(This article was last updated on October 6, 2014)
Obamacare Facts – What You Need To Know About Obamacare
In the United States, the political system is set up so that citizens can debate topics and keep each other in check when it comes to important ideas. Unfortunately, this system sometimes fails to account for the high emotions that come with hot-button issues like national healthcare. Media sources, politicians and other important figures have discussed healthcare to the point that the average citizen has little factual information and a lot of differing opinion. When it comes to the Affordable Care Act, we want to help you understand the facts so that you can decide for yourself what to think about the new laws and regulations. In the following sections, we'll outline some of the basic tenets of Obamacare. Read on to learn how new healthcare laws and guidelines may impact your everyday life.
The Affordable Care Act
While both sides of the congressional aisle will point fingers, both sides also have been advocating for healthcare reform for decades. Let's begin with a few facts on the creation of the Affordable Care Act as well as the new law's primary features.
- The ideas that motivated the creation of the Affordable Care Act actually come from decades of political debate on the topic of national healthcare. In 1989, conservative think tank The Heritage Foundation proposed the idea of an "individual mandate" that formed the basis of the ACA. Obamacare also was based in part on a healthcare system called "Romney Care" after former governor Mitt Romney of Massachusetts.
- On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act. This law expanded healthcare rights for millions of Americans while limited the inflated policies of the old healthcare industry in America. The new law is also referred to as simply the Affordable Care Act, ACA or Obamacare.
- Due to widespread concern about the new law's impact on individuals and businesses alike, the new law was challenged and brought to the U.S. Supreme Court before it could be implemented. The Supreme Court upheld the new law in a ruling on June 28, 2012.
- When the Supreme Court upheld the Affordable Care Act, it also changed two major features of the new law. First, individual states would be allowed to opt out of the Medicaid expansion provision included in the ACA. Second, the shared responsibility fee or non-compliance fee was considered a tax rather than a mandate and thus collectible by the Internal Revenue Service.
- Obamacare gives millions of previously uninsured Americans better access to affordable healthcare. The new law also helps people who already had insurance to find better options if they want them and get better benefits with the insurance they already have. In essence, the ACA provides for more rights and better protections under the law.
- It's estimated that Obamacare will cost approximately $1.1 trillion. This cost is considered a shared responsibility, and as such the new law mandates that every non-exempt American citizen pay for Obamacare through taxes. This means that the cost of Obamacare is spread throughout the population; young and healthy people will pay more while older people or those with health conditions will pay less.
- What is the "shared responsibility fee"? Also referred to as an individual mandate, the shared responsibility fee is the amount that each taxpayer is required to pay for his or her share of Obamacare. You pay this fee one of two ways: You can obtain minimum essential health coverage or pay a non-compliance fee with your taxes each year.
- If you don't obtain health insurance, then the IRS will collect the non-compliance fee when you pay your yearly taxes. The IRS cannot pursue criminal actions against you for non-compliance, but it can charge interest against your balance and deduct any unpaid fees from your tax refund.
- Employers must also comply with the Affordable Care Act in terms of providing coverage for full-time workers. If a company refuses to comply with the business portions of the ACA, then that company must pay a fine for each worker for whom it does not provide coverage.
- You have several options for obtaining the minimum essential coverage mandated by Obamacare. If you're already covered through work or a private insurer, then you can keep your current plan as long as it complies with the ACA; non-compliant plans will be grandfathered through 2017. If you don't have coverage, then you can enroll in a job-based plan, purchase private insurance or apply for options on your state's health insurance exchange, which is also called the marketplace.
New Rights and Protections under the Law
In essence, the Affordable Care Act seeks to make healthcare affordable and advantageous to every American. What was wrong with the old healthcare system in the United States? Previous regulations allowed insurers to overcharge women for the same services provided to men and deny coverage to people based on flimsy reasoning. The new law protects patient rights and extends coverage benefits as outlined below.
- With more than a thousand pages, the Affordable Care Act is a tough document to sort through, and many people haven't even attempted to understand all of its features. Fortunately, the first 140 pages of the ACA spell out enough benefits to make the law beneficial to millions of Americans.
- Under the ACA, every health insurance plan must offer ten essential benefits whether the plan is purchased through your employer, a private source or the government Marketplace. These ten essential benefits include: ambulatory services or outpatient care; emergency services; hospitalization and surgery; lab services and testing; maternity care during, before and after labor; mental health care services; pediatric services; prescription drugs; preventative services such as wellness checkups, colonoscopies and mammograms; and rehabilitative care including necessary devices.
- Insurance providers can no longer discriminate based on gender, pre-existing condition or medical history. If you're a woman, then you will be charged the same out-of-pocket fees as your male counterparts. If you have a chronic illness, then you will now be able to get coverage regardless of your condition.
