The Health Law Takes Effect: A Consumer’s Guide
Starting Jan. 1, central provisions of the Affordable Care Act kick in, allowing many uninsured Americans to afford health insurance. But the landmark law still faces heavy opposition from Republicans and from a public that remains skeptical the law can improve health care coverage while lowering its cost.
The law has already altered the health care industry and established a number of consumer benefits. It will have sweeping ramifications for consumers, state officials, employers and health care providers, including hospitals and doctors.
However, healthcare.gov, the federal website that is managing enrollment in 36 states, has been plagued by electronic problems that botched the Oct. 1 rollout of the health law’s online marketplaces, or exchanges. The problems frustrated potential enrollees and gave Republicans new fodder for their argument that the law was doomed to fail. After hundreds of hardware and software fixes, federal officials have said that the site works for the “vast majority of users,” but some problems remain.
Here's a primer on where the law stands now and how it might change.
I don't have health insurance. Under the law, will I have to buy it and what happens if I don’t?
You have until March 31 to enroll in health insurance before you are subject to the law’s tax penalty for not having coverage. For individuals, the penalty would start at $95 or up to 1 percent of income, whichever is greater, and rise to $695, or 2.5 percent of income, by 2016. For families this year the penalty is $285 or 1 percent of income. That will grow in 2016 to $2,085 or 2.5 percent of household income, whichever is greater. The requirement to have coverage can be waived for several reasons, including financial hardship or religious beliefs.
Last month the administration decided to waive the individual mandate penalty for 2014 for some people in the individual insurance market whose plans were being canceled. Under the law’s “hardship exemption,” these consumers are also eligible to buy “catastrophic” coverage policies, which have lower premiums and higher deductibles than other plans that comply with the law.
I get my health coverage at work and want to keep my current plan. Will I be able to do that? How will my plan be affected by the health law?
If you get insurance through your job, it is likely to stay that way. But, just as before the law was passed, your employer is not obligated to keep your current plan and may change premiums, deductibles, co-pays and network coverage.
The law has already made several changes to employer-sponsored insurance. For example, plans generally now ban lifetime coverage limits and include a guarantee that an adult child up to age 26 can stay on her parents' health plan. More than 3 million young adults have been able to stay on their parents’ plan due to this provision, according to administration figures.
What other parts of the law are now in place?
Starting Jan. 1, insurers will not be allowed to deny you coverage based on a pre-existing medical condition or place annual limits on medical coverage of essential health benefits, which include prescription drugs and hospitalization.
You are likely to be eligible for some preventive services such as breast cancer screenings and cholesterol tests, with no out-of-pocket costs.
Health plans can’t cancel your coverage once you get sick – a practice known as "rescission" – unless you committed fraud when you applied for coverage.
The law earlier barred insurers from denying coverage to children with pre-existing conditions.
Insurers have to provide rebates to consumers if the companies spend less than 80 to 85 percent of premium dollars on medical care.
Some existing plans, if they haven't changed significantly since passage of the law, do not have to abide by certain parts of the law. For example, these "grandfathered" plans can still charge beneficiaries part of the cost of preventive services.
If you're currently in one of these plans, and your employer makes significant changes, such as raising your out-of-pocket costs, the plan would then lose its grandfathered status and have to abide by all aspects of the health law.
I want health insurance but I can’t afford it. What will I do?
Depending on your income, you might be eligible for Medicaid. Before the health law, in most states nonelderly adults without minor children didn’t qualify for Medicaid. But now, the federal government is offering to pay the cost of an expansion in the programs so that anyone with an income at or lower than 138 percent of the federal poverty level, (about $16,000 for an individual or $32,500 for a family of four based on current guidelines) will be eligible for Medicaid.
The Supreme Court, however, ruled in June 2012 that states cannot be forced to make that change. As of last month, 25 states and the District of Columbia have chosen to expand Medicaid.
What if I make too much money for Medicaid but still can't afford to buy insurance?
You might be eligible for government subsidies to help you pay for private insurance sold in the state-based insurance marketplaces, also called exchanges.
These premium subsidies will be available for individuals and families with incomes between 100 percent and 400 percent of the poverty level, or about $11,490 to $45,960 for individuals and $23,550 to $94,200 for a family of four (based on current guidelines).
If you earn less than 100 percent of the poverty level and live in a state that does not expand the Medicaid program, you generally cannot qualify for a subsidy to purchase coverage. However, you are also exempted from the penalties for not having insurance.
Will it be easier for me to get coverage even if I have health problems?
Insurers are now barred from rejecting applicants based on health status.
I own a small business. Will I have to buy health insurance for my workers?
No employer is required to provide insurance. But starting in 2015 -- a one-year delay from the previous date of 2014 -- businesses with 50 or more employees that don't provide health care coverage and have at least one full-time worker who receives subsidized coverage in the health insurance exchange will have to pay a fee of $2,000 per full-time employee. The firm's first 30 workers would be excluded from the fee.
However, firms with fewer than 50 people won't face any penalties.
In addition, if you own a small business, the health law offers a tax credit to help cover the cost. Employers with fewer than 25 full-time workers who earn an average yearly salary of $50,000 or less can get tax credits of up to 50 percent this year.
