Using The Affordable Care Act – What You Can Do (Part 1)

In 2012, the U.S. Supreme Court upheld key provisions of the Patient Protection and Affordable Care Act (I will call it Obamacare, since that is its title in everyday conversation). Now that it is law, too little has been said about how it affects you and me. I want to change that.

This is the first in a series of three posts to help you become a more informed user of the “new” medical care. In this Part, I present the basics of how Obamacare affects your medical care and health insurance, as of now. I also give suggestions on what you can do to make the best of it.

In my second Part, I will present how Obamacare affects groups you might be a part of. In that post, I will tell how the law affects you if you are in a union, if you work for a small business, if you work for a large corporation or for government, if you are retired, and groups like that.

In the third Part, I will present the basics of changes required by Obamacare that you can expect in coming years, including taxes, insurance premiums, health insurance coverage, and medical practice. Here’s the first Part:

Part 1: Obamacare’s Effects on You

If you are poor by Federal standards. If your reported income is less than 133% of the poverty level ($29,327 family of four in 2010), check with your State to see if you are eligible for Medicaid (“free” insurance). If you are, it’s probably a better deal than if you’re not on it now. Your State is one of two types:

Expanding. About 40 States will expand their Medicaid eligibility as of 2014 and your State might be one of them. Almost all of the additional cost to the States will come from the Federal Government until 2020.

Not Expanding. The rest of the States are not expanding Medicaid eligibility. Some of these choose not to spend the additional money required above the Federal amount to fund the expansion. Some also think the Federal funds will be cut off sooner than 2020 and refuse to take up the full cost. Other states already subsidize Medicaid above the 133% level and, therefore, will not get Obamacare payments. For those States not expanding, you will be put in an Obamacare health insurance exchange (a government-established health insurer’s list).

The Penalty (Tax) – To Pay or Not To Pay. Obamacare makes you pay a penalty if you don’t have health insurance (or Medicaid, see above). The penalty will be $95 per adult in 2014 and rise to $695 in 2016. The penalty for each uninsured child will be half that, so the penalty for a two adult, two child family will be about $300 in 2014 and $2,100 in 2016. The Court ruled that this is a tax and will be collected by the IRS.

No Need to Pay. If you have health insurance now, stick with it – you won’t have to pay. If you are on Medicaid or in a health insurance exchange (see above), stick with it – you won’t have to pay.

If You Pay. If you pay, you will still be uninsured. The penalty is designed to “force” you into health insurance. Will the IRS be able to collect? Congress will have to fund the thousands of new IRS agents needed, but the IRS may be able to take it from any tax refunds otherwise due to you.

Over-The-Counter (OTC) Medications. If you use a Health Savings Account (HSA) or a Flexible Spending Account (FSA) to buy over-the-counter medications, Obamacare prohibits that. You will have to get a prescription from your doctor to pay for them from those accounts.

Preventive Test Co-Pay. Obamacare has listed a number of preventive tests that must be paid for by your health insurance company without charging you co-pay, unless your insurance plan has been “grandfathered” out of the requirement. Check to find out.

Employer Personal Wellness Reward Programs. Obamacare authorizes employers to set up personal wellness reward programs under their health insurance plans. If your employer has one, you could end up paying up to 50% higher premiums and co-pays if you don’t meet the plan’s standards.

Savings Alert. If you think that you will not meet the standards, you can ask for a special exemption to opt out of the plan.

Pre-existing conditions. Obamacare now requires children with pre-existing conditions to be eligible for health insurance, but adults with pre-existing conditions are not mandated until January, 2014. In the meantime, there is a temporary high-risk insurance pool to bridge the gap.

Early Retirees. Obamacare has created incentives for employers to drop the health care coverage that they have been providing to those who retire before age 65. If this describes you, prepare to buy your health insurance through a state-based exchange (see above) until you’re 65 (when you get Medicare).

Medicare Advantage. Obamacare has created incentives for health insurers to drop out of the Medicare Advantage program. If you are using Medicare Advantage, look for an alternative, as it likely will be discontinued.

The “Rich” Pay More. If you are in the $200K/$250K and higher group, your Medicare taxes will go up on hospital insurance and investment income. Speak with your financial adviser.

Small Business Owner. Obamacare has created significant tax credits on a sliding scale for owners of businesses under 25 employees. Employers with 10 or fewer employees get the full credit. How long this credit will last is unknown.

New Hire Alert. Before hiring new employees, include this tax credit in your new hire calculations to see if you should hire at all and, if so, how many and at what hours/pay rate.

These seem to be the main Obamacare provisions that affect most of us. There are others, no doubt, that will come to light as the law is understood, interpreted, massaged by regulations, and, perhaps, amended. This entire area of public policy is likely to change, perhaps dramatically, as more people begin to find out what is in it, so attention to the news from Washington is strongly advised. Be an informed citizen.

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