Promises Made To Protect Preexisting Conditions Prove Hollow

by Jay Hancock and Rachel Bluth

“The Senate bill guarantees people with preexisting conditions access to insurance at the same rate as healthy people, but there is not a guarantee that the benefits they need will be covered by insurance,” said Larry Levitt, a senior vice president at the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

Obamacare, too, allows states to make exceptions for essential health benefits — but with strict limits. Coverage must be at least as comprehensive as the federal standard, for one thing. The Senate bill contains no such safeguard.

“As long as they can show that it’s budget neutral, states would have a lot of latitude” to cut essential benefits, said Christopher Koller, president of the Milbank Memorial Fund and a former Rhode Island insurance commissioner.

Insurance plans for individuals might again start to look as they did in the days before Obamacare, when they typically excluded coverage for maternity, mental health and substance abuse, health policy experts said.

That’s especially true because the Senate bill would allow governors to lower coverage standards by executive certification — without approval from legislatures, Corlette said. The measure would also permit governors to raise or eliminate Obamacare’s caps on what patients pay annually out of pocket before insurance kicks in. That could make care for preexisting conditions unaffordable even if it’s covered by the plan.

For their part, insurers may heavily pressure states to make such changes, analysts said.

Unlike the Affordable Care Act and the House bill, the Senate bill contains no incentives or inducements for healthy people to maintain medical coverage. That could result in a disproportionately sick group of people buying individual insurance, driving up carriers’ costs and prompting them to seek ways to trim coverage and cut claims.

“If the only people motivated to buy insurance are going to be the ones who really need it, insurers are really going to have a strong incentive to use their benefit design to deter enrollment for the sickest people,” said Corlette.

“They have to enforce the law,” he says. “It’s exactly the same as last year.”

Though Porter doesn’t advise it, if you choose not to report your coverage on your tax return, he urges you to make sure you have your 1095 form so you have proof of coverage.

“If the IRS does come calling and says you owe this penalty, producing that document may be very useful,” he says.

Michael Eisenberg, a CPA in Encino, acknowledges that there may be consumers who owe a penalty and are hoping that a repeal in the coming months would get them off the hook.

They could request a tax-filing extension, allowing them to submit tax forms to the IRS in October, he says.

But that’s not a sure thing and would require any change in the law to be retroactive to the 2016 tax year, he says. If the penalty is not forgiven, they would have to pay it, plus interest.

“Maybe there will be clarity by October, maybe there won’t be,” Eisenberg says. “You can take your chances, but what’s the likelihood the law would be repealed retroactively? I don’t think it’s that great.”

Krochman, the Costa Mesa CPA, has a few clients who owed the penalty in previous years but haven’t paid it.

“They’re kicking the can down the road in the hopes there will be retroactive removal of the penalty once the law is repealed or replaced,” she says. “What happens down that road, we don’t know.”

Given the uncertainty, my biggest piece of advice is, and always has been, to consult with a tax professional. If you can’t afford it, multiple programs offer free tax help, including the Volunteer Income Tax Assistance (VITA) program, run by the IRS (www.irs.gov/VITA) and the AARP Foundation Tax-Aide program (www.aarp.org/findtaxhelp).

In the face of the confusion, Curtis, of Fresno, erred on the side of caution.

“I ended up deciding this year to go ahead and file the exemption paperwork and be safer than sorry,” she says. “It is the law, and we’re stuck navigating our way through it, as difficult as it may be.”

 

 

 

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This story was produced by Kaiser Health News, which publishes California Healthline, an editorially independent service of the California Health Care Foundation. Kaiser Health News (KHN) is a national health policy news service. It is an editorially independent program of the Henry J. Kaiser Family Foundation.





JADE Magazine
JULY+AUG 2017


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