Monday, May 14, 2012

Stupid MLR Tricks

From the "Be Careful What You Wish For" Department:

"Health-insurance companies must tell customers who get a premium rebate this summer that the check is the result of [ObamneyCare©], according to federal guidelines (late last week)"

The idea is that grateful consumers will necessarily credit their windfall with the new train-wreck law, a net boon for the President's reelection campaign.

Or is it?

As we've noted here at IB, the average rebate is in the neighborhood of $127. That's total, not per month. Yet average premiums under ObamneyCare© have skyrocketed, more than wiping out that piddly savings. So what are the odds that the average insured is going to look at the additional thousands of dollars in premiums he laid out, and then feel good about the measly $127?

Oh wait, did I say $127? Well, that's before taxes.

Yup, as we also noted previously, if your premiums come out pre-tax (as many group plans make available), this is a taxable event. Don't believe me?

Well, believe the IRS.

So not only does Joe Shmo get a token $127, he doesn't even get to keep all of that. Plus, he now has to file an amended return for that year, at a cost that could well exceed the rebate.

And what about those individuals who receive rebates? They may dodge the tax bullet, since very few are able to deduct their premiums. But if they're self-employed, and did take the deduction, well, see above.

MLR may well be the gift that keeps on taking.
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