Breaking Down the Affordable Care Act

Despite the government’s 16-day shutdown and a shaky start with online registration failures across the country, the Affordable Care Act, also known as Obamacare, moved into full swing Oct. 1. With accusations and claims being asserted by both sides, understanding what the updates actually mean for Americans can seem overwhelming.

There are three major ways that Americans now will be provided with health care: through their employers, through Medicaid or Medicare, or by selecting their own plan through online health care marketplaces across the nation. Despite all of the recent updates to health care coverage, approximately 30 million people will remain uninsured. Below is a summary of the changes and updates resulting from the Affordable Care Act.

Insurance Through Employers

For Americans covered by their employers, not much will change outside of new caps on how much individuals can be required to spend out of pocket for health services and coverage for additional, free preventive services. The biggest difference will come for those working for companies with 50 or more employees, which will be required to cover all full-time workers or choose to pay a penalty starting in 2015.

Small companies will not be required to provide health care for all full-time employees, but the government will create online marketplaces to simplify the process of providing health care and offer a two-year tax break to encourage companies with 25 or fewer employees to purchase employee health care.

Medicaid and Medicare

While Medicare will not change for most individuals, the Affordable Care Act will improve some of its preventive care services, as it adds coverage for colon, prostate and breast cancer screenings. Additionally, seniors who enter the Part D coverage gap in Medicare now will receive $250 to help pay for medication; by 2020, that coverage gap will be eliminated, meaning that seniors who currently are required to pay 100 percent of their medication fees then will be responsible only for 25 percent.

Starting in 2014, Medicaid will expand in some states to cover households making the equivalent of around $23,550 for a family of four. However, because the Supreme Court ruled that state legislatures may decide whether to take part in Medicaid’s expansion, 21 states are opting out, which will leave millions uninsured.

Health Care Marketplaces
Americans not covered through their employers, Medicare or Medicaid will purchase health care on their own through new, regulated, online health insurance marketplaces, where private insurance companies will compete for business by providing plans with a range of coverage, costs and deductibles.

While health plans will range in scope and cost, all will be required to cover hospital visits, doctor visits, maternity care, mental health care and prescription drugs.

As insurance companies now will be required to cover everyone, including those with pre-existing conditions, health care marketplaces have set enrollment periods to ensure people do not wait to buy insurance until they are sick or injured. The first enrollment period started Oct. 1 and will end March 31, 2014. People will not be able to purchase insurance through the marketplaces outside of these set time periods.

The government will step in and provide marketplaces in states that voted to opt out of providing the marketplace option. Those who cannot receive health care anywhere outside of the marketplaces and some low-income families will be eligible for tax credits—which means the majority of people purchasing insurance through the marketplace will not be responsible for the full premium.

Overall Changes

  • All health plans will be required to provide preventive services without a co-pay and insurers no longer will be able to turn people away or charge them more because of pre-existing conditions, which affects up to 129 million nonelderly Americans.
  • Health insurance prices will decrease for most elderly consumers, while prices generally will increase for younger people. However, people who are 26 and younger can remain on their parent’s health insurance, or choose to buy cheap, catastrophic insurance until the age of 30.
  • Starting in 2014, if you can afford to, you will be required to have health insurance. The penalty for not having health insurance in 2014 will be $95 per adult and $47.50 per child, or 1 percent of a family’s total income, depending on which is greater. This amount will rise to $695 per adult and $347.50 per child, or 2.5 percent of a family’s total income, by 2016. However, some will be exempt from this fee, including undocumented immigrants, Native Americans who have health care through other means, those who are incarcerated and those who do not make enough money to file a tax return. Additionally, if the premium costs are more than 8 percent of a household’s total income, the members of that household are exempt, as are those who would have qualified for Medicaid under the new guidelines living in one of the 21 states not expanding Medicaid. Those who do not fit into any of these specific categories also may apply for a hardship or a religious exemption.

Check out these websites for more detailed information: