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Understanding Obamacare

Written by Ilyce Glink on September 7, 2012 in Insurance  |   5 comments

The Patient Protection and Affordable Care Act, otherwise known as its more politically charged name, Obamacare, has been in effect since 2010. But the cornerstone portion of the legislation, the individual mandate, was on shaky ground until the Supreme Court upheld its constitutionality this summer. So…

understanding obamacareThe Patient Protection and Affordable Care Act, otherwise known as its more politically charged name, Obamacare, has been in effect since 2010. But the cornerstone portion of the legislation, the individual mandate, was on shaky ground until the Supreme Court upheld its constitutionality this summer.

So what does the Affordable Care Act (ACA) mean for you, outside of all the political posturing?

It means different things for different people, but at its most basic level, it means that all Americans must have insurance.

If you don’t have insurance, open enrollment under the ACA will begin in October 2013, and Americans have through 2014 to buy insurance before facing penalties.

Every American must obtain insurance in 2014 or it will cost each person $95 or 1 percent of his or her income, whichever is higher. For a family, the penalty is $285 per household or 1 percent of income in 2014. In 2015, the individual penalty rises to $325, or 2 percent of income, and in 2016 it rises to $695 or 2.5 percent of income. The penalties, which are assessed through annual taxes, get steeper each year by the cost-of-living adjustment.

Some states and the federal government will set up online exchanges—places where people can look for insurance coverage and compare plans. You can already compare insurance coverage options at HealthCare.gov, where you can learn more about the ACA.

If you already have health insurance through an employer, there are other portions of the law, some already in effect, that will impact your health insurance.

  • Children will be covered longer under their parent’s health insurance until they are 26 years old.
  • Health insurance providers can no longer deny insurance to people with preexisting conditions. This rule does not take effect until 2014, but until then people who have been without coverage for at least six months can join a Pre-Existing Condition Insurance Plan, sponsored either by the federal government or the state in which the individual lives.
  • “Already over 77,000 people have enrolled in the Pre-Existing Condition Insurance Plan, and it is now illegal for children under 19 to be denied coverage due to a preexisting condition,” said Fabien Levy, press secretary at the U.S. Department of Health and Human Services, in an e-mail.
  • Women cannot be charged a higher premium for their health insurance coverage.
  • More preventive coverage is mandated, including wellness visits, certain immunizations, and certain health screenings. See the full list of preventive services covered.
  • Insurance companies can no longer raise premiums by double digits without justification, Levy said. The law includes an 80/20 rule, meaning that 80 percent of all premium dollars (or 85 percent for insurance offered by large employers) must be spent on health care, not administrative costs like overhead or CEO salaries.
  • Premium subsidies will be available for individuals and families with incomes between 133 percent and 400 percent of the poverty level, or $14,404 to $43,320 individual annual income and $29,326 to $88,200 for a family of four. These families will pay a percentage of their incomes toward their premiums, depending on how much they make.

The big question that politicians and pundits wrestle over is the true cost of the legislation. Will it mean higher or lower health insurance costs? Will it mean more congested waiting rooms and waning care? Will it mean an expansion of the medical industry?

Until the law is fully implemented, it’s hard to tell.

Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and at the Home Equity blog for CBS MoneyWatch.

5 comments

  1. Shirley says:

    Senior citizens ALWAYS suffer. Recently I was at the hospital and was shocked to learn that there are now new regulations from Medicare, due to all the cuts (all the money taken from Medicare to pay for OTHER bills). I have had cancer and have several side effects, when I went to the hospital for treatment, I had to sign a paper that, even though I needed to be admitted to the hospital, I had to sign a paper stating that I was only being admitted “FOR OBSERVATION” not as an IN PATIENT. Stating it this way, I would be more liable for a greater percentage of the hospitable bill. The paper stated that I would receive the same treatment as a regular patient, however, over four (4) days (and they never did diagnose my problem, they referred me to JohnsHopkins Hospital in Baltimore, yet they would not change my status to In Patient) they never changed my bed, and never bathed me. I just can’t wait to get that hospital bill. I’m still paying the bills from last year for all the cancer treatments.

  2. The O says:

    so it means that as soon as a baby is born the government already wants its share of that baby’s life. this is the downfall of america…

  3. sandsgrandmother says:

    There is a certain sectors of individuals that will not be paying one dime for their care. Just to mention one , Certain Union memebers with good paying jobs will not be paying.

    Sorry, this is not the answer making people pay for others insurance.

    Nothing was fixed. I am long retired from a hospital and for example it was nothing to see 400% and not 100% mind you, but 400% in price increase from what the hospital paid from the manufactures. Then the 400% passed on to the patient. This is just one example.
    When you start digging into what the insurance companies are making, what the hospitals are making…not one thing was fixed for the patient/customer.

    If you made hospital advertise what each item /procedure/hospital room and etc. costs so that patients / clients can shop around then you will see a drop in costs.
    If instead you see insurance carriers from around the world being able to be accepted by the hospitals then you will see lower costs associated with insurance.

    You still have not got away with what basically amounts to death panels.

    If individuals truly studied the health care system in Canada, and around the world then you would find that the quality of care will be going down.
    My husband works with what they all called themselves , the little U.N. because employees came from all around the world to be trained and/or hired in the U.S. and they all said without a doubt we will regret this move.

  4. Mark Prasack says:

    I dont understand this I need to study more, politically i cant say im democrat or republican. Im 25 years old and have a bachelors in accounting, I cant find permanent work, b/c i did not do an internship and my grades were average. So i am working for a business which pays under the table, so in may when i turn 26, no more health care for me. A couple of questions to those that can help me…
    –Where (website or book) can i find in depth information on how medical care works in america and abroad
    –To those who worked in hospitals–When someone needs a lot of treatment for something expensive, say a car accident, or something, but they do not have insurance, then the hospital treats that person..who foots the bill? the taxpayer, hospital, government???
    –If this bill goes through, how much for obamas health care? How much will it cost per month? (I make about 25,000 bux per year)
    Thanks for your help, and GOD BLESS AMERICA

  5. DKMacLeod says:

    When is the section “Women cannot be charged a higher premium for their health insurance coverage” in effect. I have a small business and my carrier charges my female employees a higher premium than males


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