Understanding Your Accountability under the Affordable Care Act-Medical Insurance Mandate

Today, I achieved my 3,000^th mile of the year and am rounding the corner on 2015. Year end is a time to clean out the closets and make financial decisions, which includes your medical insurance review. This article clarifies the individual insurance mandate tax assessment under the Affordable Care Act and the exemptions to avoid taxation.

The Patient Protection and Affordable Care Act was passed by Congress in 2010, creating a standard for medical insurance for most residents of the U.S. and requiring all to obtain medical insurance. As of 2015, individuals who lack proof of medical insurance, will have to pay an additional tax. The tax penalty is up to $695 for those individual tax payers lacking insurance and up to 2.5% of adjusted gross income, capped at $2,085 for a family ($347.50 per child).[1] FYI, your insurance company will produce a form which shows the number of months you had medical insurance coverage. If you obtained your medical insurance through an insurance exchange, the form will also show the tax credits which were advanced from the government to pay for the premiums, which will affect your overall tax filing. In other words, your tax credits reduce the amount of a refund you may receive or conversely, may require you to pay some money back to the government if too much money was advanced to cover your insurance premiums.

Exemptions to the Individual Insurance Mandate

Like any other law which Congress creates, there are exemptions and here is a summary of the exceptions to the individual insurance mandate under the Affordable Care Act.

Hardship Exemptions

The hardship waiver is based on four main standards; your residency status, your financial situation, the cost of insurance relative to your income, and religious exemptions. Here are the eligible exemption criteria as drawn from the healthcare.gov web site. [2]

Cost of the Medical Insurance is Unaffordable

8% Rule for Insurance Exchange Plans

If the lowest price insurance available to you would cost more than 8% of your household income (generally based on the adjusted gross income figure on your income tax return) no penalty will be assessed for lack of medical insurance. If the individual medical insurance policy was cancelled and you have found marketplace plans to be unaffordable you will also not be penalized for lack of medical insurance.

Household Income

Residents whose Annual Earned Income is below $6,300 are not required to file a tax return.[3] In this case it would be difficult for the government to audit compliance with the medical insurance mandate, but these individuals are probably covered on Medicaid or Medicare anyway.

Family Hardship Situations

Of small comfort, homeless residents will not be taxed for lack of medical insurance, but this begs the question, do homeless people file income tax returns? Nor will those facing eviction or who have been evicted from their home be penalized for lack of health insurance. Receiving a utility shut off notice also creates an exempt classification, which leaves the door open for gaming of the system. Bankruptcy filed within the last six months is an exempt category. Losses due to a natural disaster such as flood, fire, or other disaster also mitigate the need to obtain medical insurance. Unexpected medical expenses for the care of a disabled, elderly, or ill family member are also an exempt class. Those supporting a child for whom another person has been court ordered to provide medical support, are eligible for an exemption from the tax penalty.  The recent death of a family member also creates a tax penalty waiver for lack of medical insurance. Domestic violence events also create an exemption and to these victims, please note free health care is available at trauma centers.

Other Exemptions

Hardship in obtaining health insurance, such as having your policy cancelled creates an exemption to the A.C.A. insurance mandate tax. No penalty will be assessed for any eligible individual if the period of without insurance was for less than three months of the year.

Religious Exemptions

Members of a health care sharing ministry, which are 501-C 3 plans, are exempt from compliance with the medical insurance mandate under the Affordable Care Act. Additionally, those who are members of a recognized religious sect which objects to insurance, including Social Security and Medicare are exempt.[4]

Residency Status

Unlawful immigrants are precluded from insurance exchange participation and enrollment in other federal health programs. Sadly, this provision includes pregnant women and children. Incarceration gives you an exemption, because you are a ward of the state. Finally, if you reside in a state which did not expand its Medicare program to meet the 138% of the federal poverty level for enrollment under the Affordable Care Act and you are in that income category, you are exempt from the tax penalty if you are unable to squeeze the insurance premiums from your tight budget.

