Updated November 2017
If you've been reading up on Obamacare, then you may have come across some misleading information about the current healthcare law. Like any government program, the ACA has been met with a mixture of support and criticism depending on which side of the political spectrum you watch. Despite the law's many accomplishments over the past seven years, there are still some myths being spread relentlessly by those who oppose it. Here, we outline five of the more prominent myths and the truth behind them.
Myth: Obamacare is free health insurance.
Fact: The ACA offers low-cost insurance, but it doesn't provide free insurance to anyone.
It's easy to confuse the term “Obamacare” with “insurance” because the two words get used interchangeably in the media. Reporters, lawmakers and even proponents of the new law make the mistake of referring to health insurance as Obamacare and vice versa. In reality, Obamacare refers to the Affordable Care Act; it's a nickname. The act itself sets out guidelines for getting better and more affordable health insurance.
Under the ACA, you have greater choice when it comes to signing up for insurance because of the marketplaces. Families with lower incomes can also find subsidized plans that make monthly premiums less expensive. However, Obamacare never promised free healthcare to anyone. Only those participating in Medicaid and CHIP will receive free care, and even these programs are funded through taxes. Free health insurance can't and doesn't exist.
Myth: I don't have to pay the penalty fee if I can't afford coverage.
Fact: Certain people are exempt from the individual mandate.
Most Americans will have to obtain health insurance under the new law, but there are a few exceptions. Non-citizens, people in jail and families with very low incomes, for example, are exempted from the individual mandate that requires you to have coverage. Being unable to afford insurance is one of the exemptions, but there are restrictions. For insurance to be truly unaffordable for you, you have to meet at least one of two conditions.
First, your income must be below the threshold required for filing taxes. According to the 2017 filing guidelines, the threshold for filing taxes is $10,400 for individuals under age 65 and $20,800 for married couples under age 65 filing jointly. If you earn below these amounts, then you don't owe federal taxes.
The second qualification for income-based exemptions under the ACA relates to the cost of insurance. If the least expensive plan available to you through work or the marketplace would cost more than 8.16 percent of your household income, then you don't have to sign up for it and don't have to pay the penalty fee.
Note that having Medicaid also exempts you from the penalty fee because Medicaid is considered qualifying health coverage under the law. There's another exemption available to you if you would qualify for Medicaid under the newly expanded guidelines but your state opted against expansion. In other words, the exemption is based on your income level and ability to pay.
Myth: It's more cost-effective to pay the penalty fee than to buy insurance.
Fact: Some families will pay more in penalty fees than they might have to get coverage.
When you're calculating the cost of health insurance, it's important to consider not only the initial price tag on premiums but the long-term benefits as well. The ACA guarantees a lot of rights and protections to the insured population, which makes getting insurance a smart investment.
If you're set against getting health coverage for whatever reason, then know that you might end up paying more in penalty fees than you might have if you'd signed up for a subsidized plan on the marketplace. For tax year 2017, the penalty was the greater of 2.5 percent of your household's taxable income or a flat $695 per uninsured adult and $347.50 per uninsured child, per household. For 2018, costs may increase but have not been finalized.
Keeping up with the numbers can be challenging, but there are handy tax calculators out there that you can use to figure out how much you're likely to pay for not having health insurance. Consider this: A single person earning $45,000 a year would owe a penalty of around $859 for the year if he didn’t buy health insurance. That same person, assuming he couldn’t get coverage through work, would be able to buy the cheapest health plan in his area for just $5 a month after tax subsidies. Sometimes, the penalty is much higher than the cost of premiums.
Myth: The ACA has had a negative effect on employment and the economy.
Fact: Obamacare has not been around long enough to gauge long-term economic impact.
It's true that in the early months following the inaugural marketplace opening, employers reacted preemptively to the mandate requiring them to insure their full-time workers. Some people lost their jobs while others had their hours reduced to below full time. However, this has not been a consistent practice. Obamacare was passed in the midst of a substantial economic recession, during which time the employment rate had sunk dramatically. It's hard to say whether the ACA has hurt or helped the economy because the economy continues to recover, but The Commonwealth Fund reported in 2016 that the ACA has had an overall positive effect.
It should be noted that the employment rate has actually improved significantly since the passage of the ACA in 2010. As of October 2017, unemployment is down to 4.1 percent nationwide. Whether that drop has anything to do with Obamacare isn't clear, but the new law seems not to have affected the economy as has been predicted continuously since its passage.
