How the Affordable Health Care Act Affects You
The Patient Protection and Affordable Care Act of 2010 significantly changed healthcare in the U.S., making insurance available to between 32 - 50 million more Americans -- a total of 95% of the legal population.
The Act, also known as Obamacare, is being phased in over four years. Every citizen will be required to have health insurance by March 31 2014, or face a 1% income tax. However, they can choose how to get coverage.
If they already have a plan, whether through their employers, Medicaid, Medicare, or privately, they can keep it. Those who can't currently get health insurance will have additional options -- they can purchase it from a health insurance exchange (and possibly get a subsidy) or they may be eligible under expanded Medicare guidelines. Find out How Much Will Obamacare Cost Me?
Over the first 10 years, the program adds $940 billion to the Federal budget. However, a study by the Congressional Budget Office said the Affordable Care Act will lower the budget deficit by $143 billion over these same ten years. How? The Act was designed to offsets its costs by:
- Lowering payments to hospitals.
- Increasing Medicare taxes on higher income households.
- Assessing penalties on employers who don't offer, and individuals who don't take, health care insurance.
- Assessing taxes on various health related activities.
- Reducing overhead by consolidating the higher education loan program with the Pell Grant program.
There's been tremendous opposition before, during and after it's becoming law.
Lawsuits argued that the mandate that all U.S. citizens must purchase health care insurance from a private carrier, or pay a penalty, was unconstitutional. The Supreme Court ruled it was constitutional, under Congress' right to impose a tax.
The House of Representatives has voted to repeal the law numerous times. In 2013, they shut down the government and threatened to default on the debt if it weren't defunded. There has been so much opposition, in fact, that 22% of Americans think the law has already been repealed. What changes does the Affordable Care Act create, when are they rolling out, and how do they affect you?
Changes That Occurred in 2010
- Small businesses received tax credits to cover up to 35% of their total employee premium payments. This increases to 50% in 2014. (For details, see Small Business Tax Credit.)
- Indoor tanning services were assessed a 10% excise tax.
- A re-insurance program offset the costs of health benefits for workers age 55-64 who were forced into early retirement.
- Medicare beneficiaries who fell into the Medicare Part D Prescription Drug "donut hole" received a $250 rebate. They received a 50% discount on brand name drugs in 2011, and the donut hole is eliminated in 2020.
- Children were allowed to stay on their parents' health insurance until they turn 26.
- Private plans created after 2010 were required to cover preventive services with no co-payments, and they are exempt from deductibles. Consumers who applied to new plans have access to an external appeals process if coverage is denied.
- Insurance companies were prohibited from dropping coverage if someone got really sick. They couldn't create lifetime coverage limits. They could no longer deny coverage to children with pre-existing conditions. The same will apply to adults in 2014. Until then, adults with pre-existing conditions who have been denied coverage will get access to temporary health insurance coverage until the exchanges are set up.
Changes in 2011
- Medicare-covered preventive services were exempted from deductibles and the co-pay was eliminated.
- Insurance companies must prove they spent at least 80% of the premium payments on medical services, rather than on things like advertising and executive salaries. Those that didn't were required to provide rebates to policyholders.
- States were funded to require health insurance companies to submit justification for all rate hikes.
- Funds were expanded to increase the number of doctors and nurses, and more community health centers -- enough to double the number of patients they can treat in the next five years.
Changes in 2013
Medical expenses must be at least 10% of income before they are deductible for those under 65. Manufacturers and importers of medical devices pay a 2.3% excise tax. Federal funds were increased to allow Medicaid to offer free preventive services, and to extend CHIP for an additional two years. The Federal government funded states to pay primary care physicians 100% of the Medicare fee. Medicare started a pilot program to encourage hospitals to bundle services before submitting for payment. (Source: Healthcare.gov)
Additional taxes were assessed on the 1 million people who make more than $200,000, and the 4 million couples filing jointly who made more than $250,000. Specifically, they paid a total of 2.35% (up from 1.45%) Medicare taxes on income above the threshold, and 3.8% Medicare taxes on the lesser of (a) dividends, capital gains, rent and royalties (b) income above the threshold. For more, see Obamacare Taxes.
Families in most states could start shopping on the health insurance exchanges beginning October 1, 2013. Businesses with fewer than 50 employees could start in November.
Changes in 2014
Health insurance coverage bought through the exchanges begins. Medicaid eligibility is expanded to include those with incomes up to 133% of the Federal poverty level (That's $31,720.50 for a family of four). New subsidies become available for those with incomes up to 400% of the poverty level ($95,400 for a family of four). Find out more.
Those who don't purchase insurance will be assessed a tax. The minimum is $95 per adult and $47.50 per child, capped at $285 per household. The maximum is 1% of adjusted gross income (AGI), capped at the cost of purchasing the "bronze" health insurance plan on the exchanges.
Changes in 2015 and 2016
Businesses with 100+ workers must pay $2,000 per worker (except for the first 30) if they don’t offer health insurance. This applies to businesses with 50-99 employees in 2016. The tax applies if even just one employee can find the same benefits with a lower-cost premium on the exchange. (Source: U.S. Treasury, Final Regulations Implementing Employer Shared Responsibility and SHOP Marketplace) Article updated February 18, 2014