April 2, 2023

Your Money: A Guide to the New Exchanges for Health Insurance

But after much anticipation, the curtain will finally rise on the exchanges next week, providing millions of consumers with an online marketplace to compare health insurance plans and then buy the coverage on the spot.

The exchanges are likely to be most attractive to people who qualify for subsidized coverage. Individuals with low and moderate incomes may be eligible for a tax credit, which can be used right away, like a gift card, to reduce their monthly premiums. People with pre-existing conditions will no longer be denied coverage or charged more (this applies to most plans outside the exchanges, too). And all of the plans on the exchanges will be required to cover a list of essential services, from maternity care to mental health care.

“In today’s individual market, it’s like Swiss cheese coverage,” said Sarah Dash, a research fellow at the Health Policy Institute at Georgetown University. “Consumers should have an easier time figuring out what they are getting for their money.”

But it’s still going to take some time to analyze the plans and their costs, which are expected to vary widely across the states. And the coverage may still pinch many families’ budgets. Fortunately, there’s a six-month window, from now to March 31, for people to figure it all out.

Here’s some information to get you started:

Q. Where can I apply or get more information on the exchanges?

A. To avoid fraud artists, enter through the front door: Healthcare.gov. From there, you can find links to the exchange offered in your state. There may be technical glitches as the program gets started, so alternatively, you can call 1-800-318-2596.

Q
. When does coverage go into effect?

A. You can apply as early as Oct. 1, but coverage won’t begin until Jan. 1. The enrollment period for coverage in 2014 closes on March 31, 2014. After that, you can enroll only if you have a major life event like a job loss, birth, marriage or divorce.

Q. What sort of coverage will be offered?

A. All plans will have to provide the same set of essential benefits, including prescriptions, preventive care, doctor visits, emergency services and hospitalization (this also applies to most individual and small-employer group plans sold outside of the exchanges). But plans can offer additional benefits, or different numbers of services like physical therapy, so you’ll need to do a side-by-side comparison to see what fits your needs — or at least the needs you can anticipate.

Q. Are the plans sold on the exchange more comprehensive than plans outside?

A. There are four plan levels, each named for a precious metal. They all generally offer the same essential benefits, but their cost structures vary. The lower the premium, the higher the out-of-pocket costs.

The bronze level plan, for instance, has the lowest premiums, but will require consumers to shoulder more costs out of pocket. They generally cover 60 percent of a typical population’s out-of-pocket costs, and include deductibles, co-payments and coinsurance. The silver plans cover 70 percent; gold, 80 percent; while platinum covers 90 percent (and therefore carries the highest premiums).

If you buy a plan on an exchange, your annual out-of-pocket costs cannot exceed $6,350 for individuals and $12,700 for a family of two or more in 2014. Catastrophic plans are also available to people under age 30 or those suffering a financial hardship. These carry high deductibles (equivalent to the out-of-pocket maximum, or $6,350 for a single person, in 2014). You cannot apply tax credits to these plans, either.

Premiums will vary across the states because of a variety of factors, like market competition, the underlying cost of care and the negotiating power of the exchanges, according to Kaiser research.

Q. If the costs with plan levels are similar, how will plans differ within the metal levels?

A. Networks of doctors and hospitals will differ, and cost-sharing structures may also vary. One plan might have lower deductibles and higher co-pays, whereas another plan might have a separate deductible for prescriptions. Various medications may also be covered differently. “If you are someone who is taking medicines, make sure you know what your drugs will cost in the various plans being offered,” said Cheryl Fish-Parcham, deputy director of health policy at Families USA, a Washington consumer advocacy group.

Q. Will I be eligible for a premium tax credit (subsidized coverage)?

A. People with income between 100 percent of the poverty line (or about $23,550 for a family of four) and 400 percent of poverty ($94,200 for a family of four) are eligible for a tax credit to defray premium costs. (All income eligibility is based on your modified adjusted gross income; the online version of this column links to a guide explaining how that is calculated).

The tax credits are set up so that consumers will not have to pay more than a certain percentage of their income, ranging from 2 percent for those with incomes of up to 133 percent of the poverty level ($15,282 for a single and $31,322 for a family of four) to 9.5 percent for those with income of 300 to 400 percent of the poverty level, according to the Center on Budget and Policy Priorities. The dollar amounts of the credits are calculated based on the costs of the second-to-lowest-cost silver plan available to you.

