How Does Obamacare Work? 11 Questions, 11 Unbiased Answers
When will it actually kick in? Who qualifies for a subsidy? And what does it mean for indoor tanning addicts? We have answers from Kamy Akhavan, president of ProCon.org.
The way the Affordable Care Act is written, the term "applicable large employer" means a company that employed an average of at least 50 workers during the preceding calendar year. They'll have to pay a fine of $2,000 per full-time worker if any of their employees turn around and get premium tax credits through the new health insurance exchanges. So if the small business has 51 workers and one of those workers gets a tax credit to help them buy insurance, even though they're already getting insured through their company, then the business has to pay a $2,000 fine per employee, per year.
8. So the mandate doesn't apply at all to companies with under 50 employees?
No, and there's no debate.
9. Can you keep your current coverage?
The White House says yes, and the answer is technically true, but -- and this is a big but -- a lot of the insurance providers will no longer be offering the exact plan. Part of the reason is that Obamacare mandates a certain level of quality and a certain number of services to be offered in their insurance packages. So if the insurance package you currently have doesn't perform a certain service that Obamacare requires, that insurance plan will likely become a different plan. So your exact same plan may no longer exist because now they have to comply with some of the requirements of Obamacare, which are the ones intended to increase quality coverage.
Whether the forced, low-tier plans will cost more is still subject to debate because -- and this is one of the main theories of the Affordable Care Act -- by mandating that everyone get insurance, they are creating this big carrot for the insurance company. They're saying we'll give you 30 million more customers and that will help your bottom line. In exchange for doing that, we're going to ask that you provide them a little more coverage. And in effect we hope that, on net, it's a plus for all because more people are insured, you have more customers, they are still profitable, everyone's happy. That's the theory.
Whether it increases premiums or not, we won't know until the mandate has kicked in. I can tell you that [at ProCon.org] for our particular company plan, our premiums have not gone up. In fact we've received rebates. Other people will say the opposite, that their premiums have gone up. So the bottom line is to be determined on that one.
10. Will Obamacare raise my taxes?
There will be 19 new taxes in the form of brand new taxes, fees, and penalties that have never existed and in the elimination of tax deductions. For example, we'll see a $50,000 tax penalty on charitable hospitals that fail to meet five new requirements, a 2.3% excise tax on medical device manufacturers, and a removal of executive salary tax deductions for health insurance companies that compensate executives over 500,000 a year.
For individuals and families, an increased penalty of 20% will apply to early withdrawals from health or medical savings accounts, and people who buy indoor tanning products will incur a 10% excise tax.
11. What if I have [insert chronic disease]? Will I get to participate in the exchange? Will there be a limit on how much carriers can increase my premium, and how can they afford to cover me anyway?
A press release from the Department of Health and Human Services said that under the Affordable Care Act , in 2014, Americans with preexisting conditions cannot be denied coverage, cannot be charged significantly higher premiums, be subject to an extended waiting period, or have their benefits curtailed by an insurance company.
There's specific language to the effect that increases have to be reasonable. The government will help subsidize what it calls "high-risk pools" so that it is not as cost-prohibitive for the insurers to offer those types of plans. But the law is very specific in that it says they cannot be denied coverage for a preexisting condition. No debate.
What have we learned today?
For starters, those of us carelessly carting around health insurance ID cards with no middle initial have been getting away with murder. So let's all breathe a collective "Whew!" for that unwitting feat.
Although tan mom will certainly take a hit from Obamacare, even those among us without home tanning beds can likely expect raised taxes passed down from the companies and hospitals, directly incurring the $1 trillion increase between the 2013 and 2022 budget periods. We also know much of the revenue will be squeezed out of a 0.9% payroll tax and a 3.8% tax on investment income for couples earning over $250,000 and individuals making more than $200,000.
Some health-care companies are expected to benefit from the act, however, including the nation's largest hospital operator, HCA Holdings (NYSE:HCA), the largest insurer, UnitedHealthGroup (NYSE:UNH), drug companies like Merck (NYSE:MRK) and pharmacy manager Express Scripts (NASDAQ:ESRX), and drug retailers like CVS (NYSE:CVS) and Walgreen (NYSE:WAG).
Fingers crossed, you're not doing as well, financially, as you thought. Check out the Department of Health and Human Services poverty level guidelines. If you're a single earning $44,680, a couple earning $60,520, or a family of four earning $92,200, congratulations, the government thinks you're just poor enough for a subsidy!
The rise and/or fall of insurance premiums under Obama's signature law varies by state. New York Governor Andrew Cuomo says New Yorkers will see their premiums drop by 50%. So, if rates where you live go up, just move to New York. There's plenty of room.
Since companies with less than 50 employees are exempt from the mandate, Michael Moore may soon have new fodder for a Downsize This! sequel.
If repealing Obamacare is a matter left to the legislative and executive branches, it seems anti-health-care reformers needn't despair just yet. The 2014 midterm elections -- when all 435 seats in the House and 33 in the Senate go up for grabs -- are a mere doctor's checkup away. A mammogram or prostate exam later, and America will have a brand-new president.
And if the White House's own decision to delay the employer mandate provision is any indication, it may very well be the Obamacare enthusiasts who are left waiting.
Finally, the success of the Affordable Care Act hinges on the participation of the young and the healthy. If this demographic opts out and instead takes the penalty, insurance companies won't be able to mitigate the cost of the "high-risk pools," and we can basically count this whole thing as kaput.
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