- Tobacco users will still pay higher premiums under the new law even though they can get coverage. The only factors that determine your premium prices are your age, taxpayer status and tobacco usage. In general, young and healthy people will pay more because they're less likely to take advantage of costly treatments.
- Consumers who commit fraud on their applications can be denied coverage or have their policies voided, but no other reason will allow an insurer to drop you from a plan without notice. In fact, you now have the right to unimpeded appeals when it comes to insurance denial. The ACA gives patients a better bargaining position when it comes to insurer relations.
- Medicaid has been expanded under the terms of the ACA, but not every state has to comply with this expansion. The Supreme Court allowed states to decide whether they wanted to extend Medicaid coverage. As of June 2014, 28 states plus Washington, D.C. have extended Medicaid benefits; four states have tabled the discussion; and 21 states are not expanding Medicaid in 2014.
- Your coverage will stay the same if you have work-related, private or Medicare coverage. Obamacare primarily affects those individuals who lacked coverage prior to the new law's implementation or those who needed better coverage. In some cases, Obamacare improves existing health insurance plans by providing the aforementioned ten essential benefits.
- Insurers can no longer place a cap on the amount of treatment you receive. Under old regulations, your insurance company may have limited your annual allotment for treatment coverage. Now, you can rest easy knowing that if you need extensive treatments your insurance company cannot place an annual or lifetime limit on the cost.
- The Affordable Care Act limits insurers and healthcare providers in other ways as well. Insurance providers must offer plans that are comparable to a Bronze plan offered on the federal Marketplace. If not, you may be entitled to a subsidy to offset the cost. Healthcare providers can't deny treatment to patients with pre-existing conditions, which means patients have more coverage options today.
- Obamacare makes it possible for more people to get coverage. Prior to the implementation of the ACA, approximately 45 million Americans lived without coverage. Now, those people have access to a wider network of healthcare providers, insurers and treatment options that could prevent health crises and decrease the strain on the healthcare industry.
The Individual Mandate: How the ACA Affects Your Family
While you may understand the theoretical implication of Obamacare, you might be wondering how these new laws affect your life. After all, there's no point in healthcare reform if it doesn't improve the quality of and access to affordable healthcare. In this section, we'll go over the impact of the ACA on you and your family.
- Under the new law, each non-exempt American citizen is required to obtain minimum essential coverage. This coverage includes the ten essential benefits and is only available during the open enrollment period provided by your chosen insurer or the federal Marketplace. Exempted Americans do not need to pay the non-compliance fee.
- Lower income families will be eligible for subsidies to help offset the cost of monthly premiums. If you earn between 100 and 400 percent of the federal poverty line, then you may qualify for these subsidies. Taxes are paid on a sliding scale; each family will pay according to its means.
- Subsidies only exist on the government Marketplace, and you can only apply for cost assistance through your state's health insurance exchange website. Insurance bought through a private source outside of the Marketplace or obtained through your employer is not eligible for cost assistance.
- How much is the fee for non-compliance? If you don't obtain health insurance in one of the ways listed above, then you will be charged a tax referred to as a shared responsibility fee provided that you don't qualify for an exemption. This fee in 2015 is the greater of two percent of your income or $325 per individual; for children, then fee is $162.50. Families may be charged more.
- The shared responsibility fee will increase each year after 2014. While the IRS cannot impose criminal sanctions against those who don't pay, it can charge interest for unpaid amounts and take the money owed out of your tax refund. Over time, a $325 fee could turn into thousands of dollars and a serious strain on the economy.
- Obamacare is paid for by taxes, which means that if you don't normally pay taxes due to low income or other reasons then you may be exempted from obtaining health insurance or paying the shared responsibility fee. The point of the ACA is to make healthcare affordable; the government isn't going to burden lower income families by making them pay for insurance when they may qualify for Medicaid.
- Lower income families can still take advantage of Medicaid, and families with children can apply for the Children's Health Insurance Program or CHIP. Regardless of your coverage, CHIP will help give your kids the healthcare they need. If you think that you're eligible for these assistance programs, then you can apply for them through your state's marketplace.
- If you earn more than 400 percent of the federal poverty line, then you will have to obtain insurance or pay the penalty fee with your taxes. You also won't qualify for subsidies, which may mean that you pay a bit more in monthly premiums. The scale works to offset the balance of those who can't afford to pay.
- There are exemptions to the individual mandate requiring individuals to obtain health insurance. The government exempts certain religious groups, Native American tribes, incarcerated individuals and other specialty groups from obtaining insurance or paying the fine. A complete outline of exempted groups is available on our website.
- Prior to the implementation of Obamacare, most Americans had insurance coverage. If you already had insurance, then your benefits may increase and get better under the new law. You can expect more covered preventative services and ongoing care that could prevent major issues down the road.
