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The BIG Health Insurance Gap: Self-employed Baby Boomers

Posted by Chip Block on February 11, 2018 12:00 PM EST
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As an employee health benefits consultant, I am always focused on ways to help clients improve the value of their employee health benefits offerings.  It's getting harder every year to do that.  But the worst case scenario is....

...the self-employed or independent contractor workers who are between the ages of 50 to 64 years of age.  This group is getting crushed with outrageous premium costs and increases for horrible health insurance plans with deductibles that are $6,500 or greater.  They don't qualify for employer-sponsored, subsidized health insurance benefits and many are not eligible for the health insuranace  marketplaces tax credits-or income subsidies.  While I don't build my practice around the self-employed segment of the market, I am very sensitive to the terrible situation that these hard-working, entrepreneurial American workers are caught up in over the last few years.  For you see, I am one of them-a self-employed entrepreneur who is hired as a consultant or independent contractor, very often doing the work that fully-employer, benefitted employees once did for their "employer". 

This group is "sandwiched" between the need to provide and prepare for retirement, often being required to help young adult children make ends meet (sometimes providing  housing for their adult children and often helping with "loans" which may not be met) AND increasingly being drawn in to help provide a financial or health services solution due to the need to help their own parents who may be in difficult health or financial straits.  And many have been cast out and have had a very difficult time 

There is very little written in the public media about the shocking impact that the ACA and the " legalized" extortion being brought against this group.  You won't find much dsicussed on TV, written in newspapers and or debated a pulbic political forums about how much the insurace premiums cost this group, on top of the other financial strains upon them.  But it is a large group that the Kaiser Family Foundation estimates to be almost 15% of total population, perhaps as hight as 25% of all adults above the age of 21 years.  is caught up in the extortion-like way in which insurance carriers have raised the individual and family health insurance rates on this group (since the ACA requires rates to be tied to age and geography, regardless of whther individuals or families in this age segment are healthy or not).  

I don't enjoy using strong words like "legalized extortion" or "extortion-like way" insurance companies have penalized the very large and fair-minded group of American workers who have continued to earn a living, pay income taxes and not receive any governmental financial help nor enjoy employer-subsidized benefits because this group is self-employed.  But make no bones about it, what carriers have done is to raise the rates on this group by as much as 95% (in Virginia) to then have the government pay that increase back to the carriers for those on the health insurance marketplace subsidies/tax credits.  Those older citizens who make incomes below a cerain amount get Federally funded income tax credits (subsidies) that eliminate all but 1.5% of the increase, with the Federal government paying the 98.5% difference in the up to 95% increase.  On the other hand, if you are in this age group and earning enough of a living to not qualify for the tax credits then you are truly "stuck" with paying a monthly premium increase that can literally be as much as $1,500 per month (not $1,500 total, but $1,500 in INCREASE on a plan which may have had a premium the prior year of almost $1,400 per month).  As a self-employed consultant, let me say that one thing I can do is deduct these outrageous costs from my taxable income as a business expense.  Thank goodness for that!

So, let me tell you my story on of how the impact has been so you know that my sympathy for this group is REAL:

Two years ago, my wife and I had a plan from one of Virginia's health insurance carriers that had a $4.500 deductible and an premium of over $1.100 per month.  The following year, last year, our deductible was raised to $7,150 ($14,300 for both of us) and our premium rose to $1,385 pre month.  This current calendar year, our deductible stays at $7,150 each-$14,300 for both of us_ and the premium has risen to over $2,800 per month!  This by any measure and by any definition a "CATASTROPHIC health insurance plan" that we are expected to pay $2,800 per month for.  In other words, we must spend at least $29,000 per year (monthly premiums plus expenses up to our $7,150 deductible) to even get any benefit at all!  What compounds this, and thank goodness for this too, is that in the last five years I have only gone to the doctor twice per year for check-ups!

So, I'm not necessarily writing this blog today to garner sympathy from others.  I'm not asking for money or a "GoFundMe campaign either.  What I am saying is that health insurance, like health care itself, is fundamentally BROKEN.  The unhealthy poor are rewarded without any CONSEQUENCE or COMPLIANCE to do anything to improve their overall health.  And others, like me-healthy or not-are being financially exploited as a result of this.  Now, more than ever, we MUST focus on creating real programs that require people who get great benefits from the Federal government, to do something to reduce their costs that the rest of us are being forced to pay for.  We must provide positive incentives for unhealthy people to become HEALTHY-not simply continuing to pay their health care costs and not require anything of them in return.

You see, health reform is a much more powerful concept than health INUSURANCE reform.  But if health INSURANCE reform is to have an impact on reducing health care costs, there must be INCENTIVES, CONSEQUENCES and COMPLIANCE built into the programs for unhealthy people that have the government and others like me and all 50-64 years olds, pay their bills!

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