Obamacare Explained

The implementation of the Affordable Care Act, aka Obamacare, began on October 1st. This means a lot of different things for a lot of different people, but I will try to provide an informative summary that explains the ACA.

If I have insurance from my employer will my coverage change?

48% of Americans have employer-based health insurance. If you are one of those people, your health insurance will not change as a result of the Affordable Care Act.

If I am covered my Medicaid or Medicare will my coverage change?

32% of Americans receive their health from government programs like Medicare, and Medicaid. If you get your healthcare from either of these programs your healthcare will not change.

What does the Affordable Care Act do?

The Affordable Care Act was designed to affect the 20% of Americans that either don’t have health insurance or purchase health insurance on the individual market. Here’s what is going to change for the aforementioned 20%:

Insurance companies can no longer reject people because of preexisting conditions.

Insurance companies can no longer charge higher rates solely based on the gender of the individual applying.

If you are under 26 years of age you will be able to stay on your parent’s health insurance plan. (If your parents don’t have health insurance they will be required to pay a penalty to the IRS until they do, but I’ll get to that later)

I’ve heard about online exchanges. What are they?

The administration, in conference with the States, has set up online marketplaces for consumers to shop for health insurance. (They are similar to websites like priceline.com and kayak.com for travel booking) On those marketplaces consumers will be able to pick the plan that best suits them and purchase health insurance. The idea behind the insurance exchanges is to encourage competition and thusly drive down prices.

How do I pay for it?

Any consumer that makes more than the federal poverty line, which is shown in the graph below, but less than four times the poverty line ($94,200 for a family of four), can buy subsidized insurance on the marketplaces. This essentially means that if you make less then 4 times the poverty line then the government will help pay for your insurance.

What if I still can’t afford insurance with the subsidies?

Now, one exception to the aforementioned formula is that in the states that accepted the Medicaid expansion proposed by the Affordable Care Act, (Florida not being one of them) people who make less than 133% of the poverty line will be able enroll in Medicaid and have there healthcare completely covered by the government. This expansion allows states to cover people who previously made too much money to qualify for Medicaid, but currently don’t have enough money to buy health insurance on the marketplace. Unfortunately, if you are in a state that did not expand Medicaid, you will be left to pick up the insurance tab. If you are one of those people I would suggest contacting one of your state representatives and encouraging them to expand Medicaid in your state.

I understand all of that, but why should I get health insurance?

Well besides the obvious “so you can go to the doctor” answer, there is something called the individual mandate. This is the aspect of the law that provides the incentive to get people to buy health insurance. If you do not have insurance on January 1st, 2014 then you will be subject to a penalty that will be imposed when you file your taxes. The penalty will be $95 per person, or 1% of household income, whichever is greater. It will go up in every subsequent year and by 2016 will be $695 per person, or 2.5% of household income.

Where do I sign up?

The website where you sign up is healthcare.gov and the deadline to buy insurance and not be subject to the penalty is December 15th, 2013 even though the marketplaces will stay open until March 1st, 2013. If you don’t have insurance, check it out. You could qualify for the subsidies and get covered.