Obamacare- What You Need To Know For the Next Enrollment Period
(This article was updated on October 13, 2014)
Americans felt the effect of growing prices in the economy, a deflated job market and the recession in many different but personal ways. One such way was the fact that many Americans could no longer afford health care for themselves or their families either because they were without a job or simply without health insurance, or because they could not afford the increasing costs of seeing a doctor, going to the hospital or getting medicine.
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On March 23, 2010, President Obama signed into legislation the Affordable Care Act (“ACA”), which is also commonly referred to as Obamacare. Obamacare.Net is an informational, unbiased and non-political resource to learn about Obamacare. Additionally, Obamacare.Net offers its visitors access to an exceptional network of Obamacare compliant healthcare policies and brokers that are very knowledgeable about healthcare and the new requirements under Obamacare.
Obamacare was not well received by many Americans, including their representatives in Congress, but the Obama Administration knew that a severe and swift regulatory overhaul of the U.S. healthcare system was necessary and overdue to protect the well-being of every American. Since its inception, Obamacare has faced many significant challenges from the opposition, including dozens of attempts to repeal the ACA in Congress, numerous lawsuits in federal courts across the country and an infamous Supreme Court ruling that paved the way for the penalty imposed on any American who fails to comply with the ACA’s mandate to get compliant health insurance by certain annual deadlines.
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The first open enrollment period for individuals to shop and sign up for health insurance through Healthcare.gov or a state exchange commenced on October 1, 2013 and the numbers were steady. Many Americans experienced frustration and dissatisfaction with the Healthcare.gov website, which experienced a very public lashing after users were faced with numerous downtime. Within a short period of time the Administration was able to get the Healthcare.gov website back on track and Americans were able to sign up for insurance plans that would commence on January 1, 2014.
Despite the negative press and constant opposition to Obamacare, the U.S. Department of Health and Human Services (“HHS”) proudly reported on May 1, 2014 that after the extended deadline to finish an application closed on April 15, 2014 (the deadline to start an application was March 31, 2014), more than 8 million Americans were able to call themselves “insured” – 8,019,763 people to be exact. 2.2 million of those who signed up for Obamacare were between the ages of 18-34 years old, which equates to approximately 28% according to HHS. The reasons why this demographic is important is discussed in further detail below. Additionally, HHS reported that 4.8 million people enrolled under the newly expanded requirements for Medicaid and CHIP (Medicaid for children).
If you enrolled in a plan in 2014, you can rest assured that unless you want to change your plan, your currently healthcare plan will renew for 2015. If you missed the 2014 deadline to sign up for insurance and are anxiously awaiting the opportunity to get coverage for 2015, open enrollment starts on November 15, 2014. You may also be able to obtain an Obamacare compliant insurance policy if you have experienced a Qualifying Life Event that will allow you to sign up for insurance and avoid the tax for non-compliance or an exceptional circumstance that will excuse non-compliance by the deadline. These concepts will be discussed further below as well.
What is the individual mandate?
The main purpose of Obamacare is to make sure that all Americans are either insured by their employer or are self-insured and that the costs associated with being insured are affordable. Although to their benefit, not every American would willingly and voluntarily take the steps necessary to obtain an Obamacare compliant health insurance policy unless there was some sort of consequence, which is where the infamous Individual Mandate steps in.
The Obamacare Individual Mandate requires all American citizens to obtain health insurance by a certain deadline. For the 2015 calendar year, open enrollment will begin on November 15, 2014 and the deadline to sign up will be February 15, 2015. Of course the Administration could always extend that deadline as well.
The Obamacare Act states that should an American citizen who is not insured under a policy offered by their employer choose not to sign up for an ACA compliant plan by the deadline, they will be taxed $325.00 per adult and $162.50 per child or 2% of the adult’s income, whichever is greater. This particular tax amount only applies to non-compliant Americans during the 2015 calendar year. The tax amount will increase each subsequent year that a person is not in compliant with Obamacare. In 2016 the tax penalty will increase to $695.00 per adult or 2.5% of that person’s annual income whichever is greater. This tax will either be deducted from or imposed on the person when they file their federal tax return for that calendar year.