Kaiser has a calculator that can give you an idea of your eligibility.

Q. Can I get help with my out-of-pocket expenses, like deductibles?

A. People with incomes between 100 percent of the federal poverty line ($23,550 for a family of four) and 250 percent ($58,875 for a family of four) are also eligible for cost-sharing reductions, which means you’ll pay less for items including deductibles and co-payments, and you’ll have lower out-of-pocket maximums.

Article source: http://www.nytimes.com/2013/09/28/your-money/health-insurance/a-guide-to-the-new-health-insurance-exchanges.html?partner=rss&emc=rss

Economic Growth Was Moderate in First Quarter

The Commerce Department said on Thursday that economic growth in the first quarter was only marginally below the 2.5 percent annual rate the government had estimated last month. The rate is still much faster than the 0.4 percent growth during the October-December quarter.

Most economists think growth is slowing to around a 2 percent annual rate in the April-June quarter as the economy adjusts to federal spending cuts, higher taxes and further global weakness. Still, many say the decline may not be as severe as once thought. The numbers have been buoyed by solid hiring, surging home prices and record stock gains, which should keep consumers spending.

Jennifer Lee, senior economist at BMO Capital Markets, said the small revision to first-quarter growth supported her view that the economy would grow a moderate 2.2 percent for the year, the same as last year.

Still, Ms. Lee expects growth to improve to 3.2 percent in 2014, as the job market accelerates and consumers grow more confident in the economy.

Employers have added an average of 208,000 jobs a month since November, well above the monthly average of 138,000 during the previous six months. And the government said on Thursday that weekly jobless aid applications had risen to 354,000, a level consistent with modest job gains.

In addition, the number of Americans who signed contracts to buy homes edged up in April to the highest level in three years. The increase points to growth in home sales in the coming months.

The National Association of Realtors said on Thursday that its seasonally adjusted index for pending home sales rose 0.3 percent to 106. That is the highest since April 2010, when a home buyer tax credit inflated sales.

Signed contracts have jumped 10.3 percent in the last 12 months. There is generally a one- to two-month lag between a signed contract and a completed sale.

Sales of previously occupied homes rose in April to a seasonally adjusted annual rate of 4.97 million, a 3 1/2 year high. Sales of newly homes also rose in April, to nearly a five-year high.

Still, the supply of homes on the market remained low and that could keep sales from accelerating later this year. The number of available homes for sale rose in April, the Realtors’ group said last week, but was still down 14 percent from a year earlier.

Fewer homes for sale may be holding back sales in tight markets in the West, like Las Vegas and Phoenix. In those cities, many homeowners still owe more on their mortgages than their homes are worth.

Article source: http://www.nytimes.com/2013/05/31/business/economy/economic-growth-was-moderate-in-first-quarter.html?partner=rss&emc=rss

Housing and Manufacturing Gains Drive U.S. Economy

Home prices rose 8.1 percent in January, the fastest annual rate since the peak of the housing boom in summer 2006. Demand for longer-lasting factory goods increased 5.7 percent in February, the biggest gain in five months.

February sales of new homes and March consumer confidence looked shakier. But the overall picture reflected an improving economy.

“There is nothing in this data that says the economy is falling back,” said Joel Naroff, chief economist at Naroff Economic Advisors.

The year-over-year increase in home prices reported by the Standard Poor’s/Case-Shiller 20-city index was the fastest since June 2006. Prices rose in all 20 cities and eight markets posted double-digit increases, including some of those hardest hit during the crisis. Prices rose 23.2 percent in Phoenix, 17.5 percent in San Francisco and 15.3 percent in Las Vegas.

The strength in home prices has far from erased the damage from the crisis. Home prices nationwide are still on average 29 percent below the peak reached in August 2006.

Sales of new homes cooled in February to a seasonally adjusted annual rate of 411,000, the Commerce Department reported Tuesday. That is down from January’s pace of 431,000, which was the fastest since September 2008. But February’s pace was still better than every other month since April 2010, when a temporary home-buying tax credit was lifting sales. And February sales were 12.3 percent higher than a year earlier.

“We are still far from the healthy level of 700,000, but we’re slowly making our way in that direction,” said Jennifer Lee, senior economist with BMO Capital Markets. “We just have to accept the fact that the path will be interrupted once in a while, and that’s what happened in February.”

Manufacturing is also pushing the economy this year, and factories were busier in February, the Commerce Department’s report on durable goods orders said.

