration.
But that’s the decision process that faces the states—what about the ramifications for the rest of us? We talked about it the other night on The Blaze. Here are a few points I’ve highlighted to those with questions about coming policy changes ang how they will effect you:
Flex Spending Accounts and Health Savings Accounts: FSAs will now be capped in 2013 at $2500 (before they were limited only by employer). If you’re one of the thousands of people who have a special needs kid and had been using your FSA for their education payments, you're out of luck. We already have the increased penalty for HSA withdrawal, so be aware of the other restrictions on your HSA, including no longer being able to purchase things over the counter without a prescription.
High Deductible Health Plans: HDHP+HSA or “consumer driven” plans are not long for this world, despite having rapidly growing popularity in the marketplace – the MLR and essential benefit regulations issued last year virtually guarantee that these will disappear from the market within the next few years, spelling the end of this approach as an option. They need the young and healthy people purchasing these plans to purchase more coverage to subsidize the rest of the marketplace.
Get a Younger Physician: Switch to a younger primary care doctor, particularly if you're older or approaching retirement. Only half of doctors plan to continue practicing at the same level for the next three years – they instead plan to cut back on hours, see fewer patients, or retire altogether, according to the Physicians Foundation (this is partly due to Obamacare, partly due to the fact that a lot of doctors are Baby Boomers themselves). If you have enough money and have chronic issues, consider concierge medicine as an option, where a doctor is essentially paid an annual fee in order to be on call for you.
Be Aware of Tax Implications: Before the individual mandate kicks in for 2014, be aware of how you’ll have to alter your approach in 2013 if you are someone with high medical expenses used to claiming them on your taxes. Obamacare imposes a new threshold of 10 percent of your income in order to claim the deduction, not 7.5 percent. It also eliminates the deduction for employer-provided retiree prescription drug coverage.
Be Aware of Business Implications: If you are a small business owner, start shifting people to part-time work, under 30 hours, in order to avoid the employer mandate to provide coverage; if you have multiple franchises, consider splitting them up so you don't run into the limits and have to pay penalties for not providing insurance. Prepare for your plans to change. In Washington DC, small businesses have already been told that they will be forced to participate in the new Obamacare exchange whether they want to or not. I expect this to become the norm across the country in states that want to avoid the cost of trying to market the exchange to people – instead, you can just make participation mandatory.
Your Premiums Will Go Up: This is very simple: health costs are going to continue to go higher, and so will your premiums. Be ready for it as both an individual and employer. “Mercer’s survey concluded that employers’ health costs will rise 4.1% this year, and even more (5.0%) next year; if firms do not take steps (e.g., raising co-payments, etc.) to control costs, cost would rise by a whopping 7.4% in 2013.” That cost-saving shift to consumer driven plans will disappear soon as well, so that’s not going to help matters.