For a fun, easy-to-understand overview of Obamacare, watch this video
The Marketplace: How to Apply for Insurance under Obamacare
In addition to reducing the amount that some people would pay for insurance, Obamacare created easier ways to buy insurance. You now have the option to purchase an insurance plan directly through your state or federal health insurance exchange. Health insurance exchange websites make it easy to browse through plans and fine one that fits your family’s budget. You can even apply for federal assistance using these sites. Let’s take a closer look at the Obamacare Marketplace.
What is the Marketplace?
Also referred to as a “health insurance exchange,” the Marketplace is a website designed to make shopping for insurance as easy as shopping for anything else. The new ACA guidelines will make Explanation of Benefits statements easier to understand, and people will now be able to pinpoint exactly what their insurance plans cover. Likewise, buying insurance will be easier because you’ll be able to see what you get for your money. Some states have their own health insurance exchanges, but not every state does because the Supreme Court ruled that individual states don’t have to create their own marketplaces.
How Much Does Obamacare Cost?
You can view official rates here. In 2014, the average American paid just $82 for Obamacare. That’s a 76% discount off of their monthly insurance cost in many thanks to the tax subsidies offered by the government. Rates vary depending on the size of your family, your age, tabacco use, state, etc. but here are a couple real-world examples for reference:
Meet Henry and Delia Smith. They have no kids, live in Tennessee and earn $42,000 per year. Neither smokes, and each is under the age of 30.
Because of their combined income, the Smiths can most likely get a subsidy to help pay for their premiums each month.
Without a subsidy, a Bronze-level plan on the Marketplace will cost anywhere from $220 to $304 per month. Bronze level plans feature low monthly premiums with high deductibles.
If the Smiths choose a Platinum plan, then they might pay between $534 and $655 per month for insurance. Platinum plans feature high monthly premiums with lower deductibles.
Obamacare rates for this year may differ from 2015 health insurance rates, and your situation could differ significantly from that of the Smiths. Tobacco users will pay more for insurance, but young and healthy people without dependents may also pay more. You can browse through plans and estimate the cost of your premium rates on the ACA website throughout the year without waiting for open enrollment.
You Can Receive Discounted Health Insurance With a “Tax Credit”
If you can’t afford any of the plans on the Marketplace or insurance at all, then you may qualify for a federal tax credit (also known as a “tax subsidy”). 87% of Americans will eligible for the tax credit it 2014 and the intent is to help lower-income families afford health insurance, many for the first time in their lives. How much will a subsidy cover? In some cases, subsidies may cover the entire cost of your monthly premium and the average subsidy reduced consumers insurance bill by 76% every month. Factors that determine your subsidy amount include your age, location, household size and income.
Like regular insurance, the insurance plans you can sign up for on the Marketplace have select dates during which you can enroll in a plan. The initial open enrollment period for 2014 ended on March 31, 2014. If you didn’t sign up for a plan before that date, then you won’t be able to enroll in a plan until the next enrollment period. You can still sign up for plans through a private source or work during those plans’ open enrollment periods. As long as you have insurance for at least nine months in 2014, you may not be charged a penalty fee for non-compliance.
Enrollment Period for 2015
As mentioned in an earlier section, the next open enrollment period for the Marketplace runs from November 15, 2014 through February 15, 2015. During this period, you can compare government plans against private ones and sign up for health insurance that meets your needs. Keep in mind that enrollment guidelines for private, off-Marketplace plans and job-based plans may differ from the Marketplace enrollment period.
Ten Essential Benefits
Obamacare enhances insurance plans by requiring all plans created after March 23, 2010 to offer ten essential benefits. This provision applies to all new plans and some old plans as well. Your current insurance plan may be grandfathered in, but if you ever change or renew your policy then your insurance company must offer a plan with the following essential benefits:
- Ambulatory or outpatient care
- Emergency services
- Lab testing
- Maternity care
- Mental health services
- Pediatric care
- Prescription drugs
- Preventative care
- Rehabilitative care and equipment
You may notice that some benefits don’t apply to everyone. Opponents of Obamacare argue that people will pay for services they’ll never use. For example, some people may never need maternity or pediatric care. However, these benefits help millions of other parents and children get access to affordable healthcare. Just as you pay for insurance that you might not need, the benefits are available if you ever do need them.