Teeth gnashing aside, as observed there are enough loopholes in the individual insurance mandate to drive a truck through. For more information on the religious exemption, please follow the link to the article I published on it in 2014. To calculate your tax penalty, use a free online tax preparation program and make your life easier. Also, the government site, healthcare.gov has a great interactive worksheet to figure out if you may owe an insurance tax. And this is the healthpolicymaven wishing you a happy and safe holiday season for Chanukah, Christmas, Solstice Festival, or whatever your end-of-year ritual may be.

Feel free to share this article voraciously, with appropriate attribution of course. This article was written by Roberta E. Winter, a freelance writer and healthcare analyst and author of Unraveling U.S. Healthcare-A Personal Guide. http://www.amazon.com/Unraveling-U-S-Health-Care-Personal/dp/1442222972

Sources for more information

---

[1]  https://www.healthcare.gov/fees/fee-for-not-being-covered/

[2]  https://www.healthcare.gov/health-coverage-exemptions/hardship-exemptions/

[3]  https://www.irs.gov/pub/irs-news/IR-15-119.pdf

[4]  http://healthpolicymaven.blogspot.com/2014/08/v-behaviorurldefaultvmlo.html 

 

 

Factors Driving High Drug Costs and Ideas to Change the Paradigm

The Real Skinny on Why Your Drugs Are So Expensive

Americans are scolded they need to pay more for their prescription drugs, because of the inherent need for drug companies to invest in science to find cures. The real reason for the price gouging is American healthcare consumers are getting ripped off by Wall Street sharks who are profiting at the expense of the rest of us. First, there are differences in the market sector of the pharmaceutical industry, basically, the bio-pharmacological industry, which has invented the highly successful cancer treatments and other health enhancing drugs and the generic drug manufacturing business. For the former, these companies must wait years, often decades before they have a successful payoff, but the latter, is involved in the lucrative and predictable generic drug manufacturing business. This is the sector which creates drugs which are still highly effective, but for whom their patents have expired. In other words, this is where you, the consumer can obtain your medicine for a lot less money, at least, that used to be the case.

The pharmaceutical industry in the U.S. is theoretically subject to some market constraints based on patent laws. In other words, just because you invented penicillin (thanks France) doesn’t mean you get to collect royalties into eternity. Generally, drug patents are good for 20 years and expire after that, but exclusivity rights may only last 3 to 7 years. At that point, any drug company in the world can start to manufacture that drug and distribute it, causing market competition, which should result in lower prices. However, because the U.S. healthcare system is based on a cost-plus reimbursement system, with no cap, the incentive to retain artificially high drug prices has created a perverse incentive to stall the release of patents on drugs. Here is how companies restrict your access to less expensive medications:

Buying up the Patent Rights for Drugs which have Become Generic

Daraprim, a drug which is used to fight infections has become generic, but it isn’t profitable enough for most private companies to continue to manufacture. It has been around for 62 years and is used to treat pregnant women and people with AIDS. Thus, Turing Pharmaceuticals bought the rights and raised the price 5,000 % for this drug. In economic terms this is referred to as a monopoly and coincidentally, is prohibited for most businesses in the U.S. Essentially if there is no competition for something as critical as medicine, the rogue drug companies can and do take advantage of vulnerable consumers. Valeant is another company which jacked the price for generic heart medication formularies they acquired.

Extending Patents through the Courts

The drug companies have manipulated the 180-day-exclusivity and 30-month-stay provisions to their advantage, to prevent the release of generic drug formularies. Essentially these are loopholes which the pharmaceutical industry uses by tying up drug access through their lawyers via patent infringement lawsuits and extensions. The courts have found that generic applicants have prevailed 73% of the time in these challenges. This malingering allows the drug companies to continue to earn more money on medications whose patents have expired, because of the judicial process.

Lack of Meaningful Use for Patent Extensions

Pharmaceutical companies also try to extend patent rights by making minor changes to drug formularies and refiling the patent. This is purely about profit and not efficacy for the patient or health system. The FDA should have guidelines which prohibit this kind of shenanigans.

