Obamacare is the popular name for the Patient Protection and Affordable Care Act of 2010. Parts of it have already affected you, someone you know and the economy overall. The most controversial part, the mandate that everyone must purchase health insurance or pay a tax, starts in 2014. For more, see When Does Obamacare Start?
Here's a quick summary of how Obamacare affects you, depending on your situation. Find out How Much Will Obamacare Cost Me?
If You Already Have Health Insurance
You can keep your existing insurance if it's an individual plan you bought yourself, an employer plan (including COBRA), a retiree plan, Medicare, Medicaid, CHIP, TRICARE and other veterans health care programs, and Peace Corps Volunteer plans. If you have any questions, see qualifying health plans, or ask your health coverage provider.
Check to see if your plan was in existence before March 23, 2010, and was therefore "grandfathered in." That means it doesn't have to provide the Obamacare beneifts. Otherwise, all insurance plans must cover 10 essential health benefits in 2014. In addition, Obamacare has improved the benefits you already receive in eight ways.
- It allows you to add your children up to age 26 to your health insurance plan.
- Your insurance company can no longer drop you if you become sick, even if you made a mistake on your health insurance application.
- It can't limit the coverage you receive over your lifetime.
- If you have a child with a pre-existing condition, you no longer have to worry about losing coverage if you change your insurance. That's because the new insurance plan can no longer deny coverage to children with pre-existing conditions.
- If you or another adult has a pre-existing condition, you will get the same protection as your child in 2014. Until then, if you get denied coverage by a new insurance company, you can get temporary health insurance coverage from the state. (Find out more about the Pre-Existing Condition Insurance Plan)
- You may receive a rebate from your insurance company. Obamacare requires that they spend at least 80% of premium payments on medical services, instead of advertising and executive salaries. If they can't, the money goes back to you.
- Insurance companies must submit justification to the states for all rate hikes. Obamacare provides funding to the states to administer this.
- You won't have a co-pay for wellness or pregnancy exams.
Many people are concerned that their company will cancel their health insurance, forcing them to go on Obamacare. However, that probably won't happen. Companies offer health insurance as a benefit to attract good employees. They see it as cheaper than offering higher wages, because they don't have to contribute their share of payroll taxes.
However, some companies might find it more cost-effective to pay the penalty, knowing their workers can get coverage on the health insurance exchanges. Others may prefer to shop the exchanges themselves to get a better deal. The CBO estimates between 3-5 million employees might lose their existing plans as a result.(Source: CBO, The Effects of the Affordable Care Act on Employment-Based Health Insurance, March 15, 2012)
If anything, your premiums should decrease over time, as Obamacare is designed to lower health care costs. By allowing parents to add their children, more healthy people are paying premiums but not using the system as much. This adds to health insurance companies' profits, which should mean lower premiums over the long run. Similarly, Medicare recipients now have more of their prescription costs covered, allowing them to continue taking medications needed to prevent emergency room visits.
By 2014, everyone will be required to have health insurance. This means that more people will use preventive medical care, instead of waiting until they have to go to the emergency room. The average emergency room visit is $1,265, and hospitals have to eat this cost for indigent patients. When these costs are transferred to insurance companies or prevented, hospital costs, and therefore overall health care costs, will drop.
Note: All the above benefits apply to everyone once they get health insurance.
If You Don't Have Health Insurance
Starting in 2014, you will be required to purchase insurance or pay a penalty of as much as 1% of your income. You can shop for the insurance that meets your needs on the health care exchanges. If it's any consolation, members of Congress are also mandated to get their health insurance through the same exchanges, instead of the government-provided health insurance they get now. Unlike you, however, they get a $4,500 subsidy for individuals ($10,000 for family coverage) to help pay the cost. (Source: WSJ, Members Only, August 8, 2013; Affordable Care Act)
Exchanges allow you to compare health plans before you buy one. The exchanges also help you find out if you qualify for tax credits or other government health benefits. States are being given substantial Federal grants to fund the exchanges. Find out your state's status.
If You Can't Afford Health Insurance
In 2014, you will qualify for Medicaid if your income is 133% or less of the Federal poverty level (In 2013, that's $15,281 for an individual, or $31,321.50 for a family of four). This will be funded by the Federal government for the first three years, and 90% after that. Learn more about Medicaid.
If you don't qualify for Medicaid, you are eligible for a tax credit if your income is under 400% of the poverty level ($45,960 for an individual, or $94,200 for a family of four). You get the tax credit each month, instead of waiting for your annual tax rebate. You may also qualify for reduced copayments and deductibles. Here's How to Get Obamacare.
If You Are on MedicareYou now receive many wellness and preventive care visits for free. See Medicare Preventive Services for the full list. If you have Medicare Part D, Obamacare helps pay for your prescription drugs if you fell into the "donut hole." For more, see Drug Discounts. By 2020, the donut hole will be eliminated.
If You Are a Small Business Owner
25 employees or less - You can get a tax credit of 35% of the costs of health insurance. This goes up to 50% in 2014.
Less than 50 employees - You don't have to pay a fine if your workers get tax credits through an exchange.
50 or more employees - You must provide health insurance or pay a tax of $2,000 per employee (for all but the first 30 employees) starting in January 2015.
Less than 100 employees - You can shop for insurance on the exchanges in 2014 that should provide cheaper alternatives than are available now. If you offer health insurance as a benefit to early retirees 55-64, you can get Federal financial assistance. Find out how at ERRP. For more resources to help small businesses comply with Obamacare.