To Obamacare? or Not to Obamacare!

Cartoon Obamacare

As bad as the above cartoon is, I would be happy if it depicted our Obamacare situation.  Our health insurance reality is worse.  I’m offering this analysis as background which lead our decision to use the Obamacare exemption which requires us to be on foreign soil for a period of 330 days.  Yes, we are Obamacare Escapees, Bon Voyage……..

1)  “I got a cancelled insurance health insurance policy.”  Yes, the company I retired from, BB&T Bank, the 10th largest in the nation, cancelled our health insurance policy effective midnight December 31, 2015.  This forced me onto the Obamacare exchange to find insurance for myself.
2)  “I got doubled health insurance rates.”  Our premiums have gone up over 250% since 2011.  When I retired four years ago, my company-provided retirement health insurance premiums were $425.  After five years of The Affordable Care Act, (ACA) my monthly premium escalated to $1,500 a month.  This would be like the price of gasoline increasing from $2.50 to $8.75 and calling this government benefit the “Affordable Petroleum Act.”
3)  “I got a $6,500 deductible.”  In 2011 our deductible was $10,000 for a family of two and that was increased in 2016 to $12,000.

It is indeed bad when the reality of Obamacare is worse than what the cartoon exaggerated for the sake of humor.
Uninsured
We therefore recently made the possibly unwise financial decision to opt out of Obamacare, self insure and not contribute $18,000 for a $12,000 deductible policy.  While I certainly am not advocating this choice for others, here is my analysis of the financial position in which Obamacare has placed the two of us.
Exempt
The Affordable Care Act (ACA) considers insurance to be unaffordable and provides an exemption from the tax penalty  if your bronze plan insurance costs more than 8% of your annual income.  Dividing our $18,000 bronze plan  annual insurance premium by 8% means our South Dakota policy is unaffordable for all who make less than $225,000.  By IRS rules, my insurance is legally unaffordable for the vast majority of all Americans.  Clearly the system is flawed.  Wait, it gets worse…

Because we travel, any medical care we were to require would be treated as ‘out of network’ and would only be covered 70%.  So if I were to incur a $100,000 medical expense, I would need to pay the $18,000 annual premium + $12,000 deductible policy + $30,000 the insurance would not cover, or $60,000.  I would have to pay this $60,000 for $70,000 worth of coverage.  Is this really insurance?  How many families can afford to pay $60,000 out of pocket?

If we were to incur a $100,000 medical incident while not having Obamacare, we are only increasing our financial risk $40,000 vs. having insurance.  Statistically, the largest health risk we face would be from an accident, so we have obtained a $100,000 accident policy per person for only $2,100, that will cover us in the USA, as long as we are over 100 miles from our home town, as well as overseas.

Keep in mind that Obamacare would not cover us while traveling abroad.  Any emergency costs we were to incur overseas would not be covered anyway.  Further, we would need to be in good enough physical shape to fly back to our home town for treatment should we prefer to be treated in the US.

Something we cannot quantify is the cheaper cost of medical care overseas.  Obamacare did everything to include coverage for all, but little or nothing to limit costs.  My personal experience is care overseas is materially cheaper.  For a time I was on cholesterol medicine which can only be obtained by prescription in the States.  After spending few hundred dollars on a doctor visit and blood tests, I could then obtain my medicine for an additional  $10.50 a pill.  My total all-in cost per pill was close to $14.00.  In France and Mexico I was able to obtain this same cholesterol medicine, from the same manufacturer, with no doctor visit for about $1.25 a pill, a 91% discount.

We do not perceive us as risking our health, only our financial assets should we suddenly require medical treatment not due to an accident.  We have had physicals and all necessary preventative tests.  Until Medicare kicks in, we are self insuring.  Statistically, it seems the odds are in our favor.  It just seems so very wrong for us to be charged $18,000 for a $12,000 deductible policy.  We do not wish to be a part of this flawed program.  We are instead choosing to vote with our wallets and our feet.  Obamacare misses out on our $18,000 contribution to subsidize others and the US merchants lose our thousands of dollars spent on goods and services annually while we are overseas.

We have found that if we resided in a different state, such as Utah, a very similar high deductible insurance plan would only cost around $12,000.  Here is an example of how the ‘Affordable Care Act’ could have brought costs down but chose not to.  Simply allowing health insurance to be sold across state lines would have materially increased competition and brought down costs.  The founders of the ACA succumbed to the insurance lobbyists and allowed the current, less competitive insurance system to remain in place.

It has been fun for us to discover through Facebook and travel web sites so many other US citizens making similar health care choices.  We are certainly not the only Obamacare Escapees.  One of the rewards of a frugal lifestyle and saving during our entire working careers is that we are finally rewarded with the ability and freedom to make our own financial choices.  We have chosen to not participate in the Obamacare, not to spend our savings on supporting such a flawed system.

Cruise Ship Sunset

Regarding Obamacare, the IRS states if a taxpayer is “present in a foreign country or countries for at least 330 full days during any period of 12-consecutive months” they are exempt from Obamacare and the associated penalty.   We will therefore leave the United States for a period of 330 days and travel Europe and the world.  This adventure will be partially funded with our Obamacare savings.  Stay tuned for travel updates.