Generic Drugs Have Become a Lucrative Investment

The Hatch-Waxman Amendments to the FDA have contributed to a bloom of generic drugs from 19% of the U.S. pharmaceutical market to 47%. If generic drugs are such a bad deal, then why are so many companies interested in this business?  This change is also due to pressure from the insurance industry and consumers, to reduce the cost of medications. Unfortunately, what used to be a savings passed on to consumers is no longer the case.

Suggestions to Improve the Intolerable Drug Pricing

In 2008, the U.S. government bailed out many banks and of course, General Motors (which still hasn’t repaid its loans), so perhaps the nation should consider buying up some generic drug production rights and thereby controlling the price. The U.S. government could ultimately make money in the transaction by arranging for an exclusive manufacturer and distributing the medication throughout the health system. This would save Medicare, Medicaid, and the Veterans Administration a lot of money. And, since the private sector follows Medicare standards for services and reimbursement, this would drive the price down for all American healthcare consumers.  

The government should also require pricing transparency for pharmaceuticals, which should not be a charge-whatever-you-can environment without justification. Lots of companies invest for years and don’t get a return, why should a drug company expect to make all of their investment return in the first year of release for a new medication? Perhaps an amortization schedule can be agreed upon for this process, which is used in accounting vernacular.

Congress should remove the restriction from the Centers for Medicare and Medicaid, which prevents them from negotiating directly for drug prices for their enrollees. Since this is the largest single pharmaceutical customer base, this would have a huge impact.

The next time you think you are getting jacked for your prescription, you are probably right, so let’s reach out to our regulators and the executive branch for a fix.

References for more information

https://projects.propublica.org/bailout/list 

https://www.ftc.gov/reports/generic-drug-entry-prior-patent-expiration-ftc-study

https://www.ftc.gov/news-events/press-releases/2013/01/ftc-study-fy-2012-branded-drug-firms-significantly-increased
https://www.ftc.gov/news-events/press-releases/2011/10/ftc-study-finds-fy-2011-pharmaceutical-industry-continued-make 

Roberta E. Winter is a freelance healthcare writer who has published Straight Talk on Healthcare under the tradename, healthpolicymaven since 2007. She is the author of Unraveling U.S. Healthcare-A Personal Guide.
http://www.amazon.com/Unraveling-U-S-Health-Care-Personal/dp/1442222972
 Feel free to share this article virally.

Conflicts of Interest Between Doctors, Hospitals, and Patients Result in Harmful Treatment