Myth: Health insurance will now be unaffordable thanks to huge premium hikes for 2018.
Fact: Most marketplace enrollees qualify for cost assistance, protecting them from huge price increases.
For a small but significant portion of private health insurance customers in 2018, premiums will be unaffordable next year due to several factors, including lack of insurer participation on the exchanges, uncertainty over healthcare reform (and the individual mandate), and the Trump administration’s decision to end cost-sharing reduction payments to insurers. Nationwide, premiums are expected to increase by an average of about 30 percent. Some states will see price hikes well above 50 percent, and just two states (Minnesota and Alaska) will see premiums decrease for 2018.
But for most exchange customers, premiums won’t increase by much. Last year, about 84 percent of marketplace enrollees qualified for cost assistance. And because Trump ended the cost-sharing reduction payments to insurers -- who built the loss of revenue into their premiums for next year already -- but insurers still have to offer cost-sharing reductions by law, many exchange customers will actually come out ahead for 2018 health plans. The important thing is to shop around for coverage in 2018 to find a good deal, on or off the exchange. Even if you’ve got health insurance already, now’s the time to make sure that you’re still paying what you want and need to for the coverage that you want. Open enrollment 2018 runs from November 1 through December 15.
Updated October 15, 2014
When discussing hot-button issues like national healthcare, it's easy to get caught up in the politics and lose sight of the rationale and the facts behind the subject. Many people have tuned out the debate on public healthcare simply because both political parties have made little effort to present the facts rather than their interpretations of the new law. We're here to help you sort through the misinformation concerning the Affordable Care Act, also referred to as Obamacare. In the next few sections, we'll discuss some popular myths or misunderstandings about national healthcare so that you can make a more informed decision about your personal healthcare coverage.
Myth: We don't even need national healthcare because the current system works.
Prior to the implementation of Obamacare, many Americans had access to healthcare through private sources or their employers, but not everyone enjoyed this privilege. In fact, approximately 45 million Americans lived and worked every day without health insurance for themselves or their families. Those who did have insurance may have had poor coverage, expensive premiums and limited care options. They also might have been denied coverage for a pre-existing condition, because they were women or because they got sick too often. Meanwhile, the healthcare industry ballooned into a massive, for-profit machine that cared more about the bottom line than the patients they were supposed to be protecting. The healthcare system in America needed reform.
Signed into law on March 23, 2010, the Patient Protection and Affordable Care Act law seeks to resolve the discrepancies in the old health insurance industry while giving patients more rights and protections under the law. Also referred to as simply the Affordable Care Act, ACA or Obamacare for short, the law now forces insurers and providers to offer more services and cover more people regardless of pre-existing conditions, gender or other factors. The ACA continues to be controversial in some circles, but the Supreme Court upheld its validity in a decision on June 28, 2012. Their ruling not only solidified the law but made the ACA more substantial. Every U.S. citizen now has access to affordable healthcare with essential preventative care among other benefits.
Myth: The government wants to force me to pay for everyone's healthcare.
In a way, this myth is true if you look at it from a limited perspective. The federal government wants to help uninsured Americans gain access to lifesaving healthcare, but healthcare costs money even under the new law. Obamacare is funded through taxes, which means that people who typically pay taxes will be responsible for offsetting the cost of healthcare for people who can't afford to pay. It's estimated that the total cost of Obamacare will be around $1.1 trillion. Without distributing this cost throughout the taxable U.S. population, the ACA wouldn't work. The government expects people to pay a "shared responsibility fee" depending on your status as a taxpayer. In other words, you will need to obtain minimum essential coverage or face a penalty fine. This fine goes toward your share of the trillion-dollar price tag.
While you are in essence paying for "everyone's healthcare," you are actually paying for your own as well. If you don't obtain healthcare from your employer, a private insurer or a Marketplace plan, then you will have to pay a fee each year on your taxes. Think of the fee as an investment in your own future healthcare needs. Without insurance, a trip to the emergency room can cost thousands of dollars. You may need to take advantage of emergency services someday, and your penalty fee helps to offset this cost in the future. If everyone contributes their shared responsibility fees as part of the implied individual mandate, then Obamacare works more effectively to cover the cost of unexpected crises and other medical situations.
Myth: Obamacare replaces my current insurance.
