Obamacare is the Patient Protection and Affordable Care Act of 2010. The name was created by critics of President Obama's efforts to reform health care, but it stuck. Even the President likes it, because he says it shows he does care.
The most important part of this Act requires you to have health insurance in 2014 or be subject to a tax. See When Does Obamacare Start?
Open enrollment through the exchanges ended March 31, 2014. The deadline was extended is you tried to sign up, but couldn't. Those who don't have insurance will be taxed 1% of income unless certain conditions apply. Find out How Much Will Obamacare Cost Me?
Here's the Facts You Need to Know
The health insurance exchanges opened on October 1, 2013. Some exchanges are run by states, and some by the Federal government. At first, the Federally-run exchange made you wait hours, if you could register at all. However, it's been cleared up and you can now compare plans.
Keep in mind to compare, not just your monthly premium, but your overall anticipated health care costs. This includes the annual deductible, percentage covered, and copayments.
If you already have insurance, you can keep it IF:
- It was in existence before March 23, 2010. In that case, it's been grandfathered in.
- Your employer keeps its plans. However, many companies are using this opportunity to drop covers, or change how they provide it.
- Your insurance company keeps your plan. Many have canceled plans that don't meet the minimum requirements, as detailed in the first section below.
Here's more facts, customized to your personal situation:
If You Already Have Insurance - All insurance plans must provide services in 10 essential health benefits categories. In addition, those with pre-existing conditions can no longer be excluded (children in 2010, adults in 2014). Health insurance companies can no longer drop those who get sick. Parents can put their children, up to age 26, on their plans. However, if your plan began before March 23, 2010, then it might be "grandfathered in," and not have to provide all these benefits. Therefore, even if you have insurance, it will be worth your time to review it and compare it to those on the exchanges.
If you have Medicare, the "donut hole" gap in coverage will be eliminated by 2020.
If You Can't Afford Insurance - Medicaid will be extended to those who earn up to 133% of the Federal poverty level. That's $15,281 for an individual, or $31,321.50 for a family of four in 2013. The poverty level usually increases each year to keep up with inflation.
However, not all states have elected to expand Medicaid, even though the Federal government will subsidize it. If you live in a state where you are eligible for Medicaid, but the state won't give you coverage, you won't have to pay the tax if you can't get insurance.
Those who earn too much for Medicaid will receive tax credits if their income is below 400% of the poverty level. In 2013, that's $45,960 for an individual, or $94,200 for a family of four. The credit is applied monthly, rather than as an annual tax rebate. There are also reduced copayments and deductibles. Find out How to Get Obamacare.
If You Don't Get Insurance - If you don't enroll in a health insurance plan by the end of open enrollment (March 31, 2014) you won't be able to get insurance through the exchanges. (Find out about special circumstances here.) You must have coverage for at least nine months in 2014 to avoid the tax.
The Supreme Court ruling allows the IRS to tax you 1% of adjusted gross income, but no less than $95 per adult/$47.50 per child in 2013. The amount rises in 2015 and 2016. For more, see Obamacare Taxes.
If You Make More Than $200,000 a Year - Taxes increased in 2013 for wealthy Americans, some health care providers, and other health-related businesses.
If You're a Business Owner - The mandate to provide health insurance for your employees has been postponed to January 1, 2016 if you have 50-99 employees. This may be good news for you, because many of your employees may find insurance on the exchanges by then, lowering your costs. If you have 100 or more employees, you must provide insurance to at least 70% of full-time employees or pay a fine. For more, see Treasury Press Release.
If you have 50 or fewer employees, you are eligible to look for better employee coverage on the SHOP exchange. For more about how the Act affects you, depending on the group you're in, see How Will Obamacare Affect Me?
Little-known FactsThe Affordable Care Act contains many provisions that aren't as well known. For example, it created the National Prevention Council that coordinates all Federal health efforts to promote active, drug-free lifestyles. It funds scholarships and loans to double the number of health care providers in five years. It cuts down on fraudulent doctor/supplier relationships. It also requires background checks of all nursing home staff, to prevent abuse of seniors. For more details of all ten Titles, see Obamacare Bill.
Obamcare Pros and Cons
The main advantage of the Affordable Care Act is that it lowers health care costs overall by making insurance affordable for more people. That's because insurance will be extended to two uninsured groups. First, it will include many more younger people, who are healthier. This lowers costs overall because they'll pay premiums, but won't use as many services. Second, insurance will become available to people who now use expensive hospital emergency room treatments instead of going to a primary care physician. This lowers costs because they will have their conditions treated before the expensive critical stage.
Another advantage is it provides insurance more fairly. Prior to the Act, only people who fell into one of four categories could get affordable health care:
- Those who work for a company that provides it.
- Those who can afford to pay on their own and who have no pre-existing conditions.
- The very poor, who have Medicaid.
- Those who are 65 and older, who have Medicare.
If you don't fall into one of those categories, you are forced to pay for health care out of your pocket. If you can't afford it, either the hospital must pick up the cost, or you must declare bankruptcy. The U.S. system was set up this way in the 1940s when the Federal government gave tax breaks to companies who provided health insurance for their employees.
The main disadvantage is that the Act could increase health care costs over the short term. That's because many people will receive preventive care for the first time in their lives. This could lead to treatment of heretofore undiagnosed illnesses, driving up costs. (Source: CBO, 2009 Study on Preventive Health Care, August 7, 2009)
Most of the disadvantages are accruing to those individuals and businesses that are paying higher taxes. In addition, somewhere between 3-5 million workers could lose their existing, company-sponsored health insurance if their company finds it more cost-effective to let them buy it on their own and pay the penalty. For details, see Obamacare Pros and Cons.
The cost of Obamacare has been listed as both a pro and a con. That's because the calculation depends on the assumptions used. Estimates ranging from $1.76 trillion added to the debt down to $143 billion subtracted from the debt are all correct (in their own way). Find out how in Cost of Obamacare. Article updated April 16, 2014.