OK, I was going to write about the new social caste-system determining how you pay for your health care, but the New York Times article about the errant Dr. Ghandi from Indiana (I kid you not) and his over zealous love of invasive cardiac treatments is too good to pass up. First of all, the full color photo in the New York Times of this woman's scarred chest is a shock. The sleeveless pink floral top (not enough of it to merit calling it a blouse) is the standard rag you find so many many American woman wearing to places they should not. I mean really, this is what you wore for an interview with the New York Times? One could make a case that the cardiac chest-crack surgical scar is more aesthetic than that mom tattoo. I thought you were supposed to put your kids names on your body, not the word mom, isn't that reserved for sailors? Read on to find out how this all went wrong in the midwest.
 Malpractice and Medicare Rip-offs
The woman in the New York Times photo had been treated by Dr. Ghandi for thirty years, originating from the irregular heartbeat diagnosis and devolving into multiple surgeries involving stents,  and other invasive procedures. This plucky female did say no to Dr. Ghandi's insistence on getting a pacemaker (smart move sister) but she was pummeled into the insertion of a heart monitor. Unbeknownst to her, this monitor was linked directly to Dr. Ghandi's bank account. At last count, 293 patients have sued this doctor for installing unnecessary pacemakers, stents, and other cardiac devices. Thanks to Dr. Ghandi and his co-conspirators, little Munster (not to be confused with Muncie), Indiana placed within the top 10% for cardiac defibrillator implants (pacemakers) according to Medicare, which is also investigating. Munster is a town of 23,270 people, so it is pretty difficult to imagine they have that many defective tickers. But please remember, Indiana is pretty close to Wisconsin, where most of the world's cardiac devices are manufactured, so maybe they were being neighborly. However, here is where the story takes an even more twisted turn.
Hospital Administration Conflict of Interest
The hospital administrators knew that Dr. Ghandi and others in his cardiac practice were performing invasive medically unnecessary procedures and they did nothing to stop it. Lest you think this was a for-profit hospital, you'd be wrong. In fact, a nonprofit community hospital, much like any local hospital, such as  Harrison, in Kitsap County, made the decision to ignore the professional complaints brought by Dr. Mark Dixon, whom also practiced at the hospital. The hospital's chief benefactor it seems was a long time patient of  Dr. Ghandi's for his cardiac care, so no conflict there at all. Specifically, Dr. Dixon's complaint was unqualified people were installing some of these cardiac devices and Dr. Ghandi's patients did not meet the medical necessity requirements for some of the treatments.  So, why would the hospital ignore these concerns-because cardiac care is very lucrative and brings in lots of money for the facility. In fact, in hospital administration parlance, this is referred to as a service line, it isn't even called health care. And yes, in hospitals, the doctors who bring in the most money are treated with deference.
What You Can Do
Hold the phone-this is the lesson for all persons reading this article-(1.) ask questions about training and board certification before you consent to any surgery and (2.) get a second opinion. Sure Munster is a small town, but you do not have to have your treatment there, you can go to a bigger city, like Indianapolis or Chicago, or if you are really smart, the Mayo Clinic in Minnesota. Further, if you cannot commute to these locations, you can go to the following web sites to get information which is reliable on cardiac care:
 http://www.mayoclinic.org/departments-centers/cardiovascular-diseases/home/orc-20121930
 http://www.mayoclinic.org/diseases-conditions/heart-murmurs/basics/definition/con-20028706
 http://www.cdc.gov/heartdisease/materials_for_patients.htm
http://my.clevelandclinic.org/services/heart/disorders

Tip of the Iceberg
Lest you think this scenario of over diagnosis and money making through unnecessary medical procedures is an anomoly, it is one of the biggest problems in the U.S. healthcare system. Thankfully, in the last decade, better information has become available to consumers through websites and other resources, which make it easier for the average person to double-check the facts before submitting to a procedure.  The truth is you can't always trust what your community hospital is telling you, nor can the same be said for every doctor. The responsibility is on the patient and their advocate to ferret out all necessary information and make an informed decision. The Lown Care organization is in the midst of its' Right Care Campaign and that is one example of a collective effort of clinicians to curtail abusive practices in healthcare. I have written about health care scenarios and policies for the past eight years, and in 2013, I specifically targeted the layperson in my book, Unraveling U.S. Healthcare-A Personal Guide, of which five chapters were devoted to figuring out how to gauge health care quality.

Stay healthy by choosing wisely and this is the healthpolicymaven signing off, encouraging you to share this article widely. Roberta E. Winter is a graduate of the University of Washington School of Public Health and the University of Washington Evans School of Public Affairs and publishes under the trademark healthpolicymaven.
1. http://www.nytimes.com/2015/10/18/business/a-small-indiana-town-scarred-by-a-trusted-doctor.html?smprod=nytcore-iphone&smid=nytcore-iphone-share&_r=1
2.  http://www.rightcaredeclaration.org/
3. http://www.amazon.com/Unraveling-U-S-Health-Care-Personal/dp/1442222972

