Illinois consumers who purchased health insurance on the state’s Affordable Care Act exchange are paying 26% more for coverage, on average, than they did last year. And the number of people who enrolled in the plans dropped nearly 4%, according to the state.
The 26% average increase in monthly premiums is difficult for many people. But it’s a far cry from the 78% average hike that state regulators previously said could occur if the federal government didn’t renew enhanced premium tax credits and people stayed on their plans from last year.
After several contentious months that included a government shutdown over the issue, Congress failed to reach a deal to extend those more generous tax credits. The enhanced tax credits expired at year-end.
This means that fewer people now qualify for tax credits to help offset their monthly premium costs. Also, those who still qualify may receive smaller credits than in the past.
State data shows that about 3.7% fewer people enrolled in exchange plans during open enrollment. This went from November 1st to January 31st in our state, compared with last year.
Illinois consumers with exchange plans are paying an average monthly premium of $328 per household for exchange coverage this year. This compared with only $260 last year, according to Get Covered Illinois, the new state-run exchange.
Let me leave you with this…
I’m not a fan of Obamacare. Health insurance costs for my company have more than tripled since its inception.
Many reasons for this are publicly discussed. But there’s a tax reason that never gets any airtime.
It’s the fact that premiums held by insurance companies to pay future claims are deductible in the tax year in which they’re received.
Obamacare required insurance companies to pay unlimited claims. The health insurance costs of policyholders must be covered, regardless of the cost.
Insurance underwriters are now called upon to underwrite infinity. By definition, this is impossible.
So they set aside hundreds of millions of dollars each year earmarking this money to pay the future claims for their policyholders. Even though they haven’t spent a dime of this money, they get to deduct it inside that current tax period.
Obamacare was the best thing to ever happen to the insurance industry. It gave them a literal license to steal.
Even though I haven’t heard of anyone who actually used the unlimited claims of the plans, we’re all paying for it. Consequently, the pricing for all our goods and services has needed to increase substantially.
And two things have happened.
Few policy holders, if any, are using the unlimited claims feature and the insurance companies aren’t paying any taxes on it. They’re sitting on billions of income tax-free dollars.
Imagine what you’d do if you owned one of these businesses.
By November, you’d sit down with your accountants to review that year’s profits. You’d then decide which profits you wanted to pay income tax on and just say that the rest was being held for future claims.
Socialized medicine has led to the ultimate inefficiency as socialism always does.
And Illinois residents just received a 26% rate hike. Only God knows what next year will bring.
As always, if you’re having problems with your accounting and tax work, please don’t hesitate to contact us.
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Sincerely yours,
Chris Amundson
President
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