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imagesWe keep hearing about affordable health care and Obama care.   What is this health program is this? And how does the average American participate?

Obamacare is the Patient Protection and Affordable Care Act of 2010.   Most people think it just applies to insurance, but in fact it has already changed the way healthcare is being delivered.   It mandates health insurance for all, while expanding subsidies for middle – income families, and taxing healthcare providers and higher-income earners. It’s is the most comprehensive piece of legislation since the Social Security Act of 1935. It’s named after President Barack Obama, who has championed health care reform since running for office in 2008.

The most important part of this Act requires you to have health insurance for at least nine months out of every 12 months or be subject to a tax. The tax is 1% of your 2014 income unless certain conditions apply.

The name was created by critics of President Obama’s efforts to reform health care, but it stuck. Even the President likes it, because he says it shows he does care.

How It Affects You

The health insurance exchanges are open for enrollment from November 15, 2014–February 15, 2015. You can always use the exchanges, even after enrollment, to compare plans, buy private insurance off of the exchanges, or apply for Medicaid if you are eligible.

Some exchanges are run by states, and some by the Federal government. However, you can still use the exchange to compare plans.  You need to keep in mind to compare, not just your monthly premium, but your overall anticipated health care costs. This includes the annual deductible, percentage covered, and copayments.

To enforce the mandate, a 1% additional income tax is levied on those without insurance. This tax rises to 2% in 2015 and 2.5% of income 2016. To pay for the subsidies, those making $200,000 a year ($250,000 for married couples) pay higher income and investment taxes. Many businesses pay more taxes as well.

The goal of Obamacare is to lower health care costs overall. It includes more, healthier young people who will be paying premiums but not using services. It allows people, who now use expensive hospital emergency room visits, to get their conditions treated by a doctor before it becomes a crisis.

Unfortunately, the Act could increase healthcare costs initially, because many people will find chronic illnesses in their regular doctor visits, driving up costs.  Obamacare could cause between 3-5 million workers to lose their existing, company-sponsored health insurance. Businesses may simply find it more cost-effective to let their workers buy insurance on the exchanges, and pay the penalty.

Others are losing their individual plans because they don’t meet the requirements of the new law.

If You Already Have Insurance – All insurance plans must provide services listed in the 10 essential health benefits categories. In addition, those with pre-existing conditions can no longer be excluded (children in 2010, adults in 2014). Health insurance companies can no longer drop those who get sick. Parents can put their children, up to age 26, on their plans. However, if your plan began before March 23, 2010, then it might be “grandfathered in,” and not have to provide all these benefits. Therefore, even if you have insurance, it will be worth your time to review it and compare it to those on the exchanges.

If You Can’t Afford Insurance – Medicaid will be extended to those who earn up to 138% of the Federal Poverty Level. That’s $16,105 for an individual or $32,913 for a family of four. The poverty level usually increases each year to keep up with inflation.

However, not all states have elected to expand Medicaid, even though the Federal government will subsidize 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.

Those who earn too much for Medicaid will receive tax credits if their income is below 400% of the poverty level. That’s $45,960 for an individual or $94,200 for a family of four. The credit is applied monthly, rather than as an annual tax rebate. There are also reduced copayments and deductibles.

If You Don’t Get Insurance

The exchanges are open until February 15, 2015. You must have coverage for at least nine months in 2015 to avoid the tax. You can still get sign up for private insurance or Medicaid, and you can use the exchanges to begin researching plans for next year.

The Supreme Court ruling allows the IRS to tax you 1% of adjusted gross income, but no less than $95 per adult/$47.50 per child in 2014. The amount rises in 2015 and 2016.

If You Make More Than $200,000 a Year – Taxes increased in 2013 for individuals making more than $200,000 a year ($250,000 for married couples), some healthcare providers, and other health-related businesses.

If you’re a Business Owner – The mandate to provide health insurance for your employees has been postponed to January 1, 2016 if you have 50-99 employees. This may be good news for you, because many of your employees may find insurance on the exchanges by then, lowering your costs. If you have 100 or more employees, you must provide insurance to at least 70% of full-time employees by 2015 or pay a fine. This increases to 95% of their employees in 2016.

The Affordable Care Act is so complex that it’s created a lot of other terms. Here’s a list of the most important ones, and their definitions.

Health Insurance Exchange – These are online shopping sites that allow you to compare and purchase health insurance plans beginning October 1, 2013. Some states run their own exchanges, but most allow their residents to use the one run by the Federal government. Coverage starts on January 1, 2014 if you’ve purchased a plan by December 15, 2013. Open enrollment ends March 31, 2014. Those who don’t purchase a plan by then can’t get insurance through the exchanges. In other words, you must have coverage for at least nine months in 2014, or pay the tax.

Federal Poverty Level – This is the annual income that the Federal government uses to determine who is living in poverty. In 2013, it was $11,490 for an individual and $4,020 for each additional person in the household. That equals $23,550 for a family of four. The poverty level usually increases each year to keep up with inflation.

Obamacare expanded Medicaid to those who make 150% or less of the poverty level, and provides tax credits for those whose make 400% or less.

Ten Essential Health Benefits – Under Obamacare, all insurance plans must provide services in each of the 10 essential categories. These include: (1) Outpatient care; (2) Emergency room services; (3) Hospitalization; (4) Preventive Care, wellness visits, and chronic disease management’ (5) Maternity and newborn care; (6) Mental and behavioral health treatment: (7) Prescription drugs; (8) Services and devices to help people with injuries, disabilities, or chronic conditions; (9) Lab tests; and (10) Pediatric care.

Grandfathered In – That term applies to all health insurance plans that were in existence before March 23, 2010, when the Affordable Care Act was signed. These plans don’t have to provide the 210 essential benefits, or comply with many of the other ACA regulations. They may offer both lower coverage and premiums than the plans on the exchanges.

Therefore, check to see when your plan was first offered. If you have a grandfathered-in plan, compare it carefully to plans on the exchanges to see if you really can get a better deal. Once you let it go, you can’t get it back. .

Kathy Kiefer


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