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As mentioned previously, the Individual Mandate was very controversial and the question of whether or not it was constitutional was heard and decided by the U.S. Supreme Court in June 2012. Our Justices returned a 5-4 vote in favor of the constitutionality of the Individual Mandate, including the tax provision for non-compliance, and reasoned that the Federal Government’s power to tax its citizens authorized the taxing provision of the Obamacare Act.
The Individual Mandate does not apply to everyone living in the United States however. The Obamacare Act outlined certain categories of people who will not be required to obtain an Obamacare compliant health insurance policy. Those people are: 1) Americans who are exempt from filing a Federal Income Tax Return; 2) Native Americans receiving healthcare from a different governmental program; 3) Americans who have only been without health insurance for three months or less; 4) Americans that are imprisoned; 5) Americans that qualify for a religious exemption; 6) Americans that are under the age of 26 and are still on their parent’s health insurance policy; or 7) illegal immigrants living within the United States.
Another important part of Obamacare and the burden it imposed on many Americans who chose not to have healthcare previously due to financial concerns is that the government is offering subsidies or tax credits on insurance plans for people who make under a certain amount of money each year. Effectively, the government will help you pay your insurance premiums each month unless and until you make enough money to pay for it on your own. An individual who makes between $11,670 and $45,680 and a family of four that makes between $23,850 and $95,400 may qualify for a subsidy on their healthcare premiums. Healthcare.gov has laid out the income requirements for different family sizes on its website. The dollar amount of the subsidy will be identified after you fill out the enrollment application.
There is a second type of subsidy available for families who earn less than 250% of the FPL and who enroll in a silver-level plan. This tax credit is issued to families on their tax return and is designed to reimburse people for their insurance-related out-of-pocket expenses for things such as the annual deductible, copays and coinsurance payments.
What Are Qualifying Life Events?
When planning the execution and carrying out of the first Obamacare Open Enrollment period, the Administration anticipated certain circumstances whereby a person should be excused for not being able to enroll in an Obamacare compliant plan by the deadline. Under Obamacare, people that experience these exceptional circumstances or other complications are exempt from the tax penalty so long as they report the circumstance and then sign up for a compliant policy.
The list of contemplated, exceptional circumstances and complications is: you experienced an unexpected hospitalization or experienced temporary cognitive disability, you experienced a natural disaster, there was a system error, outage or display error on Healthcare.gov that prevented enrollment, you were not qualified for Medicaid and were transferred to the Marketplace with not enough time to enroll or you were a victim of domestic abuse that prevented timely enrollment.
More common than experiencing an exceptional circumstance or complication that prevented compliance is the fact that a person experienced a Qualifying Life Event that caused them to not be insured. If one the of the following Qualifying Life Events occurred in an American’s life, Obamacare provides that the person can sign up for a plan for themselves and/or their children, post-deadline, without fear of being taxed for non-compliance. A Qualifying Life Event under Obamacare is: having or adopting a baby, getting married or divorced, losing healthcare for some reason such as becoming unemployed, a change in income that now makes a person eligible or ineligible for a subsidy, a person moved to a new state or a person became a U.S. citizen, national or gained lawful status and can now apply for Obamacare.
What is an ACA compliant health insurance plan?
One important aspect of the Obamacare Act is that insurance companies are now required to provide a minimum amount of protection to their customers. This new minimum standard is undoubtedly a great improvement from the healthcare standards imposed before Obamacare. For instance, it is now illegal under Obamacare for an insurance company to deny you coverage based on a pre-existing health condition. Previously, an American currently living with a health condition that required attention would regularly be denied coverage and more than likely always denied affordable coverage due to their unfortunate health conditions. Today, that worry is no longer a factor in whether or not a person can be insured.
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Additionally, Obamacare now allows for children under the age of 26 years old to be covered by their parent’s insurance policy. Obviously if the under 26-year-old is afforded healthcare through an employer they will have to accept that coverage in lieu of staying on their parent’s policy. Considering the fact that more young adults are opting to extend their education in lieu of entering the workplace where they could ordinarily obtain their own health insurance, this new provision of Obamacare is greatly appreciated by concerned parents and their cash-strapped students.
Another great provision of Obamacare, which is oftentimes a problem faced by Americans will an illness or injury that requires extensive or prolonged medical attention, is that insurance companies can no longer cap the amount of money available to a customer for coverage on a yearly or lifetime basis. This means that no matter how much money a person racks up in insurance claims in a year or in their lifetime, their insurance company must continue coverage. In addition, insurance companies cannot arbitrarily cancel any policy simply because a person gets sick under the new Obamacare requirements.
