Obamacare Update: What You Need to Know Now
If you’ve been following the news about Obamacare, you’ve probably heard that the mandate, which requires employers with over 50 full-time workers to provide health insurance, has been extended for one year.
That mandate is a major part of the federal health act, and was originally scheduled to go into effect in January 2014. However, the Obama Administration’s delay of one year applies only to the mandate. The rest of the provisions of health reform are still scheduled to go into effect at the beginning of the year.
The most important reform to be implemented as scheduled is the opening of the health insurance exchanges, which are essentially online marketplaces where individuals who don’t have health insurance through an employer can purchase it from a public plan, such as Medicare, Medicaid or the military.
So what can you expect as Obamacare rolls out?
For starters, there are some changes being made, including: 1) the requirement that most Americans get health insurance or pay a fine; 2) new rules that prevent insurers from turning patients away just because they have a prior medical history; and 3) new rules that prevent insurers from putting lifetime caps on a patient’s medical expenses.
Other changes to be made are limits on the minimum coverage that can be provided, and in some states, wider eligibility for Medicaid. Also, there will be changes in the formation of so-called accountable care organizations, as well as in rules intended to require hospitals to provide better care – and still to come in 2018, a tax on “Cadillac” health insurance plans.
Despite the one-year delay for the mandate, the Affordable Healthcare Law is still scheduled to launch open enrollment for new health insurance plans on October 1, 2013, and to start paying for people’s health care on January 1, 2014, which is just a few short months away.
According to the Kaiser Family Foundation, approximately 18 percent of Americans under the age of 65 do not have any health insurance at all. The health exchanges are supposed to help these people, with the Congressional Budget Office projecting that some 26 million individuals will buy health insurance on the exchanges by 2022.
In the meantime, you’ve probably already noticed some advertising about Obamacare in an effort to increase public awareness about what’s in store, and you can expect even more.
“We have a very long way to go on public awareness and education on what is going to be available,” says Caroline Pearson, a vice president at the consulting firm Avalere Health in Washington, D.C. “We are going to see a big push from state and federal governments and private groups to educate people.”
Despite the public awareness campaign and the push to educate Americans about Obamacare, the majority of people in the U.S. say they don’t have a clue what’s going on.
Indeed, nearly 80 percent of the general public, and 87 percent of people without health insurance, say they know little or nothing about the exchanges, according to the Kaiser Foundation.
Meanwhile, the individual mandate is a provision that was demanded by the insurance companies, and starting January 1, 2014, nearly every American will be required to have health insurance – which most Americans already have through either an employer, Medicare, Medicaid, or Tricare for the military.
If people do not have health insurance, they will have to pay a fine. The first year, such fine could be as small as $95 if the person doesn’t get insurance through Medicaid or the exchanges – or if they choose not to get whatever insurance offered by their employer.
“The penalties the first year are very low and may not be enough to sway people,” Pearson says, and the federal government will help pay the premiums for anyone making up to about $46,000 for an individual, as much as $94,000 for a family of four.
The premise behind Obamacare is to help those who cannot afford health insurance, and to provide them the care they need. However, nearly half of the states have declined to expand Medicaid, which would have made more Americans eligible – something the federal government was counting on.
Accordingly, people in those states who make too much money to qualify for Medicaid, but too little to qualify for the exchanges, could end up having to choose between the lesser of two evils: 1) paying the full premium on an exchange; or 2) break the law by not getting insurance, and pay the fine that may cost less.
If you’re among those who don’t make enough to file for income tax, consider yourself lucky, as you won’t have to pay any fines.
In regard to Medicaid expansion, all states were originally required to make the health insurance plan for the poor more widely available, and the federal government was going to pay the full cost for several years. However, the Supreme Court has since ruled that was unconstitutional. So, according to the Advisory Board Company, only 26 states currently say they plan to expand Medicaid.
One change that many welcome with Obamacare is that health insurance companies can no longer turn you away just because you’ve had a pre-existing condition. Of course, this provision is not so welcomed by the insurance companies because they fear there will be a bunch of new customers with health insurance they previously never had; thus, there may be a back-log of expensive medical conditions that the insurance companies will now be required to pay for.
Also starting January 1, 2014, insurance companies can no longer stop covering people once they reach a lifetime limit. This provision effectively gets rid of any concern that you’ll be cut off from your insurance company just when you get really sick and need insurance the most.
The following is a list of some other provisions set to go into effect January 1, 2014:
1. Insurance companies will only be able to charge a certain amount more for older people.
2. Insurance companies can no longer charge women higher premiums than men.
3. Insurance companies can, however, charge smokers higher premiums.
4. Employers can expand their wellness programs, offering discounts on premiums, cash rewards, gym memberships and other incentives for those who lose weight, take part in diabetes control programs, or similar plans to improve their health.
It’s important to keep in mind that, like any change, there will be some bumps in the road. For example, insurance companies do not know whether or not the exchanges will be worth the effort, meaning it’s possible that some may get in and out of the market, while others may change the price of premiums in some states.
“The hope is the large insurers will see this is a profitable market and jump in over the next year or two,“ says health law expert Timothy Jost, at Washington & Lee University in Virginia. “I think it is fair to say in many states there are not going to be that many insurers in the exchanges,” Jost says.
SOURCES: 1. The Advisory Board Company, "Where each state stands on ACA's Medicaid expansion" (June 14, 2013). 2. The Congressional Budget Office, "The Budget and Economic Outlook: Fiscal Years 2013 to 2023" (February 5, 2013). 3. Department of Human Health and Services (HSS), Patient Protection and Affordable Care Act; Program Integrity: Exchange, SHOP, Premium Stabilization Programs, and Market Standards: A Proposed Rule (PDF published in the Federal Register on June 19, 2013).