How Obamacare Impacts Your Business
If you own a business, then you're probably wondering how the new healthcare law affects your business. Many have expressed understandable concern about the impact of Obamacare on job growth and hiring, and some have even claimed that the Affordable Care Act will severely limit the ability of business owners to conduct business as usual. Here are some facts relative to business when it comes to the new healthcare regulations.
- Beginning in 2015, businesses will have to adhere to a set of standards according to the size of their company and annual revenue. These standards are unofficially called the "employer mandate" even though this language does not appear in the ACA text. Companies that don't comply with the law will be charged a fine for each employee they don't cover.
- Just as higher income families will pay more for individual coverage, larger companies will shoulder a higher percentage of the burden in terms of employee coverage. Businesses that employ more than 100 full-time workers will have to provide health insurance for at least 70 percent of their full-time staff starting in 2015; in 2016, the coverage increases to 95 percent. Companies with 50 to 99 full-time workers will have to insure their full-time staff by 2016.
- Businesses with 25 or fewer employees will not have to insure their full-time staff, but they do receive tax credits for insuring their employees. Detailed information on tax credits for small businesses is available on the health insurance exchange website, or you can check out the IRS's guidelines on their website.
- SHOP stands for the Small Business Health Options Program, which is a virtual marketplace similar to the one available to individuals. Business owners can browse through plan options, check tax credit eligibility and purchase health insurance for their workers. Unlike the individual marketplace, the SHOP site does not have a limited enrollment period.
- The Affordable Care Act seeks to provide better coverage for employees even if they already have insurance. Full-time workers will now have access to more healthcare options through their employers. If they don't receive these options, then they may be eligible for subsidies through the Marketplace.
- Certain people may be eligible for exemptions from the individual mandate. If you lose your health insurance or your job as a result of Obamacare regulations, then you may be entitled to a hardship exemption. This exemption will prevent you from being charged a fee for non-compliance, and you may apply for subsidies for cost assistance through the Marketplace.
- Very small businesses do not have to offer insurance to full-time workers, so there's no need to fear that mom and pop shops will unilaterally close down as a result of Obamacare. In fact, some small businesses may benefit from the new laws in that their workforce will be healthier and better protected.
- The Affordable Care Act does not provide for the coverage of part-time employees, but that doesn't necessarily mean your employer won't offer coverage. Over time, more businesses may offer insurance even to part-time staff because the government will continue to offer tax incentives to businesses that offer insurance.
- For full-time workers, the ACA offers a number of benefits that may not have been available prior to the implementation of the law. Employers must offer coverage that meets the minimum essential coverage requirements or face fines for non-compliance. Full-time workers can expect much better protection than before.
- While some people have lost their jobs as a result of Obamacare, many government jobs and jobs in the healthcare industry have been created in response increased demand. Because of the ACA's relatively short existence, it's still too early to gauge job growth in relation to Obamacare.
What You Should Know about the Marketplace
Throughout this article, we've referenced the state health insurance exchange and the federal Marketplace. These terms are almost interchangeable when referencing the method for choosing government-run healthcare, but they do have subtle distinctions. If you're curious about the Marketplace and what it means in relation to Obamacare, then here's some information to help you get acquainted with the new way to do healthcare.
- The Marketplace is also called the health insurance exchange, and it's a website created by the federal government to help people find affordable insurance options. Using the Marketplace, you can browse through the government's plans, check out private insurer plans and apply for cost assistance if you qualify.
- On the other side of the same coin, your state's marketplace works in the same way as the federal version. In fact, unless your state lacks its own website then you must start with your state's marketplace in order to apply for Obamacare. Using your state's marketplace, you can compare all of the available plans and features as if you were in a virtual shopping mall.
- Some states do not have a health insurance exchange because they aren't required by law to set one up. As of 2014, only 17 states have set up state-run insurance exchanges. Several states run a site in partnership with the federal government, but the majority of states redirect to the federal Marketplace. If you live in a state without a marketplace, then you can apply using the federal exchange site.
- The Marketplace offers more than government-run options for healthcare. With the exception of Medicare and job-based insurance, you have access to all the forms of insurance available in one place. You can still pursue private options outside of the Marketplace, but you won't be able to get subsidies if you enroll off-site.
- In terms of government-run healthcare, you have four options available from the health insurance exchange. Bronze, Silver, Gold and Platinum plans are called "metal plans" and offer varying levels of coverage. Platinum plans charge lower deductibles with higher monthly premiums while Bronze plans offer low monthly premiums and high deductibles. There's also a "Catastrophic" plan available to people who experienced a hardship or were under the age of 30 who only need basic emergency coverage.