Affordable Care Act Program Shows Reduced Medical Costs Through House Calls

The Affordable Care Act funded the Shared Savings Program which financially rewards health care organizations for reaching targets for patient care, such as reductions in hospital re-admissions, and thereby reduces plan costs. One of the most compelling projects from this pay-for-performance program has been a resurgence in house calls by doctors to vulnerable Medicare patients. The Wall Street Journal recently featured an article on this phenomena and found the "Independence at Home" Medicare demonstration project has shown a 25 million dollar savings for Medicare in the first year of the program. (1) This article reveals more about how this program works, who participates, and what it might mean for health care plans. Here are the creative health care organizations which elected to participate in this three year initiative (sans the LLC, Inc, or other corporate modifiers): Boston Medical Center, Christiana Health Care Services, Cleveland Clinic Home Care Services, Comprehensive Geriatric Medicine, Doctors Making Housecalls, Housecall Providers, MD2U, Medical House Call Program at Medstar Washington, National House Call Practitioner Group, North Shore Long Island Jewish Health Care, RMED, Schnabel In-Home Care,Virginia Commonwealth University, and Visiting Physicians Association (locations in 4 states). (2)
Awarding Value-Based Payments
As a part of the value-base care initiative, participating practices were able to reduce emergency room re-admission costs by 16.4%. In order to receive a shared savings reward, the organization had to meet the following clinical targets for qualified Medicare patients:

• Have fewer hospital re-admissions within 30 days of discharge
• Have follow-up contact from their provider within 48 hours of a hospital admission, hospital discharge, or emergency department visit
• Have their medications identified by their provider within 48 hours of discharge from the hospital
• Have their preferences documented by their provider
• Use inpatient hospital and emergency department services less for conditions such as diabetes, high blood pressure, asthma, pneumonia, or urinary tract infection.

This pay for performance effort resulted in incentive payments for four group practices and one consortium of health care practices. The top three shared savings recipients for this program were; Visiting Physicians Association capturing the lions share of the compensation, totaling 7.8 million, followed by the Mid-Atlantic Consortium, which includes Medical House Call Program at Medstar, Schnabel In-Home Care, and Virginia Commonwealth,  receiving 1.8 million, and  Portland, Oregon, Home Care Services, getting 1.2 million dollars in incentive pay.(2) It is pretty obvious that the health practices which were exclusively organized to provide home health care had an advantage for the first year of this program, based on the results achieved. However, the other groups may catch up in the three year period, as Medicare has stated it wants to tie 30% of all CMS reimbursements for patient care to incentive plans by 2016 and increase that to 50% by 2018. (3)  I am skeptical these results are possible, nor are all health care organizations going to be able to achieve this outcome, especially smaller practices, so there will be some fall-out on these bold goals. Finally, there is some concern that the focus on health metrics has gotten in the way of patient care, as so much of the clinical day is now devoted to completing forms and reports.

Today's house calls can include portable MRI machines for imaging as well as on-the-spot blood draws and testing, which enable clinicians to gauge the health of especially frail patients more closely. For a vulnerable Medicaid patient who is just out of the hospital, being able to remain at home, and not risk travel or hospital acquired infections could be a plus. However, all you have to do is walk your rounds in today's hospitals to see who the patients are, frail elderly people, who are often without family to look after them, so the house call bonanza won't apply to the entire population.

This article was written by Roberta Winter, a healthcare advocate who has published under the trademark, healthpolicymaven since 2007, and may be shared virally. For more straight talk on health care programs and policy you can follow me on twitter at:.https://twitter.com/healthpolicymav
 
Roberta Winter is the author of: Unraveling U.S. Healthcare-A Personal Guide, which may be found at http://www.amazon.com/Unraveling-U-S-Health-Care-Personal/dp/1442222972





(1) Laura Landro, "How House Calls Cut Medical Costs", Wall Street Journal, September 27, 2015
http://www.wsj.com/articles/how-house-calls-can-cut-medical-costs-1443407612
(2) Innovation Projects, Centers for Medicare and Medicaid, Independence at Home, Year One Results  http://innovation.cms.gov/Files/x/iah-yroneresults.pdf
(3) Centers for Medicare and Medicaid, Media Release, June 18, 2015
 https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2015-Press-releases-items/2015-06-18.html