Minimum Essential Coverage
You don’t have to worry about the shared responsibility fee if you have insurance, but you should note that some insurance policies don’t meet the new law’s requirements for “minimum essential coverage.” In other words, your insurance plan needs to meet the minimum standards in order for it to count. Minimum essential coverage includes the ten essential benefits listed above, and you probably already meet the requirement if you have one of the following types of insurance:
- Health insurance Marketplace plans
- Private health insurance plans
- Employer-sponsored group health insurance
- COBRA, retiree or union plans
- Student health plans available through school
- Medicare, Medicaid or CHIP
- TRICARE or a healthcare program for veterans
- Plans for Peace Corps volunteers
- Plans that have been grandfathered into the new law
Short-term disability, dental-only plans and other types of limited insurance do not meet the minimum essential coverage requirement. You can still purchase any type of insurance that meets your needs, but you will owe a penalty fee for non-compliance if you choose to forgo minimum essential coverage.
Tax Penalties if you don’t enroll
How much will you pay if you don’t buy insurance? Unless you qualify for an exemption as discussed below, you could pay up to one percent of your total income for every month that you don’t have coverage in 2014. The fee increases each year based on inflation. The enrollment period for Marketplace plans ended in March 2014; the next enrollment period begins on November 15, 2014 and ends on February 15, 2015. If you plan to enroll in a government-sponsored plan or browse private plans on the Marketplace, then you will need to sign up during the open enrollment period to avoid paying a fine.
Exemptions from the Individual Mandate
There are exceptions to every rule, and some people get an exemption from the individual mandate. While Obamacare is designed to help everyone get health insurance, some people simply won’t be able to afford coverage even with government subsidies. These and other groups of people do not have to buy insurance and will not be charged a fee by the IRS. The following conditions or situations may exempt you from the individual mandate:
- You lack insurance for less than three months in the year.
- All of the available insurance plans would cost more than eight percent of your annual income.
- You don’t normally file taxes due to low income.
- You’re part of a federally recognized Native American tribe.
- You’re part of a federally recognized religious institution that objects to all forms of insurance.
- You take part in a healthcare sharing ministry.
- You are currently incarcerated.
- You’re living unlawfully in the United States.
You might also qualify for a hardship exemption if you meet the right conditions. Generally, hardship exemptions are for people who go through extremely bad situations such as homelessness, eviction, bankruptcy or the death of a close family member. The ACA website offers a complete list of the acceptable hardships. Note that people who lose their jobs as a result of Obamacare may also qualify for a hardship exemption.
Patient Protections under the ACA
Better health benefits and more fairness aren’t the only benefits of the Affordable Care Act. The new law also protects patients by giving them more power to challenge unfair conduct by insurers. In the past, insurance companies could summarily dismiss people from insurance plans for trivial administrative mistakes and other arbitrary reasons. Now, patients have a right to challenge these decisions and hold insurers accountable for their actions. This provision does not allow patients to ignore rules set out by insurers or get rights they shouldn’t; rather, the new law helps insurers and patients enjoy a more equal dialogue when it comes to discrepancies.
New Rules for Charitable Hospitals
Obamacare also changes the way that charitable hospitals conduct business in terms of how they handle financial need. Typically run by religious organizations, charitable hospitals get a tax break by writing off medical care provided to low-income patients or those who can’t afford to pay for treatment. Under the new ACA guidelines, these types of hospitals have to create a written statement on their financial policy to make sure providers within the hospital follow the same standards. Patients should be better informed about their rights when receiving care at such facilities. These hospitals also will be more accountable for their actions and how they administer cost-free care.
Shared Responsibility: What is the Individual Mandate?