This myth came about as a result of mass confusion about national healthcare. Many people misinterpreted the new law so that they believed the Affordable Care Act was replacing all forms of insurance with government-sponsored coverage. President Obama has said that if you like your current plan then you can keep it, and under the law this is true. While the ACA offers a variety of benefits and extended protections to every American, you don't have to sign up for a government plan on the Marketplace or health insurance exchange. In fact, Obamacare makes your current plan better by ensuring that you have access to "ten essential benefits," which are discussed in detail below. Obamacare does not replace your existing insurance unless you want it to. Some people have found that plans offered through the Marketplace are more affordable and applicable to their family's needs. But if you like your insurance, then there's no reason to switch.
If you have private insurance, Medicaid or Medicare, then you can also keep your existing plans. However, some aspects of Medicaid have changed in the new law; these aspects will be discussed later. Medicare and private insurance remain the same. If you've worked hard to receive the benefits of Medicare, then you can still take advantage of this program as you always have. Likewise, private plans purchased directly from an insurer or agency will remain the same as long as they conform to the standards of the new law. You don't have to worry about finding a new doctor, specialist or medical facility because for the most part insurance remains the same or gets better for people who already have it.
Myth: I'll get less coverage under Obamacare.
The Affordable Care Act makes insurance not only more affordable but more effective through the policy of "ten essential benefits." Every plan must include ten essential benefits in order to comply with the ACA. This policy extends to every insurance plan now offered whether it's a private plan, a government-sponsored plan or a plan purchased through your employer. These ten essential benefits include:
- Emergency services
- Hospitalization and surgery
- Lab testing and services
- Maternity care before, during and after labor
- Mental health services
- Outpatient care or ambulatory services
- Pediatric care
- Prescription medication
- Preventative services like annual checkups
- Rehabilitative treatment, care and devices
Prior to Obamacare, some insurance plans didn't cover basic healthcare screenings or wellness checks that provide lifesaving information. With the new law, you can now stay on top of your health more routinely in order to detect problems early and prevent major issues later. The ACA strives to help reduce the cost of the healthcare industry by keeping people healthier for longer. You should get more coverage under the law – not less. In fact, if your current health insurance plan does not offer these ten essential benefits, then you may be entitled to switch your plan to a subsidized Marketplace plan.
Along with these ten essential benefits, Obamacare provides more rights to more Americans. For example, young people can now stay on their parents' insurance plans until age 26. In addition, insurance companies must now adhere to more honest standards: They can't deny coverage based on gender or pre-existing condition, raise their rates without proper justification, drop you from a plan if you get sick or fill out your application incorrectly, put lifetime or annual limits on your payouts, or deny you the right to appeal their decisions. The ACA also helps subsidize the cost of insurance for people who need financial assistance and provides coverage for millions of previously uninsured Americans.
Myth: I'll lose my job thanks to Obamacare's impact on small businesses.
Opponents of the Affordable Care Act have asserted that more than 650,000 jobs will be lost thanks to Obamacare, but this number isn't based on real information and appears nowhere in the report filed by the Congressional Budget Office. It's true that some people have lost their jobs or had their hours reduced as a result of confusion on the part of employers, but these could be temporary setbacks as more employers realize the benefits of Obamacare. In fact, the ACA has created thousands of jobs in the public and healthcare sectors.
Where is the confusion coming from? The Affordable Care Act forces employers to provide health insurance for full-time workers depending on the size of the business. Not much will change at the start of Obamacare, but soon businesses will need to pay attention to important changes.
Beginning in 2016, larger companies with more than 50 full-time employees must offer full-time workers coverage that's comparable to a Bronze plan on the government Marketplace. Smaller companies do not have to offer insurance, but they do receive tax credits if they offer healthcare coverage. In 2014, small business tax credits increase to 50 percent of the cost of premiums. Forced healthcare coverage for businesses is part of the "employer mandate," and employers who don't comply with the law will need to pay a tax just like individuals who don't pay their shared responsibility fees.
Because some employers don't fully understand the law or choose to pay the fee instead, some people have lost their jobs or have been cut back to part-time status. Fortunately, the ACA offers a hardship exemption for individuals who lose their jobs or their employer-sponsored healthcare as a result of Obamacare. The hardship exemption enables these workers to obtain subsidies so that they can purchase a plan through the Marketplace and still find the coverage they need.
