What Is Obamacare? The ACA and What You Need to Know
What You Really Need to Know About Obamacare
Obamacare is the Patient Protection and Affordable Care Act of 2010. Most people think it only affects health insurance, but it has changed the way America delivers health care itself. There are at least nine ways Obamacare affects you that you probably don't know about.
The Act's primary focus was to reduce the increase in the cost of health care. It had three components that, working together, began to accomplish this.
The first was to make sure everyone could be insured. Before the ACA, insurance companies could exclude people with pre-existing conditions. As a result, the people with the greatest health expenses had to go without insurance. They couldn't afford treatment. They often ended up in hospital emergency rooms with their diseases became life-threatening. Hospitals passed those expenses onto Medicaid, contributing to rising health care costs. Obamacare allowed these people to afford preventive care, reducing hospital visits, and slowing the rise of health care costs.
To make sure insurance companies could afford these ill patients, Obamacare promised they would receive many healthy patients. It did this by requiring everyone to have health insurance for at least nine months out of every twelve or be subject to a tax.
The third component was federal subsidies to help everyone afford the required insurance.
In December 2017, Congress repealed the tax effective 2019 in the Tax Cuts and Jobs Act. This significantly weakened Obamacare's ability to lower health costs. Even before that happened, many groups had successfully petitioned Congress so they could be exempt from Obamacare.
By removing the mandate, Congress basically assured that health care costs would skyrocket. It told insurance companies they had to take patients with pre-existing conditions, but removed the healthier patients. Since the subsidies remain in place, it also made sure the government would pick up a percentage of these rising costs.
How It Affects You
Even though Congress cut off one of the three legs supporting the ACA, you can still take advantage of the parts that work.
When can you get started with Obamacare? The health insurance exchanges open for enrollment between November 1 and December 15 each year. If you miss the window, you can still use the exchanges to buy interim private insurance or apply for Medicaid. You can also use them to compare plans for the future. Some exchanges are run by states and some by the federal government. Keep in mind you should compare not just your monthly premium, but your anticipated overall health care costs. That includes 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. But many companies used this opportunity to drop coverage 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 on what Obamacare is, customized to your personal situation:
If You Already Have Insurance – All insurance plans must provide services in 10 essential health benefits. Health insurance companies can’t exclude those with pre-existing conditions. They also cannot drop those who get sick. Parents can put their children on their plans up to age 26. If your plan began before March 23, 2010, then it might be "grandfathered in" and not have to provide all these benefits. But even if you have insurance, it will be worth your time to compare it on the exchanges.
If you have Medicare, the "doughnut hole" gap in coverage will be eliminated by 2020.
If You Can't Afford Insurance – Medicaid was extended to those who earn up to 138 percent of the federal poverty level. But not all states have elected to expand Medicaid, even though the federal government subsidizes 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.
The poverty level usually increases each year to keep up with inflation. Those who earn too much for Medicaid will receive tax credits if their income is below 400 percent of the poverty level. The credit is applied monthly, rather than as an annual tax rebate. There are also reduced copayments and deductibles. Five factors will determine how much Obamacare will cost you. These are age, income level, family size, where you live, and your choice of plan.
If You Don't Get Obamacare Insurance
The exchanges are open until December 15, 2017. There are special circumstances here. You can always sign up for private insurance or Medicaid. You can also use the exchanges to begin researching plans for next year. Make sure you are well aware of the process on how to get Obamacare. You should also know how the law applies to you should your economic situation falls within these parameters:
Even though the mandate no longer applies, there are still some Obamacare taxes.
If you make more than $200,000 a year - Taxes increased in 2013 for individuals making more than $200,000 a year or $250,000 for married couples, some healthcare providers, and other health-related businesses.
If you're a business owner - If you have 50 or more employees, you must provide insurance to at least 95 percent of full-time employees or pay a fine. This regulation was stipulated in the Treasury press release. It still exists despite the Tax Act's removal of the individual mandate, according to NOLO.
For more on Obamacare, see my book The Ultimate Obamacare Handbook.