Obamacare works best when everyone participates, but some people will choose not to buy health insurance. The government expects people to contribute a fair share to the collective pool that funds Obamacare, and this fair share is called the “shared responsibility fee.” The fee ties in directly with the individual mandate outlined above. Essentially, every eligible American citizen will owe a fee for insurance. You can pay this fee by buying health insurance or paying an additional with your yearly tax return. The U.S. Supreme Court ruled that the shared responsibility fee can be considered a tax and that the IRS can collect the fee from your taxes if you don’t comply. Let’s take a closer look at the individual mandate provision of the ACA.
For Business Owners
The Affordable Care Act wants to make sure that everyone has an opportunity to purchase affordable insurance, and some of the reforms included in the new law center on businesses. Under Obamacare, business owners must adhere to the “employer mandate.” Like the individual mandate, the employer mandate requires businesses to participate in their portion of the shared responsibility provision of the ACA. Essentially, businesses with full-time workers must now offer full-time employees affordable insurance. Not every business will have to comply with the law, and fines for non-compliance vary based on different factors. The following section offers an overview of what Obamacare means for businesses.
Business Guidelines Starting in 2015
The employer mandate takes effect in 2015. Businesses with more than 100 full-time workers in 2015 will have to offer affordable insurance to at least 70 percent of their full-time staff. Starting in 2016, businesses that employ more than 50 full-time workers will have to offer affordable insurance plans to their full-time staff as well. The government defines “full-time” to mean 30 hours or more per week. In 2016, the percentage of covered full-time workers changes as well. Starting in 2016, all businesses with more than 50 full-time workers will have to offer affordable insurance plans to 95 percent of their full-time staff.
Small Business Tax Credits
If you own a business that employs fewer than 50 full-time employees, then you do not have to participate in the employer mandate or pay a fine for non-compliance. However, you may be able to take advantage of tax credits if you choose to offer insurance anyway. Businesses with fewer than 25 full-time employees that earn less than $50,000 per year may get tax credits for providing insurance. Tax credits can pay up to 50 percent of the cost of your premiums as a business owner.
Shopping on the “SHOP”
As a small business owner, you can use the Small Business Health Options Program or SHOP to find and purchase plans for your employees. Unlike the Marketplace for individuals, the SHOP does not have an open enrollment period. If you enroll by the 15th of the month, then coverage can begin as early as the 1st of the following month. Businesses with fewer than 25 employees will gain access to tax credits by using SHOP. Note that self-employed individuals without employees will need to use the individual Marketplace to buy insurance. You can learn more about SHOP by visiting the ACA website.
The History of the Affordable Care Act
The seeds for social reform have been sown and watered for decades by various presidents and lawmakers attempting to provide for people who need help. In the 1930s, President Roosevelt’s New Deal program got Americans back to work after the Great Depression. In 1965, President Johnson signed Medicare and Medicaid into law as part of an amendment to the Social Security Act of 1935, and these initiatives helped senior citizens and low-income families gain access to affordable health insurance. The United States operates on a largely capitalist mentality, but this mentality doesn’t preclude the occasional program with socialist roots. The Affordable Care Act continues the tradition of providing for the masses even if the masses can’t pay. In the following section, we offer a brief history of Obamacare.
The Need for New Healthcare
Some opponents of Obamacare have argued that we don’t need reform because the healthcare industry is working just fine. Unfortunately, issues can be invisible to people on the outside. If you have great insurance, then you may not realize how difficult it can be to get treatment for basic medical conditions like heart palpitations or high blood pressure. Imagine that your heart races unexpectedly when you become active, but your only option is to reduce your activity level instead of seeing a doctor for a simple treatment to regulate your pulse. Before Obamacare became law, millions of Americans had little to no choice when it came to treating basic medical conditions.
It wasn’t always so difficult to get insurance in the United States. Before the 1980s, you could see a doctor for much less than you can today. How did healthcare get so out of hand in the United States? Beginning in the 1980s and up through the 1990s, doctors started using new treatments based on rapid medical advancements. They wanted to treat new diseases like AIDS and certain forms of cancers. Surgery techniques also evolved, and surgeons started performing riskier surgeries for conditions they considered death sentences before.