Employers don't have to wait until open enrollment to apply for insurance plans for their employees. The Small Business Health Options Program or SHOP will officially open on November 15, 2014, but businesses can apply for employee healthcare plans using a paper application until that date. If they take advantage of the tax credit for covering their employees, then small businesses can apply the credit retroactively to prior tax years; they can also apply the credit to future years. If you own a business and want to take advantage of these tax breaks, then consult with a tax professional who understands the intricacies of the Affordable Care Act or visit the SHOP website when it opens.
Myth: Obamacare forces me to support coverage for services that I don't agree with.
Many religious groups have raised understandable objections to certain aspects of the new healthcare law. Specifically, organizations and businesses like Hobby Lobby that are founded on Christian principles have objected to covering contraceptives and reproductive services that go against their beliefs. The Supreme Court recently decided that companies with a religious opposition to the contraceptive part of the ACA can simply offer their employees coverage that does not cover contraception. The ACA does not force members of a religious organization to provide controversial coverage if it goes against their beliefs. Some organizations have already won court cases that allow them to bypass certain aspects of the law, and several businesses like Hobby Lobby have attempted to earn the same exemption.
Unfortunately, the myth referenced above is partially true to an extent. Because Obamacare is a tax levied against individuals and businesses alike, you may end up paying for coverage that you disagree with. However, taxpayers have long supported unpopular or controversial causes through their taxes. Obamacare is no different. Part of the burden of a shared responsibility fee is that some people will pay for things they don't necessarily support. The upside is that millions of people will gain access to efficient and affordable healthcare. In this sense, the positives may outweigh the perceived negatives of this system.
Myth: If I can't afford insurance now, then there's nothing Obamacare can do for me.
One of the primary goals of the Affordable Care Act is to make insurance more affordable, and you might be surprised to learn that many people with low incomes can now afford healthcare coverage. Even if you already have insurance through your employer or a private source, you can take advantage of lower-cost options available on the government Marketplace. With added advantages like the ten essential benefits, many Americans now have access to better healthcare options that still fit within their family's budget.
If you earn between 100 and 400 percent of the Federal Poverty Line or FPL, then you could be eligible for subsidies that help offset the cost of insurance. This means that lower income families can still take advantage of Obamacare to get vital insurance for themselves and their families. In fact, approximately 60 percent of uninsured Americans will find plans that cost less than $100 per month, and some families won't have to pay any out-of-pocket costs due to subsidies. In 2012, the average cost of monthly premiums decreased by $2.1 billion dollars, which means that Obamacare can save your family significant money in the long run.
How does the ACA work to keep costs down for low- and middle-income families? Healthy, young people and those who earn more than 400 percent of the FPL will pay for a bulk of the cost of Obamacare simply because they will require fewer treatments than those who suffer from ongoing medical conditions or old age. If you're a healthy, 28-year-old single person, then you'll be paying for better healthcare for yourself while making health insurance and treatments more affordable for someone like your grandmother.
While the ACA does not guarantee affordable insurance, it does seek to regulate the way that insurers offer coverage. For example, under the new law insurance companies have to justify rate increases of greater than 10 percent. You also aren't required to obtain health insurance if the cost of a Bronze plan will exceed eight percent of your adjusted gross income; the percentage threshold increases to 9.5 percent if you're enrolling in a job-based plan. The ACA also lowers the cost of prescription drugs for Medicare participants and provides free preventative services including mammograms and colonoscopies.
Did you know that medical bills account for roughly 60 percent of personal bankruptcy in the United States? Obamacare wants to eliminate debt caused by exorbitant healthcare costs and ensure that people get the treatment they need without being subjected to financial instability. By eliminating annual and lifetime limits on healthcare treatments, the ACA helps reduce the burden of lifesaving care.
If you want to take advantage of subsidies and other cost assistance programs, then you need to sign up on your state's individual marketplace or health insurance exchange to find out if you qualify. From there, you can choose a plan that works for your needs and apply for cost assistance. While private insurance agents may assist you with finding a plan, you can only gain assistance if you choose a plan through your state's marketplace.
Myth: Medicaid has been eliminated.
At the outset of Obamacare, many of its opponents claimed that Medicaid would be significantly limited or eliminated entirely under the ACA. Not only does the ACA support Medicaid, but it actually increases the benefits in states that participate. When the Supreme Court upheld the ACA in June of 2012, it provided for an expansion of benefits but also allowed individual states to opt out of the expansion. To date, 27 states along with the District of Columbia have opted to expand Medicaid benefits and 21 states have no current plans to expand Medicaid.
