How Will the Affordable Care Act Affect You?
Everyone has heard of the Affordable Care Act, also known as Obamacare. However, more than half of all uninsured Americans are currently unaware of exactly how and when it will affect them.
The answer is dramatically – and soon.
All individual Americans who are not provided with health insurance by their employers, Medicare or Medicaid are expected to sign up for an individual health insurance policy between Oct. 1, 2013, and March 31, 2014. The policies will go into effect Jan. 1, 2014.
If you fail to purchase a policy, you will face a tax penalty of either $95 per adult or 1 percent of income, whichever is greater. That’s not too bad now, but by 2016, the penalties will be $695 or 2.5 percent of income.
Go to a Health Insurance Exchange
Sixteen states and the District of Columbia have set up health insurance exchanges to help individuals choose a health insurance plan. In the remaining 34 states, exchanges are operated by the federal government. Information about exchanges is available at healthcare.gov or 1-800-318-2596.
Exchanges offer free help — in person, on the phone or over the Internet — from people called navigators. Exchange websites allow consumers to compare costs and benefits among the various insurers offering individual policies in their states. Most consumers will be able to choose from an array of plans offered by five or more different insurers.
As enrollment kicks off, many community groups and social agencies will also train and deploy navigators.
Policies Must Cover 10 ‘Essential Benefits’
All individual health insurance policies offered by exchanges must cover 10 “essential benefits.” Many of these have not been previously included in individual policies. These are:
- Ambulatory patient services, such as doctor’s visits and outpatient services
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care.
All existing healthcare plans, whether offered through exchanges or in the general marketplace, must be updated to meet these standards. Otherwise, the policyholder will be subject to the fines.
Dramatic Differences in Coverage
For the first time, insurers can no longer exclude from coverage individuals with pre-existing conditions. Insurance companies are barred from turning away the sick or charging them more.
The only factors that insurers can use to determine an individual’s premiums are smoking status and age. Tobacco users could pay as much as 50 percent more in premiums. Premiums for older Americans can be no more than three times the amount insurers charge a policyholder who is 21. Previously, older insured paid five to seven times more.
Choose from Four Categories
Individual must choose a plan from one of four categories. Bronze plans cover an estimated 60 percent of the cost of medical care. Silver plans cover 70 percent, gold cover 80 percent and platinum cover 90 percent.
The premiums will be lowest and deductibles and copayments will be highest for bronze plans. The premiums will be highest and the deductibles and copayments lowest for platinum plans. The others fall in between. Annual out-of-pocket expenses for individual policies will be capped at $6,350 for a single person and $12,700 for a family.
In addition, those under age 30 can buy a very limited “catastrophic plan.” Very low-income uninsured individuals will be steered to safety net programs like Medicaid.
Tax Credits Soften the Blow
To make individual health insurance policies more affordable, tax credits are available. Individuals with incomes of up to $5,960, couples earning up to $62,040 and families earning up to $94,000 (for a family of four) may be eligible for tax credits that cap their premiums (on a mid-range plan) at between 2 and 9.5 percent of income.
Individuals with incomes under $28,725 and families with incomes of under $99,075 may also receive help with copayments and deductibles.