The need for new healthcare pushed doctors to take higher risks, and patients died because of untested procedures. Medical malpractice suits skyrocketed as surviving family members brought charges against doctors who were trying to improve the medical field. Thanks to expensive lawsuits and the increased cost of medical malpractice insurance, doctors started charging more for their services to recoup their losses and protect their practices. Eventually, the healthcare industry ballooned as people began paying more for even basic medical services.
President Obama’s Priority
President Obama made healthcare reform his top priority when he was elected president in 2008. Over the next two years, he constantly debated opponents and worked with advocates to bring about healthcare reform. However, it’s important to note that President Obama wasn’t alone in the creation of the Affordable Care Act. Ideas for this program came from older regulations and programs created long before he became president. Back in the 1980s, conservative think tank The Heritage Foundation came up with the idea of the “individual mandate.” Former Governor Mitt Romney of Massachusetts initiated a program called “Romney Care” in his home state that also laid the groundwork for Obamacare today. Both sides of the congressional aisle contributed in small and large ways to the development of the Affordable Care Act.
Debate and Controversy over the New Law
Despite the joint effort required to bring the Affordable Care Act into being, not everyone agrees that America needs government-sponsored healthcare. In fact, some people continue to debate the topic even though the law was upheld by the U.S. Supreme Court in a definitive ruling on June 28, 2012. What do people disagree with? Several of the law’s chief opponents scrutinize the ACA for being too restrictive and unfair to portions of the population. Others simply object to the law’s impact on their lives and claim that the ACA limits personal freedom. Let’s take a look at some of the primary controversies over Obamacare.
The Debate about Mandatory Coverage
A common question asked by opponents of the ACA is this: Why should people have to buy insurance if they don’t want it? This is a fair question because America was founded on the principle of individual freedom. Shouldn’t people have the right to decide whether they want to pay for healthcare or not? In reality, choice still exists in America. You can choose not to get health insurance, but you will pay a non-compliance fee as part of the “individual mandate” provision. We discuss the individual mandate in a section below, but suffice it to say that the mandate ensures Obamacare’s effectiveness.
The government already limits personal freedom in other ways: You have to wear a seat belt, can’t send text messages while driving in most states, and must stop at red lights. Most states also require you to purchase auto insurance to keep a valid license. In several states throughout the country, people can no longer smoke in public places like restaurants and enclosed spaces. These are all limitations on personal freedom, and they all serve a purpose – protection. Some people argue that it’s not the government’s job to police us by enforcing limits on personal freedom, but others counter the argument by pointing out the obvious safety benefits of these limitations.
Like auto insurance, health insurance helps prevent you from paying thousands of dollars in emergency care when you need it unexpectedly. Even the healthiest people get in accidents, and health insurance helps ease the financial burden of providers by making sure everyone gets paid for providing you medical treatment. By participating in the system by buying insurance or paying a non-compliance fee, Americans help other people receive valuable healthcare.
How Obamacare Gets Funded
First, you need to understand why the individual mandate exists. As we mentioned earlier, Obamacare only works effectively if people contribute to the system. Experts predict that Obamacare will cost between $1 and $2 billion to implement over the next decade, but these estimates vary widely depending on source. The bottom line is that the new programs included in the Affordable Care Act will cost a substantial amount of money, and taxpayers will be responsible for this cost. Experts also suggest that Obamacare’s programs will reduce the national deficit substantially by creating better accountability for funding across the healthcare industry.
How Much Will Obamacare Cost the US?
We mentioned above that Obamacare will cost more than a trillion dollars for full implementation, and these costs will have to be recouped via taxes and premiums. For some people, the high price tag of healthcare reform means higher monthly premiums. For others, health insurance won’t cost anything. Obamacare works on the premise that people who can pay more will pay more while people with limited resources won’t be overburdened. In this section, we’ll talk about some of the costs you might see under the new healthcare law.