If your state did not expand Medicaid benefits but you currently rely on Medicaid as your primary insurance, then you may not see any significant changes in your coverage. Medicaid has not been eliminated even in states that chose to opt out of expansion. People who need the coverage provided by the Medicaid expansion simply won't have access if they live in a state that opted out of the expansion.
Medicaid participants can also sign up for Medicaid and the Children's Health Insurance Program or CHIP at any time throughout the year. You can't use the Marketplace to sign up for Medicaid if you miss open enrollment, but you can enroll in one of these assistance programs through other sources regardless of the enrollment period.
An additional advantage to the new Medicaid regulations is that doctors who accept Medicaid will now be paid at least the same amount as doctors who accept Medicare. This new regulation could mean a 73 percent pay increase for doctors who accept Medicaid as well as more options for patients who receive government assistance.
Myth: The health insurance exchange is difficult to navigate.
When Obamacare was officially implemented in October of 2013, many users reported technical glitches and error messages that made signing up for a plan difficult if not entirely impossible. Within two months, the technical difficulties had been resolved. More than eight million Americans enrolled successfully in a Marketplace plan thanks to the resolved issues.
If you still have qualms about signing up for healthcare using your state's health insurance exchange site, then you have the option to apply via phone or by mail. You simply need to take a look at the Marketplace and find out whom to contact. Once you get that information, you can begin the application process using traditional methods.
In terms of accessibility, the updated website for the government Marketplace is very user-friendly. Clearly labeled links make it easy to identify the information you seek. You can sign up for an account, apply for subsidies and browse through available plans at your convenience. However, please note that you can only enroll in a Marketplace plan during open enrollment periods.
For 2014, the open enrollment period ended on March 31st. The next open enrollment period begins on November 15, 2014 and runs through February 15, 2015. You can still sign up for private or job-based healthcare as usual, but you won't be able to use the Marketplace to obtain insurance unless you qualify for a special enrollment period. Specifics of enrollment are discussed in greater detail on subsequent pages.
Myth: If my state doesn't host a marketplace, then I can't get Obamacare.
When it comes to Obamacare, one of the most confusing aspects about signing up for healthcare is how to do it. Referred to as the Marketplace, the federal health insurance exchange operates as a virtual shopping mall where you can compare plans, apply for assistance and see your options for obtaining health insurance. States also have individual marketplaces, and this is where the bulk of the confusion lies. Many people wonder if they can get health insurance if their state doesn't offer an exchange site. In short, you can still enroll in a Marketplace plan regardless of whether your state offers its own website or not.
States are not required by law to host a health insurance exchange site, and many have opted not to do so. For these states, you can log onto the federal Marketplace, choose your individual state and sign up for a plan using the federal site as a proxy. The ACA wants to provide everyone with access to affordable healthcare, and the government has offered a way for you to participate even if your state refuses to set up an individual site.
The Fact is that Obamacare Protects Your Rights
Why does health insurance matter? According to various studies, between 20,000 and 44,000 U.S. citizens die each year from preventable medical conditions due to lack of proper health insurance. This number could include people who have a pre-existing condition or women who lack access to contraceptives. Fifty percent of Americans live with some type of pre-existing condition, and these people may have been denied lifesaving healthcare in the past. The Affordable Care Act strives to eliminate discrimination and provide valuable healthcare services to millions of uninsured Americans.
Under the new law, your insurance premiums depend entirely on your age, income, family size, geographical location, tobacco use and plan level. You can't be denied coverage for gender, pre-existing condition or health status. And unless you commit consumer fraud on your application, you're entitled to more rights and protections than were previously offered under the old healthcare regulations.
However, you should note that if you smoke you may pay significantly higher premiums than your non-smoking friends pay. In some states, you might even pay up to 50 percent more for healthcare coverage thanks to a "tobacco surcharge" that's applied after subsidies. These surcharges could make healthcare less affordable if you smoke.
Why does the ACA discriminate against smokers? In reality, the new law does not discriminate. Rather, Obamacare urges people to live healthier, cleaner lives. Part of the Affordable Care Act includes funding for wellness programs designed to help the public fight obesity and other preventable diseases while encouraging employers to instigate better wellness programs in the workplace. Along with providing better and more affordable healthcare options for millions of Americans, the ACA strives to help people make better long-term decisions that could prevent illness and death.