The increase in February was caused by a surge in commercial aircraft orders, which tend to be volatile. Still, orders for motor vehicles and parts increased solidly, suggesting demand for cars and trucks remains strong.

Orders for machinery and other goods that signal business investment plans fell sharply in February. But the decline followed the biggest monthly gain in nearly three years. Economists had expected companies to ease up after their spending spree in January. When looking at the two months together, business investment has accelerated from the end of 2012.

“The picture of business spending to start the year is fairly healthy,” said Dan Greenhaus, chief global strategist at BTIG, an institutional brokerage.

But tax increases and government spending cuts could slow the economy’s momentum. Both weighed on consumers’ minds in March.

The Conference Board, a private research group, said its Consumer Confidence Index fell to 59.7 this month, down from 68 in February. The decline was mainly a result of a drop in expectations for the economy in the next six months, though consumers also were more pessimistic about current economic conditions.

The survey was conducted from March 1 through March 14, as $85 billion in automatic spending cuts began. Consumers were already feeling pinched by higher Social Security taxes that have reduced take-home pay for most workers this year. And gasoline prices rose sharply in February, then eased slightly this month.

“It was sort of a perfect storm,” said Chris G. Christopher Jr., director of consumer economics at IHS Global Insight. “I do expect confidence to rebound as long as there is no government shutdown and the political bickering in Washington doesn’t reach a fever pitch.”

Article source: http://www.nytimes.com/2013/03/27/business/economy/orders-for-durable-goods-jump.html?partner=rss&emc=rss

You’re the Boss Blog: Why the Health Care Tax Credit Eludes Many Small Businesses

The Agenda

How small-business issues are shaping politics and policy.

The Agenda has now profiled three small businesses that are struggling in different ways with providing health insurance to employees. The companies are very different — they trade in very different parts of the economy, and couldn’t be located much further apart geographically — but they do have one thing in common: Though all three have fewer than 25 employees, not one has qualified for the tax credit in the Affordable Care Act that was intended to help small businesses pay for health insurance. Indeed, the credit is one element of the controversial health law that has already fallen short of expectations.

Estimates of the number of businesses eligible to take the tax credit have ranged from 1.4 million to 4 million companies, but in May, the Government Accountability Office reported that only 170,300 firms actually claimed the credit in 2010. Of these, only a small fraction, 17 percent, were able to claim the whole credit.

For eligible companies, the credit effectively refunds 35 percent of health insurance expenses between 2010 and 2013.* After 2014, the credit increases to 50 percent and is available for any two consecutive years. The credit is fully available to companies with 10 or fewer full-time employees and average wages below $25,000. It phases out as the number of employees rises to 25 and wages grow to $50,000. In 2009, there were about 4.6 million companies with fewer than 10 employees, according to the Census Bureau, and 5.7 million with fewer than 100.

The credit was aimed squarely at the smallest companies, which rarely offer health insurance to employees. However, as we reported two weeks ago, it appears not to have persuaded very many to start offering insurance. The most recent study of employer health insurance from the Kaiser Family Foundation found that just half of all companies with fewer than 10 employees offered insurance, a share that has not moved much since 2005.

So why has the credit fallen short of expectations? The G.A.O. concluded that the credit was too small to sway business owners. Moreover, it said, claiming the credit is a task so complicated as to discourage many companies from trying. Companies have to determine the number of hours each employee worked in the year, as well as compile information about their insurance premiums. “Small-business owners generally do not want to spend the time or money to gather the necessary information to calculate the credit, given that the credit will likely be insubstantial,” the report said, citing conversations with tax preparers. “Tax preparers told us it could take their clients from two to eight hours or possibly longer to gather the necessary information to calculate the credit and that the tax preparers spent, in general, three to five hours calculating the credit.”

The G.A.O. report hints at the complexity with this delicious example:

On its Web site, I.R.S. tried to reduce the burden on taxpayers by offering “3 Simple Steps” as a screening tool to help taxpayers determine whether they might be eligible for the credit. However, to calculate the actual dollars that can be claimed, the three steps become 15 calculations, 11 of which are based on seven worksheets, some of which request multiple columns of information.

It may be tempting to hold the Internal Revenue Service responsible for whatever burden accompanies the tax credit, but in this case, the complexity is written directly into the law. It turns out that legislators wrote the provision in a way that makes it appear more generous than it really is. Many businesses with both fewer than 25 employees and average wages below $50,000 are in fact unable to claim the credit.