Why Obamacare isn’t “Free”
When the ACA was first introduced, some people celebrated the concept as “free healthcare.” You should note that Obamacare isn’t free. It’s true that some people will not have to pay a monthly premium for insurance due to subsidies, but subsidies get funded by taxes, which everyone pays in some form. Plus, medical care isn’t free even if you have insurance. Health insurance simply lowers your out-of-pocket costs. There’s no such thing as free healthcare because doctors still need to get paid for their work. Under the new guidelines, you may not pay as much as you would have previously, but you will still be responsible for paying some portion of your medical expenses.
Job Loss and Business Stagnation
One of the biggest complaints about Obamacare centers on job growth. Under the ACA, certain employers have to provide health insurance options for their full-time staff. At the outset of the new law, several major companies announced layoffs and plans to reduce hours in an effort to avoid buying health insurance for their employees. Small businesses followed suit, and thousands of workers across the country faced job loss as a result of the new healthcare law. The new healthcare law is a real problem for some business owners because they may not be able to afford insurance or the penalty fee for non-compliance. In a section below, we’ll discuss how Obamacare impacts business.
On the bright side, Obamacare also creates jobs in the healthcare and insurance industries. Due to the complexity of the law and the provisions outlined within it, there’s a growing need for highly qualified medical providers and healthcare professionals to administer and carry out the new law’s guidelines. The new law makes it possible for people to find careers within the healthcare industry, and you don’t need to be a doctor or nurse. Healthcare administrators, public health professionals and others at the administrative level can all expect an increase in job opportunities as the new healthcare law takes effect over the next ten years.
Spending Cuts to Medicare
Obamacare seeks to reform healthcare across the board including finances. Wasteful spending, fraud and other misuse of funds have created problems in areas like Medicare and other social programs that depend on taxpayer funding. Over the next decade, funding to Medicare will be reduced by approximately $716 billion. Opponents of the new law and some Medicare beneficiaries worry that such drastic spending cuts will negatively impact a program meant to ease the stress of senior citizens when it comes to health insurance. These budget cuts may actually help improve Medicare by ensuring that benefits get paid appropriately. Already, early estimates suggest that effective budget cuts will prolong the life of Medicare by another 12 years. It remains to be seen what the real impact of Obamacare’s cuts will be on this long-standing government program.
New Rights and Responsibilities under Obamacare
If Obamacare isn’t insurance, then what does it have to do with your right to receive medical care? Because the term “Obamacare” refers to the law, many people confuse this term with insurance and assume that Obamacare is a type of plan you can buy. In reality, the Affordable Care Act created a new way to buy insurance and a new system for purchasing plans. Under the ACA, you can still buy insurance the same way as before, but now you have the option to buy a plan on the federal health insurance Marketplace as well. You can also buy a government-sponsored plan that may be more affordable than private or job-based plans. Best of all, the new healthcare guidelines make old and new insurance plans better for more people.
Resolving Past Discrepancies
Previous healthcare regulations left millions of Americans without recourse when it came to getting medical care. For instance, a person with diabetes might have paid significantly higher monthly premiums in addition to the high cost of medication and testing equipment. Now, that same person could see a reduction in the cost of routine visits and necessary equipment thanks to Obamacare’s provision against unfair medical charges. Insurers can no longer discriminate based on pre-existing conditions or gender.
It may come as a shock that women paid higher insurance rates than men did under old guidelines, but it happened. And these rates had nothing to do with sex-specific medical treatments; some women had to pay more for the same basic services that men received at a lower cost. The Affordable Care Act seeks to rectify this discrepancy; women now will pay the same rates as men for comparable services.
The Future of Healthcare Reform
Obamacare may evolve over time to meet the ever-changing needs of the healthcare industry and the country as a whole. Healthcare reform is an ongoing process, and politicians in the future will need to address issues like premium cost, adequate facilities, appropriate medical training and other variables that affect true reform. The Affordable Care Act seeks to make Americans healthier and less dependent on medical care. Over the next ten years, we may see a decrease in conditions like obesity, diabetes and heart disease – some of the most devastating killers known in this country today. In a nation as prosperous as the United States, people should have every opportunity to take care of themselves and their families with adequate healthcare. Obamacare offers a starting point from which future reform can evolve.