- As mentioned above, you can only apply for cost assistance through the health insurance exchange. However, Medicare works differently in that it works the same as it always has. If you already receive Medicare benefits, then you will continue to manage your benefits as before. Likewise, newly eligible recipients will apply directly with Medicare.
- You can only apply for insurance through the Marketplace during open enrollment. The enrollment period for the 2015 calendar year starts on November 15, 2014 and ends on February 15, 2015. The 2014 initial enrollment period for Obamacare ran from October 2013 through March 2014. As of March 31, 2014, anyone without health insurance who isn't exempted had to pay a fine for every month they lack insurance. This will occur in 2015 as well. The tax penalty for not having insurance will be assessed on the person's federal income taxes for that year.
- Enrollment limitations do not apply to businesses using the SHOP website, people who enroll in job-based insurance or people who buy private insurance off the Marketplace. Employer-based and private insurers hold different enrollment periods. In order to comply with the ACA, you need to adhere to your insurer's policies on enrollment.
- The Marketplace website makes it easy to find health insurance, but you don't have to enroll in a plan online. If you prefer, there are three other methods for enrolling in insurance. You can call the number listed on the insurance exchange website, speak with a representative in person or mail in an application.
- While there was some technical difficulty in the early stages of the Marketplaces, the initial glitches have been resolved. Still, if you have trouble logging into the website or applying for coverage you can contact a customer service representative for additional troubleshooting tips. For more information or tips, call the Marketplace support center at 1-800-318-2596.
Important Dates and Deadlines
Now that you know a bit more about Obamacare, you should be aware that there are some important dates and deadlines associated with the new healthcare law. Just as employer-based healthcare plans have select enrollment periods, the Marketplace has a limited enrollment period. In addition, there are other dates you need to know so that you can comply with the law.
- The 2015 open enrollment period starts on November 15, 2014 and ends on February 15, 2015.
- You're only charged a penalty fee for non-compliance for each month that you don't have health insurance. In other words, the non-compliance fee is pro-rated according to the months that you lack coverage. Unfortunately, if you lack health insurance for 2014 then the earliest date that you can get coverage is December 1st for reasons discussed below. This means that you would be charged a non-compliance fee from now until December 1st. This is the case for 2015 as well.
- Fortunately, there are special periods for enrollment available to some people, and you may qualify for special enrollment if you meet certain conditions. Situations that may qualify you for special enrollment include major life changes such as marriage or birth, job loss due to Obamacare, or a death in the family. Detailed information on special enrollment periods can be found on subsequent pages.
- When you enroll in a Marketplace plan, you have a two-week delay in healthcare coverage. If you enroll by the 15th of the month, then your coverage begins on the first day of the following month provided that you've paid your premium. For example, if you enroll in a plan on January 14, 2015 then your coverage will begin February 1st. If you enroll on January 17th, your coverage will not begin until March 1st. If you want your policy to take effect by January 1, 2015, you must complete enrollment by December 15th.
Future Changes to Obamacare
The Affordable Care Act evolves over time, and some of the benefits won't be fully implemented until 2022. Medicaid in particular may change drastically and has already been affected significantly by Obamacare. For example, couples without children who meet the low-income threshold may be eligible for coverage under Medicaid, which is a new feature for 2014. In terms of Medicare changes, the current "donut hole" will be closed by 2020. The donut hole refers to the gap in coverage for prescription medication currently experienced by many Medicare recipients. Over the next few years, the donut hole will be closed so that more senior citizens can get the medications they need. In addition, Medicare Part D coverage will be modified in the future for businesses, and businesses in general will see significant changes as Obamacare evolves.
Long-term Effects of the Affordable Care Act
There are other benefits to Obamacare in addition to the ones cited above. Not only will you receive more coverage and greater benefits under the law, but certain people will benefit even more. Women in particular will gain access to lifesaving preventative care as well as access to birth control. The Roman Catholic Church attempted to petition the government for a widespread exemption to the birth control clause for employees of Catholic organizations, but this petition was denied. In an effort to assuage conservative Democrats and pro-life groups, President Obama also set limitations on abortion coverage that mimic the limitations currently in existence under federal law. Finally, one particularly helpful benefit of the new healthcare law is that restaurant chains with more than 20 locations must indicate the calories on every item listed on the menu.
Long-term, the Affordable Care Act works to make Americans healthier by providing universal coverage and a variety of benefits to those with and without coverage. People with coverage gain benefits in addition to what they already had while people who don't have coverage will be able to get treatments without causing as much strain on the system. The goal behind Obamacare is to reduce the total financial burden of healthcare by establishing a system whereby the cost is equitably distributed. Now that you know the facts behind Obamacare, feel free to check out our other pages on additional detailed information.