Citing technical difficulties, in late November the Obama administration announced a one-year delay in the debut of the online marketplace for small businesses, called the Small Business Health Option, or SHOP. Until the SHOP exchange is fully operational in November 2014, small business owners can apply for coverage through the mail, over the phone or with a broker or insurance agent.
I'm over 65. How does the legislation affect seniors?
But the law does make other changes to Medicare.It is narrowing a gap in the Medicare Part D prescription drug plan known as the "doughnut hole." That's when seniors who have paid a certain initial amount in prescription costs have to pay for all of their drug costs until they spend a total of $4,550 for the year. Then the plan coverage begins again.
That coverage gap will be closed entirely by 2020. Seniors will still be responsible for 25 percent of their prescription drug costs. As of late November, more than 7.3 million seniors and people with disabilities who hit the doughnut hole have saved $8.9 billion on their prescription drugs, according to the Centers for Medicare & Medicaid Services.
The law also expanded Medicare's coverage of preventive services, such as screenings for colon, prostate and breast cancer, which are now free to beneficiaries. Medicare will also pay for an annual wellness visit to develop or update a plan to prevent disease or disability.
According to CMS, in 2012 an estimated 34.1 million beneficiaries took advantage of Medicare’s coverage of preventive services with no cost-sharing.
The health law reduced the federal government's payments to Medicare Advantage plans, run by private insurers as an alternative to the traditional Medicare. Medicare Advantage costs more per beneficiary than traditional Medicare. Critics of those payment cuts say that could mean the private plans may not offer many extra benefits, such as free eyeglasses, hearing aids and gym memberships, that they now provide.
Will I have to pay more for my health care because of the law?
It depends. Younger people who often paid less for health insurance before the health law may pay more for coverage. Older people may pay less because there are tighter rules governing how much more insurers can charge based on age. People who could not afford insurance before may now be eligible for subsidies to cover the cost of premiums – and possibly out-of-pocket costs as well. Individuals who purchased insurance before may pay more because the law’s “essential health benefits” require that more services be covered.
Opponents say the law’s additional coverage requirements will make health insurance more expensive for individuals and for the government. Even supporters of the law acknowledge its steps to control health costs, such as incentives to coordinate care better, may take a while to show significant savings.
There are also some new taxes and fees. For example, starting last year, individuals with earnings above $200,000 and married couples making more than $250,000 paid a Medicare payroll tax of 2.35 percent, up from 1.45 percent, on income over those thresholds. In addition, higher-income people faced a 3.8 percent tax on unearned income, such as dividends and interest.
Starting in 2018, the law also will impose a 40 percent excise tax on the portion of most employer-sponsored health coverage (excluding dental and vision) that exceeds $10,200 a year and $27,500 for families. The tax has been dubbed a "Cadillac" tax because it hits the most generous plans.
In addition, the law also imposes taxes and fees on several major health industries. Last year, medical device manufacturers and importers began paying a 2.3 percent tax on the sale of any taxable medical device to raise $29 billion over 10 years. An annual fee for health insurers is expected to raise more than $100 billion over 10 years, while a fee for brand name drugs will bring in another $34 billion.
Those fees will likely be passed onto consumers in the form of higher premiums.
Has the law hit some bumps in the road?
Yes. The Oct. 1 launch of healthcare.gov was marred by technical problems that frustrated millions of consumers and gave Republicans on Capitol Hill fresh material for another round of hearings and charges criticizing President Barack Obama’s signature domestic policy achievement. Some Democrats have urged the administration to delay the law’s individual mandate, citing the website’s woes. After a series of repairs, officials have said that the website is working for the “vast majority of users.”
When millions of Americans who buy coverage on the individual market began to learn that their current health plans would not be offered in 2014 because they did not comply with the health law’s new requirements, Obama had to apologize for his oft-repeated statement “if you like your health plan you can keep it.”
With some Americans still having difficulty in late December trying to sign up for coverage that starts Jan. 1, administration officials asked insurers to give people more time to pay for coverage beginning Jan. 1. Insurers said that people who enroll by Dec. 24 can pay as late as Jan. 10.
Problems with healthcare.gov have helped keep early enrollment well below government estimates, but administration officials have said they expect sign-ups to continue to intensify before open enrollment closes March 31.
Are there more changes ahead for the law?
Republicans are expected to continue their efforts to defund or repeal the health law and convene additional oversight hearings to highlight the law’s problems as Congress gears up for the 2014 midterm elections.
It’s also possible that some of the taxes on the health care industry, which help pay for the new benefits in the health law, could be rolled back due to pressure from affected groups. A repeal of the tax on medical devices was part of last fall’s debate over funding the federal government and raising the federal debt ceiling but was not included in the final deal. Medicare’s actuary has predicted that the law’s payment reductions to hospitals and other providers may not withstand heavy political lobbying on Capitol Hill.
Meanwhile, the Independent Payment Advisory Board (IPAB), one of the most contentious provisions of the health law, is also under continued attack by lawmakers. IPAB is a 15-member panel charged with making recommendations to reduce Medicare spending if the amount the government spends grows beyond a target rate. If Congress chooses not to accept the recommendations, lawmakers must pass alternative cuts of the same size.
Some Republicans argue that the board amounts to health care rationing and some Democrats have said that they think the panel would transfer power that belongs on Capitol Hill to the executive branch. In March, the House voted to repeal IPAB. The Senate did not consider the measure.
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