How Does Obamacare Work for Me?

Find Out How It Works for You

obamacare
How much Obamacare cuts your medical costs depends on your situation. Photo: Hinterhaus Productions/Getty Images

Obamacare works by mandating that everyone get health insurance or pay a tax. Otherwise known as the Patient Protection and Affordable Care Act, it provides subsidies for middle-income families and small businesses. It pays for this by taxing some health care providers and high-income families. Medicare has also begun paying doctors for quality-of-care rather than on a fee-for-service basis. That will also lower health care costs and provide better health care for society as a whole.

Here's Why Health Care Needed to Be Reformed.

Obamacare should lower premiums over time by reducing health care and insurance costs. It requires everyone to have insurance for nine months out of the year. It allows parents to add their children up to age 26. As a result, more young, healthy people pay premiums but don't use the system, adding to health insurance companies' profits. The competitive insurance marketplace provides incentives for businesses to pass these savings on to customers through lower premiums. Find out how much of this would change if Trump Replaces Obamacare.

Similarly, Obamacare subsidizes prescriptions for those on Medicare. This allows seniors to continue taking medications and prevent emergency room visits, further lowering the cost of insurance. Find out How Much Will Obamacare Cost Me?

How Do the Health Insurance Exchanges Work?

Health insurance plans are sold on the health insurance exchanges from November through January each year.

You can always use the exchanges to compare health plans and find out if you qualify for tax credits or subsidies. You can also use them to see if you are eligible for expanded Medicaid, which you can get any time of the year.

Each exchange uses a four-step process:         

  1. Create an account. It asks you several personal questions to verify your identity.
  1. Provide Social Security and income information to see if you qualify for tax credits.
  2. Review plans in the four categories (Bronze, Silver, Gold and Platinum). Each category has different monthly premiums, deductibles and copays. Here's how health insurance works.
  3. Enroll in the plan. 

Interested? Investigate the exchanges now.

The federal government manages the exchanges in about half the states.  These exchanges were difficult to get into at first but work fine now. The remaining states have either created their own exchanges or partnered with the federal government. You'll find out when you apply. (Source: "The Feds Will Run Most Exchanges," The Washington Post, February 18, 2013.)

The exchanges allow you to compare physicians, hospitals, nursing homes, home health agencies and dialysis services. Compare providers now.

How It Affects You

The ACA affects everyone differently. You can quickly scan down to find your situation, and learn about the next steps you can take to make sure Obamacare works for you.

I Have Insurance

If you had your plan before March 23, 2010, Obamacare allows you to keep it even if it doesn't comply. That means your plan might not have the ten 10 essential benefits. Many of those plans were "grandfathered in" and are exempt from Obamacare.

But your plan may have been canceled by the insurance company or by your employer. Obamacare’s real promise is that if you lose your health care plan, you can get a new one. No insurer can turn you away because of health or age, and you'll be able to get financial help if you need it. Here's where to start.

I Have a Company Plan - You can keep it. You still may want to comparison shop on the exchanges. Some companies might find it more cost-effective to pay the penalty, knowing their workers can get coverage on the exchanges. Others found out their plans didn't provide the 10 essential benefits. In fact, 3 million to 5 million employees might lose their existing plans for this reason. (Source: "The Effects of the Affordable Care Act on Employment-Based Health Insurance," Congressional Budget Office, March 15, 2012.)

I Have Private Insurance - If it's an individual plan you bought yourself, you can keep it. But compare it to the plans on the exchanges to see if you can get better coverage at a lower price. You might also qualify to get subsidies if you buy a plan on the exchange.

I Have a Vision Care or Dental Discount Plan, other Discount Plan or Workers' Comp - You need to buy insurance on the exchange. These plans are not the same as health insurance. Find out How to Get Obamacare.

I Have Catastrophic Insurance - You can keep it. You may want to shop for a full-coverage plan on the exchange. But if you give up your catastrophic insurance you won't be able to go back. All insurance purchased after January 1, 2014, must have minimum benefits. Catastrophic insurance will only be available in certain circumstances.

I Have Medicare - You can stay on Medicare. If you have Medicare Part D, Obamacare helps pay for your prescription drugs if you fall into the "doughnut hole." By 2020, the ACA will eliminate the doughnut hole.

I Have Medicaid - You can stay on Medicaid.

I Have Other Insurance - You can keep most other plans, including retiree plans, CHIP, TRICARE and other veterans’ health care programs, as well as Peace Corps Volunteer plans. See qualifying health plans here.

I Don't Have Insurance

If you didn't have insurance for at least nine months this year, you would have to pay extra on your income tax. To find out how much, see Obamacare Taxes.

I Can't Afford Insurance - If your income is 138 percent or less of the federal poverty level, you qualify for Medicaid if your state agreed to expand coverage. If your state didn't agree, you wouldn't have to pay the tax. Find out more about Medicaid. See if you qualify for Medicaid.

If your income is under 400 percent of the poverty level, you can get a tax credit and possibly reduced copayments and deductibles. Find out if you qualify.

I'm Unemployed - If you have COBRA, you can keep it. But you may want to shop the health care exchanges to see if you can get a better deal. Find out more. If you have no insurance, you may qualify for Medicaid or subsidies, depending on your family's income.

I Don't Need Insurance - If you are healthy, you may find it less expensive to pay the tax, depending on your income. Find low-cost community health centers in your area.

I Don't Want Insurance - You must pay the tax, as well as any health care costs. If you remain healthy, that's great. But keep in mind that the average emergency room visit is $1,265, while a broken leg can cost twice as much. Cancer treatment can cost $30,000 ($7,000 for chemotherapy alone). Like homeowners or car insurance, health insurance is designed to protect your life savings. See Why Should I Have Health Coverage?

I Need Insurance Now - The exchanges can help you shop for medical care providers and private insurance now. You won't be eligible for subsidies or tax credits until next year. Compare plans now.

I'm a Small Business Owner

25 employees or less - You may already be eligible for a tax credit of 35 percent of the insurance you provide. Find out here.

50 employees or less - You can use the exchange to find the best insurance. Find out more.

50 or more employees - You must provide affordable health insurance that provides minimum value or pay a tax of $2,000 per employee (for all but the first 30 employees). If a worker finds a lower-cost plan on the exchange, you may be taxed. 

If you offer health insurance as a benefit to early retirees ages 55 to 64, you can get federal financial assistance. Find out how at ERRP. Here are more resources to help small businesses comply with Obamacare. (Source: "The Healthcare Law and You," Healthcare.gov.)

I'm a Member or Staff of Congress

You must get health insurance through the exchanges, instead of the government-provided health insurance you get now. You will continue to receive $4,900 ($10,000 for families) to help pay for your coverage. (Source: "Members Only," The Wall Street Journal, August 8, 2013.) 

More on Obamacare

For more on how the ACA affects you, see my book The Ultimate Obamacare Handbook (2015 - 2016).