Just When I Thought I Was Out, Obamacare Pulled Me In!

Much like Michael Corleone (Al Pacino) in The Godfather: Part III, when he realized that he was never going to escape his mafia life, such was my reaction upon discovering that Obamacare was going to succeed in pulling me into its tangled web. I thought it might be helpful to my readers to hear my story as it relates to the good, the bad, and the ugly of the Affordable Care Act.

As a pastor serving a church in southern New Mexico, I have been blessed to have my church provide Family Health Insurance coverage as part of my benefits package. In fact, every church where I have served full-time has provided such a health insurance benefit. As is also the case now and with my previous churches, I have purchased my own individual policy outside because the churches where I have served, including Bethel Baptist Church in Alamogordo, NM, have not found it affordable or feasible to purchase group health insurance coverage. That has never been a problem until part of the Affordable Care Act kicked in on January 1, 2014.

Up until this year, pastors and other employees of charitable organizations (both religious and secular) have been able to purchase individual health insurance policies and have their employers pay the cost of the health insurance premiums, either directly to the insurance company or as a reimbursement to the employee for the actual cost of the premium. In my particular case, my church reimburses each month for the cost of the premium and I pay my insurance company (Blue Cross, Blue Shield of New Mexico and the New Mexico Medical Insurance Pool) myself. Churches and other non-profits can still pay their employees for individual policies, but, as of January 1, all such payments or reimbursements are no longer able to be done on a tax-free basis.

So, what does that mean? It means that the $16,000 budgeted by Bethel for my health insurance premiums are now considered taxable income because the Affordable Care Act, in one of those provisions that Nancy Pelosi said we would have to discover once the bill was passed, disallows pre-tax reimbursement plans for individual policies. Therefore, not only will my taxable income increase by $16,000, but my self-employment tax (pastors are considered self-employed for social security/medicare tax purposes) of 15.3% will increase my SECA taxes alone $2,260! I have no idea what my income tax increase will be when all is said and done.

That is the ugly part (one of many) of the Affordable Care Act. As I shared in an email last week (still waiting for a response from either one) with my two Democratic Senators from New Mexico, Tom Udall and Martin Heinrich, I do not believe that this provision of the ACA (which I assumed that neither one was aware of when they voted to pass the bill) is affordable or caring. When most families, including those serving in non-profits throughout the nation, are trying to make ends meet, I do not see how adding an additional tax burden can be the best way to insure affordable care for all Americans.

Now, for the bad part. Because my individual policy was grandfathered in, I was going to be one of the few who, in President Obama’s infamous promise, “could keep their policy if they like their policy.” We did, in fact like our policies. I say policies because my oldest son Stephen, who was diagnosed with Perthes Disease (a childhood hip condition) in 2006 when we lived in Virginia, was rejected for coverage through Blue Cross, Blue Shield of New Mexico and had to obtain a separate policy through the New Mexico Medical Insurance Pool. While not ideal, both policies were good and we have never had any issue with insurance coverage or payments, even with my three hospitalizations for appendicitis in the last three years. I was truly hopeful that we would not have to change policies or otherwise wade into the Marketplace to get the dreaded Obamacare insurance.

Before moving to the good of Obamacare, I must share that my insurance premiums for both of these policies were approximately $1,500 (for five people). Both our family policy and my son’s individual policy have seen premium increases of hundreds of dollars in the last six months. Just this past Monday, I received a notification from the New Mexico Medical Insurance Pool that my son’s premium would increase another 23.8% on July 1, 2014. Including the increase in January, that will mean that his insurance will have gone up by $68 in a matter of months. Couple that with our own increase of  $179 since November and we are now looking at spending $1,528 per month on insurance or $18,336 for the year. That is not only bad for us as a family, but it is bad for our church, which has budgeted $16,000 for the year. Prior to the Affordable Care Act, I believe this would have been more than sufficient.

Now, for the good. I share this good as one who was adamantly opposed to the passage of the Affordable Care Act. I believe that, on the whole, Obamacare has caused more disruption and chaos in our health care system than was necessary or required. While I do not believe that the Affordable Care Act should be repealed in its entirety, I do believe that there are major changes that could be made which would improve the stability, quality, and affordability of health care for all Americans.

Because of my own predicament with a new tax on my insurance premiums, I decided to give Obamacare a focused look. On Tuesday, I created an account on the Marketplace at www.healthcare.gov.  While the application process was somewhat long, it was not complicated. I never ran into any difficulties navigating the website and, as far as I could tell, the site ran smoothly. When all was said and done, I was able to qualify for a $366 tax credit, which lowered my overall monthly premium to $1,072.49 (or $12,869.88 per year). That is a significant savings. And, despite the horror stories that I have heard regarding high (some outrageously high) deductibles and out-of-pocket expenses, we were able to secure a family policy with Blue Cross, Blue Shield of New Mexico with coverage (including co-pays, deductibles, out-of-pocket expenses, etc.) almost identical to our current policy.

Another good aspect of Obamacare is that our oldest son will now be on our policy, his pre-existing hip condition no longer a barrier to coverage. As one who has been personally affected by my son’s previous rejection because of his Perthes Disease, I for one am thankful for the provision in the ACA which prohibits insurance companies from using pre-existing conditions (particularly in children) as a way to deny coverage. Of course, if the ACA would have allowed for portability of health insurance across state lines, this would not have been an issue, at least in our case.

I don’t know where all of this will end up for our family or for our church. Although I am glad that we were able to obtain health insurance that was more affordable, I wish that the ACA would not have eliminated the ability of churches and other non-profits from reimbursing (tax-free) the cost of employees’ individual health insurance premiums, as was the case up until this year. For those who say that there is nothing good about Obamacare, I would now say, based on my own experience, that this is simply not true. For conservatives like me, who have been deeply skeptical of the Affordable Care Act, I think it would be wise to acknowledge those aspects of Obamacare that are good. Don’t necessarily throw the baby out with the bath water. And, for those who have wholeheartedly supported the ACA and its implementation, I think it would behoove you to acknowledge that there are not just glitches with the website, but that there are major problems and serious unintended consequences of a bill that was never fully vetted or read before it was passed. Surely there are fixes — both major and minor — that Republicans and Democrats can agree need to be implemented (and not just because of an election).

So, that’s my story of how I thought I had avoided Obamacare, but instead got caught in its web. It’s not all bad. As the year progresses and as our “Obamacare Insurance” (there’s really no such thing) commences on April 1, I’ll let you know how things are going. Hopefully the ugly and the bad will be minimized while the good is enhanced. After all, I’m an optimist at heart who believes in grace, even for that (and who) many do not want to show any grace.

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