The New York Times has an excellent front-page story by Abby Goodnough today detailing the "blessings and hurdles" that various people seeking health insurance in Kentucky have encountered under the Affordable Care Act. A key point in one of the marquee narratives did not compute, however.
A certain David Elson, 60, was reported in today's print editions to earn $22k and be eligible for cost-sharing subsidies that would lower his deductible -- but also unable to pay his first monthly premium, reduced via a monthly subsidy of $250 to $350. In fact, a 60 year-old nonsmoker anywhere in the country earning $22k should be able to access a silver plan for around $100 per month, with Cost Sharing Reduction (CSR) reducing the deductible to under $1000 per month.
I contacted Abby Goodnough via email and learned two things (and she learned one). First, Mr. Elson had selected a more expensive silver plan, a PPO (preferred provider organization) that would allow him to keep his doctors and get better benefits for hospitalization, medication and other services. Fair enough. But still, according to HealthSherpa (the Kynect window-shop feature is terrible and does not show your subsidy), Mr. Elson's subsidy should have been around $345, not $250. And that's at least roughly right, because it turns out -- the correction now appears online -- that he reported an income of $28k, not $22k. (According to HealthSherpa, that would peg his subsidy at about $270.) Abby Goodnough tells me that when she sat with Mr. Elson through his initial application process, he reported $22k, and later switched to $28k.
Space is always limited in a newspaper, but error aside, it's unfortunate that this story could not delve even deeper than it did into the nuances of Mr. Elson's situation and choices (Abby Goodnough wrote that the Times will revisit these issues in future articles). Premium vs. network inclusiveness is a major tradeoff that the ACA forces many users to make. Reported income also is a fraught issue. Mr. Elson is self-employed, and his income varies. If he underestimates it, he will be slammed with an additional bill at tax time. If he overestimates, he's faced with higher monthly costs.
The ACA confronts Mr. Elson, who has a lot of health problems, with some tough choices. But it also gives him the opportunity to buy insurance for $100 per month with limited out-of-pocket (OOP) costs.
Federal aid for OOP costs adds another level of complexity to Mr. Elson's decision, however. The difference in aid for those earning $22k vs. $28k is quite significant. Those earning under 200% of the Federal Poverty Level (FPL)-- $22,980
for this year -- get a much steeper cost-sharing reduction (CSR) than
those earning under 250% FPL, $28,725.
Kynect, the Kentucky exchange, does not show CSR in its shop-only feature. But in Blaine County, Nebraska (picked at random), the cheapest silver plan for a single person earning $22k would have a deductible of $600 and a yearly OOP maximum of $1300. At $28k income, the deductible would be $2000 and the OOP max $2750. The difference is between a plan with an actuarial value of 87%, which the ACA mandates for people earning between 150 and 200% FPL, and one with an actuarial value of 73%, mandated for FPL between 200 and 250%.
If Mr. Elson had in fact reported an income of $22k rather than $28k, the strong cost-sharing benefit might have made the cheaper plan more viable, though the inclusiveness of the network would remain an issue. For every individual circumstance, the choice has different nuances.
P.S. As a self-employed person, Mr. Elson is also probably eligible for the self-employment health insurance deduction, which would lower the Modified Adjusted Gross Income (MAGI) on which ACA subsidy awards are based as well as reducing his tax burden.
P.P.S. If Mr. Elson overestimates his income, he can collect additional subsidy at tax time. I do not know, and would like to find out, whether one can qualify for additional CSR retroactively. But of course neither will help if he can't manage to pay the premium now.