Wednesday, April 03, 2013

Dodging The ObamaTax


"At issue is a little-known loophole in [The ObamaTax] that enables health insurers to extend existing policies for nearly all of 2014."

First a caveat: no one knows exactly how things will play out come 1/1/14. For one thing, the Exchanges may not even be online. For another, there's some confusion about whether or not folks in states with Federally-run Exchanges will be eligible for tax subsidies. and there's confusion about how existing policies - grandfathered or not - will fare after the new year rolls around.

Current conventional wisdom is that plans written before - and still in force on - January 1 will stay that way until their 2014 renewal date. For example, a policy with a May 1, 2013 effective or renewal date would stay in force until next May, at which time it will go away and insureds would either be "mapped to" or eligible for one of the new standardized plans.

["Mapped to" means the carrier moves the insured directly to the new plan most closely resembling the one that goes away]

Over the past few weeks, I've spoken with reps from several of our carriers, and this seems to be what the industry expects to happen.

Of course, that may turn out not to be the case: it may well be that Ms Shecantbeserious and her minions will dictate that all current policies will be cancelled as of January 1. And who's to stop her?

However, if one accepts that the conventional wisdom is correct, and extant plans will remain in force into 2014, these same reps anticipate a flood of new business with final quarter 2013 effective dates, providing a bit of a safety net for folks heading into the storm of '14. Although I usually eschew tin-foil hats, I'll go out on a limb here and say that even this is no safeguard: there's nothing to bar the fair Ms Kathleen from unilaterally declaring all existing plans null-and-void on (say) December 31st, 2013.

Who wants to play chicken with HHS?
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