 

To provide some level of documentation of the health premiums charged to me by Wellmark in South Dakota, below is the Wellmark document outlining the costs of my Affordable Care Act for 2016.  (HSA stands for Health Savings Account)

Wellpoint Policies

12 thoughts on “To Obamacare? or Not to Obamacare!

  1. an abomination, a catastrophe, ridiculous, and absurd. Have fun avoiding this nonsense while abroad. Much health and continued happiness.

  2. Hi Harold, I sympathize with your healthcare situation. Having been self employed for many years, I got a big dose of healthcare insurance rates pre Obamacare. Luckily for me, I made it past 65 prior to Obamacare. Your escapee plan is very creative, and I wish you well.

    I have, however, a different opinion regarding one of the inequities of our healthcare system. It regards the regulation of insurance in general. Having been involved with long term care insurance (generating leads on the internet), I learned how difficult and expensive it is to deal with insurance on a national scale. The industry is regulated by state, and all activities by an insurance company (sales, marketing, product introduction, modifications…) must be approved by each and every state that is affected. Then Obamacare comes along and dictates that everyone in the country should be treated equally without addressing the uneven playing field controlled by our states. In my opinion, your comment “The founders of the ACA succumbed to the insurance lobbyists and allowed the current, less competitive insurance system to remain in place.” is not quite accurate. If the insurance industry was regulated on a national basis, it would (should), in theory, be much easier and less expensive to operate. (Note: I’m not saying or suggesting we should federalize the insurance industry.) I believe this issue is all about state’s rights, and had Obama tried to address it; politicians at both the federal and state levels would still be blowing smoke up their collective asses. So our great leader decided to do what he normally does – ram it home regardless of the consequences, citizens and insurance companies be damned.

    • Bob, I sincerely appreciate you reading of my insurance woes….. May be I’ll rename the BLOG to “Ram it Home or not to Ram it Home.” I would write more no but in 60 seconds we board the buss to get on the cruise boat to Barcelona. I wish you good health…. Never thought I would look forward to Medicare.

  3. Harold and Bob: I have read this discussion with great interest. Good writing and well presented information from both of you. Thanks!

    • I’m not totally sure it came thru in our writings, but I THINK we are BOTH in favor of breaking down state line barriers and increase competition. Thanks for reading it Reid. We are Obamacare Escapees in Miami FL on our way to Barcelona.

      • I’m not necessarily in favor of breaking down state barriers. There’s something about nationally run programs that makes me want to vomit. The point I was trying to make is it doesn’t make sense to have one side (consumers) ruled at the national level while the other side (insurance industry) is ruled at the state level. Any government controlled program, national or state) is usually loaded with politics and inefficiencies, but a program that is dictated by both levels is truly fucked up. I guess I’d rather swallow my vomit than leave things the way they are. However, abolishing Obamacare and pushing everything gown to the state level seems more appealing to me. If you don’t like the situation in your state, move. At least one wouldn’t have to flee the country for 330 days. I couldn’t resist, Harold, but I know you’d be going in any event, and using Obamacare as economic justification is pure genius. Bon Voyage!

      • Bob, you are right we would be going to Europe anyway. We went before and traveled for 6 months. The cruise boats come and go every 6 months or so. We were VERY ready to come home. However, now to comply with the Obamacare Exemption we now must be gone for 330 days AND need to do it without health insurance. All Unwanted and Undesirable due to the UNAffordable Care Act.

  4. Hi Harold – I’m coming ’round to your way of thinking. I just called Healthcare.gov marketplace and was told that since I’m going to be out of the country from July 1 through the end of 2017, I didn’t need US coverage. (I’ve learned that isn’t entirely true from your posts). They said nothing about the 330 day exemption. I’m checking with my tax guy. We won’t be back in the states until May of 2016 – unfortunately, return cruise takes us through some US territories. Will keep you posted.

  5. Hi Toni, Per the IRS, the 330 days must be spent inside the boarder of foreign countries, any days at sea do not count. When you arrive by a cruise boat into Barcelona for example, your first day of the 330 is the FOLLOWING day. Generally cruise boats do not spend the night at the ports so none of the days cruising count for the 330. The US Territories are another matter that I’m unsure about. For example a restaurant owner told us, St. Thomas voted and surprisingly, they rejected Obamacare. So it is possible 330 days spent on St. Thomas may qualify for not paying the IRS penalty. But that unique situation does not apply to your cruise situation. However, the 330 days only exempts us from the IRS penalty, one still needs to deal with health coverage.

    • Ah yes, the yet little know or reported upon ‘risk corridors.’ The ACA created the three-year program to limit how much money health insurance companies could lose or gain in the first three years of the exchanges. Plans with lower-than-expected medical claims pay into the program, and plans that had higher-than-expected costs receive money. This was a means by the ACA to get insurance companies on board and not fight the legislation. As it turns out, there are not enough insurance companies making money to pay into the ‘risk corridor’ program, so the Obama administration is paying them only about 12% of their losses. The Wall Street Journal recently reported that “insurers requested approximately $2.87 billion in risk-corridor payments based on their 2014 results. But only $362 million came in from other insurers.” That is a shortfall of $2.5 billion and if paid can only come from one source, the tax payer. However, that is not the largest risk to the program. If the insurance companies do not get paid, they will drop out of the program. Stay tuned….

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