Under the law, once such a business has calculated its potential credit, it is required to reduce the credit first to account for any excess employees over 10 and then separately reduce the potential credit to account for any excess average wages paid over $25,000. For many companies, the two reductions exceed the potential credit itself — meaning the business gets no credit.

That’s what happened to Carrie Van Dyck, who along with her husband owns the Herbfarm Restaurant outside of Seattle. Excluding its owners, the Herbfarm, which we profiled in June, employed the equivalent of about 21 or 22 full-time staff members, who were paid an average wage of about $35,000 — a few thousand dollars over the credit’s threshold for 21 employees. The result surprised Ms. Van Dyck, she said recently by e-mail, because “it would seem that we are a pretty typical small, mom-and-pop type business that this should apply to.”

Of course, by making the credit less generous, the senators who wrote the law made it less expensive to the United States Treasury. Now it is apparent that credit will be even cheaper than planned: initially it was expected to cost the Treasury $2 billion in 2010; instead it cost the government only a quarter of that.

The law also excludes owners and owners’ families from counting toward the credit, which can cut both ways. On the one hand, owners don’t count as employees and their salaries are excluded from the annual wages, exclusions that could make some companies eligible for a bigger credit than they might otherwise have gotten. On the other hand, premiums paid for the owners’ and their families’ insurance aren’t eligible for the credit, which for some companies, as You’re The Boss commenter JAB recently noted, “greatly reduces the incentive to provide coverage for employees.”

The White House has said that the number of businesses claiming the credit for 2011 has grown to at least 360,000, but that is still well below even the smallest estimate of eligible businesses. Some advocates for the law say that more businesses will take advantage of the credit in 2014, when it grows to 50 percent, especially if the new insurance exchanges make it easier and cheaper for small companies to offer insurance.

The Obama administration has proposed making more businesses eligible for the credit, in part by starting phase-outs at higher thresholds, and also by changing the way it is calculated so that every business within the limits, such as the Herbfarm Restaurant, can take some amount of credit.

But judging from the comments of Representative Sam Graves, chairman of the House Small Business Committee, the initiative is unlikely to pass a Republican-controlled House anytime soon. “This tax credit has already largely failed to attract small-business owners, and expanding it will not make the president’s health care law affordable,” the Missouri Republican said in a statement. “For small employers that do not offer health insurance, tax incentives are unlikely to cause many of them to choose a massive new expense they just cannot afford in the first place.” It was Mr. Graves who sought the G.A.O. report.

Of course, a business denied a credit has not been made worse off by the 2010 health law. But the law surely has raised and dashed a lot of hopes, and these are the early days — the sweeping changes that are the law’s hallmark don’t come until 2014.

*There are, of course, many caveats here, but the main one is that the company has to pay at least half of the premium.

Article source: http://boss.blogs.nytimes.com/2012/09/25/why-the-health-care-tax-credit-eludes-many-small-businesses/?partner=rss&emc=rss

Demand for Factory Goods Rises

Bookings for factory goods rose 1.8 percent after a revised 0.2 percent drop the previous month, data from the Commerce Department showed Wednesday. Demand for aircraft, autos and metals compensated for a drop in computers and electronics.

Slowing demand for capital goods like computers is a sign that business investment will cool this year, reflecting concern over a slowdown in global growth and a less advantageous government tax credit.

“Manufacturing is holding up fairly well,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pa. “Business investment has been very strong during this recovery, so some softening isn’t surprising.”

Economists forecast factory orders would rise 2 percent, according to the median of 57 projections in a Bloomberg News survey.

Orders for durable goods, or those meant to last at least three years, increased 3.7 percent. Demand for capital goods excluding aircraft and military equipment, a measure of future business investment, fell 1.2 percent.

Bookings for commercial aircraft, a volatile category, jumped 74 percent after dropping 14 percent. Orders for computers and electronic products fell 4.3 percent.

Bookings for nondurable goods, including petroleum and chemicals, rose 0.3 percent, the report from the Commerce Department showed.

Inventories climbed 0.5 percent in November, indicating factories were ramping up production to restock warehouses.

Manufacturing in the United States grew in December at the fastest pace in six months, the Institute for Supply Management’s factory index showed Tuesday.

Article source: http://feeds.nytimes.com/click.phdo?i=cb4e1c482fffc0478c5201cf88535507