Finally, Obamacare provides that the insurance company must offer their customers free preventative care. Therefore, despite whether you’ve met your yearly deductible, an American adult can go to their doctor and receive the following care without paying a single cent. The free preventative care services under Obamacare are: Abdominal Aortic Aneurysm one-time screening for men who have ever smoked, alcohol misuse screening and counseling, access to Aspirin to prevent cardiovascular disease, blood pressure, obesity, HIV, tobacco use, cholesterol, colorectal cancer, depression and diabetes (Type 2) screening, diet counseling for those at a higher risk for chronic disease, immunization vaccines and finally sexually transmitted infection prevention counseling and screening for syphilis specifically.
There is also a long list of preventative care services available to woman and children that are similar in nature to the list described above, which is available for all adults. During the 2014 open enrollment period, many companies challenged one particular preventative care service offered to women under Obamacare, contraception, because they believed it violated their religious rights. The Supreme Court examined this issue after two lawsuits were brought up for review and held that companies with a specific religious opposition to paying for a healthcare plan for their employees that included contraception, can simply offer plans that do not include contraception coverage.
Medicaid expansion and CHIP (Children’s Health Insurance Program)
One of the many reasons that there were so many uninsured people in America was because insurance was not attainable by many lower income people. In 1965, the government created Medicaid to aid families earning an income that was insufficient to pay for healthcare. Prior to Obamacare, the qualifications for eligibility into the Medicaid program were more strict; however Obamacare expanded the income requirements for Medicaid from persons under the age of 65 that were under 100% of the federal poverty line, which amounts to approximately $11,670 a year as a single person or $23,850 for a family of four, to persons under 65 who make under 133% of the federal poverty line, which equates to $16,105 a year for a single person or $32,913 for a family of four. Because of the way that the income is calculated, people who make under 138% of the FPL are actually eligible for Medicaid in states that expanded the requirements. The above incomes reflect the correct percentage of FPL.
Initially the Obamacare Act attempted to require that all states expand the Medicaid guidelines to include a larger percentage of people. For any state that did not comply the Obamacare Act threatened to take away any federal funding allotted for that state, for the Medicaid program. Since Medicaid is partially funded by the Federal Government and partially by the states, this provision and the resulting penalty for non-compliance faced a lot of opposition. In addition to reviewing whether the Individual Mandate and the resulting tax for non-compliance by an individual was constitutional, the Supreme Court also reviewed the issue of whether the Obamacare Act can mandate a Medicaid expansion in every state or suffer the consequences. The Supreme Court ultimately ruled that the government did not have the authority and power to impose this requirement and resulting sanction for non-compliance upon states and struck the provision down as unconstitutional.
The result of this Supreme Court holding is that each state could individually decide whether or not it wanted to expand the guidelines for Medicaid. If a person under 65 lives in a state that expanded the requirements, they could be eligible if they were under 133% of the federal poverty line. If a person under 65 lives in a state that did not adopt the expanded guidelines, they could only qualify if they were under 100% of the federal poverty line. Presently, a little less than half of the states have opted not to expand the guidelines of Medicaid.
Before Obamacare, many people were under the belief that a Medicaid policy was a deficient or bare bones policy that would not cover very much. However, under Obamacare, every Medicaid policy will offer Essential Health Benefits. For states that are expanding Medicaid, Essential Health Benefits include: ambulatory services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services and treatment, prescriptions drugs, rehabilitative services and devices, lab services, preventative and wellness services along with chronic disease management and pediatric services that include oral and vision care.
Related to the Medicaid program is CHIP, which stands for the Children’s Health Insurance Program. This program is separate from the Marketplace and is used to provide healthcare to child whose parents earn too much to qualify for Medicaid. CHIP and Medicaid work hand-in-hand and is offered by every state in the United States. Each state has their own income requirements for CHIP eligibility and also requires that the child be under the age of 18 years old, be a U.S. citizen and be the citizen of that particular stat. Some states also offer CHIP to parents of children already covered by CHIP and to pregnant women.
Under Obamacare, every state must offer routine check-ups, immunizations, coverage of doctor visits, prescription drugs, dental and vision care, hospital care, laboratory and x-ray services and emergency services under CHIP. Some states also offer additional services. The cost of CHIP varies per state but under Obamacare, all routine wellness doctor visits and dental visits are free and no state can charge a parent more than 5% of their total annual family income for CHIP.
The official website for CHIP is insurekidsnow.gov. Although a family cannot sign up for CHIP through the Marketplace, after they fill out and submit a Marketplace application on Healthcare.gov, the website will advise the applicant if any of their children are eligible for coverage under CHIP in their state.
Other Provisions of Obamacare
Obamacare revised, overhauled, or had an effect on almost every aspect of healthcare and the health insurance industry. One such additional effect was on Medicare, which is healthcare coverage for Americans over the age of 65 years old, those who receive disability benefits under Social Security (SSI) or the Railroad Retirement Board (RRB) or people who have been diagnosed with End-Stage Renal Disease or Lou Gehrig’s Disease.
Under Obamacare, Medicare is now required to cover a long list of preventative and screening services. Additionally, hospitals that offer exceptional service to its Medicare patients, which are measured by the rate of re-admittance, will be rewarded with additional funding.
Obamacare also imposes a minimum coverage standard on Medicare customers. If a person has Medicare Part A, they have reached the minimum essential coverage required. Medicare Part A covers hospital stays, skilled nursing facilities, hospice care and some home health care facilities. If a person only has Medicare Part B and no other coverage, they have not met the essential health coverage required under Obamacare and will be taxed for non-compliance. Medicare Part B generally covers doctor’s services like lab tests and supplies that are medically required to treat a disease or condition and preventative services. The only way to then be in compliance with a Medicare Part B plan is to take on a Medicare Part A plan as well.
An American would not shop for a Medicare Part A or B plan on the Marketplace but must still be aware of the minimum standards and deadlines imposed under Obamacare. An American can shop for a Medicare Part C plan on the Marketplace however. Medicare Part C is a policy written by a private, corporate insurance company that offers substantially the same coverage as Medicare Part A and B and may also include additional perks such as a prescription drug coverage that is similar to Medicare Part D. The Open Enrollment period for Medicare commences on October 15 and will close on December 7.
In addition to Medicare, Obamacare also had a huge effect on small and larges businesses and the responsibilities they now take on and mandates they must follow under Obamacare. Obamacare cannot require all businesses to insure their employees but has implemented a provision of the Act whereby some larger companies will have to make an Employer Shared Responsibility Payment if they choose not to provide their employees with Obamacare compliant insurance coverage. Any business that has less than 50 full-time employees is exempt from making this payment for not providing healthcare at all or supplying insufficient healthcare to their employees. Whether or not a company is required to make an Employer Shared Responsibility Payment is dependent on circumstances that can be researched through the Treasury Department or the Internal Revenue Service.
Obamacare also created a separate Marketplace for business owners to shop for healthcare for their employees. This Marketplace is called the Small Business Health Options Program, or SHOP for short. Companies with less than 50 full-time employees can start using SHOP in 2014 to find insurance for their employees. SHOP will be available for companies that employ up to 100 full-time employees in 2016.
In an effort to help small business owners provide their full-time employees with coverage that the company can afford, the Obamacare Act provides a tax credit that amounts to 50% of the company’s premium costs for policies purchased through SHOP.
Why is the 18-34 Year-Old Demographic So Important to Healthcare?
As mentioned before, it was impressive for HHS to report that 28% of all new Obamacare enrollees were 18-34 years old. The reason that this is an important statistic is because without the typically healthy 18-34 year olds signing up, paying for and participating in Obamacare, the entire system would crumble. The reason that this demographic of Americans is so vital and desirable to insurance companies is because they will keep the money steadily flowing into the pool of premiums paid without taking much out to pay for medical claims. The 18-34 year old demographic of people is just simply healthier than their counterparts who are dealing with the medical requirements of aging and illness. Therefore, they cost less money to keep healthy unlike people of an older demographic who take more out of the pool of premiums paid in to pay insurance claims.
The very reason that President Obama discussed and promoted the Affordable Care Act on programs like “Between Two Ferns” with Zach Galifianakis and visited our favorite late night talk shows is because he was trying to speak to the 18-34 year old demographic on the programs they were already watching. Apparently his efforts were successful because 2.2 million Americans in that demographic signed up for a compliant healthcare plan in 2014.