Obamacare. Is it a good Law or good Policy?

Both. The law was signed by President Obama three years ago becomes effective on January 1, 2014. The most important highlights:

  1. Insurers will no longer be able to reject people or charge higher rates because of preexisting conditions
  2. The premiums they charge older people will be capped
  3. Most plans won’t be able to impose annual or lifetime caps on coverage
  4. To control the cost of insuring the older and sicker, everyone–including the young and healthy–must have health insurance or face a penalty. A penalty? Really? Yes. In 2014 the penalty is 1% of annual income or $95 per person (whichever is higher); the penalty increases to 2.5% or $695 per person in 2016.

What happens if you don’t have health insurance through an employer, or you are self-employed or unemployed, or you work for an employer that doesn’t offer health benefits, or you have decided not to get it? You may be eligible to receive a subsidy to help reduce your premiums. But to qualify, you have to buy a policy from your state’s new health insurance exchange.

What happens if my employer offers coverage? Can I choose to shop on the exchanges? Yes, but you can’t get a subsidy if your employer provides “affordable” coverage. Affordable means the employee’s share of premiums for employee-only coverage is no more than 9.5 percent of household income. The employer’s plan must also be considered “adequate,” which means it covers 60 percent of the average health care costs in the area.

What’s in it for me if I am young? Individuals under the age of 26 can remain insured as a dependent under their parent’s or legal guardian’s existing health insurance, provided they do not have access to their own job-based coverage, even if they are married.

What if I am older? ObamaCare vastly reduces private insurers’ ability to instate age-related cost spikes in health insurance coverage for those individuals not yet old enough to apply for health insurance through Medicare, although there will be some as yet unspecified, state-to-state variances.

Because of the health care law’s new protections, young, healthy people won’t get as big of a break on premiums and are likely to pay higher rates than in the past. Older people may pay less, especially if they have health conditions that jacked up their premiums. But the changes will depend on your state’s current rules, competition in the marketplace and the level of coverage you have now.

You should keep in mind that employers are unlikely to drop coverage or change it because the government delayed the requirement to provide insurance until 2015.

What if I have a pre-existing condition? Before ObamaCare, children under the age of 19 could be refused health insurance due to pre-existing conditions, such as cancer, asthma or HIV/AIDS, but no longer. Under the new law, health plans that cover children cannot deny or limit them coverage. No individual with a pre-existing condition or chronic disease of any kind can be locked out of the health care market under ObamaCare.

THE EXCHANGES OR MARKETPLACE

Each state will have an exchange (also called a marketplace) where you can buy health insurance and apply subsidies to reduce your premiums. The federal government is running the exchanges in 27 states, and 23 states plus the District of Columbia are running their own exchanges or operating them in partnership with the federal government. Remember you can get a subsidy only if you buy on the exchange.

Plans sold on the exchanges must fall into one of five categories: platinum (must cover 90 percent of average health care costs), gold (must cover 80 percent), silver, bronze and a policy for people under age 30. As the level decreases, you can expect the highest deductibles and more co-payments and coinsurance. As the level increases, the premiums will be higher and cost sharing will generally be lower.

Many companies are also selling policies outside of the exchanges, which could be worth considering if you don’t qualify for a subsidy, or you qualify for only a small one. These policies must meet most of the same requirements as those on the exchanges, but they may have different networks (and different doctors) and other small variations that can help reduce premiums.

If you already have a policy on your own, you may be able to keep it at the current cost until the policy’s renewal date later in 2014.

HOW TO GET A SUBSIDY

To qualify, your modified adjusted gross income must be between 100 percent and 400 percent of the federal poverty level (400 percent of the federal poverty level in 2013 is about $46,000 for an individual and $94,000 for a family of four). For example, if your modified adjusted gross income is $70,650 for a family of four, you’re expected to pay 9.5 percent of your income, or $6,712, toward the benchmark plan’s premiums. If that benchmark plan costs $12,500, you’d get a tax credit worth about $5,790. You can buy a plan that costs more or less than the benchmark, but your subsidy will remain the same. Anyone with income below 250 percent of the federal poverty level ($28,725 for an individual in 2013) can also get a cost-sharing subsidy that reduces co-payments and other out-of-pocket costs, but only for silver plans.

Subsidies come in the form of advance tax credits that reduce what you pay for a policy. When applying for the coverage on the exchange, you estimate your income for the year. The figures will be adjusted when you file your 2014 taxes. If you earn more than you reported, you may have to pay back some of the credit.

What if I am a small business owner? ObamaCare provides tax relief in the form of reduced premium costs, allowing small business owners to remain competitive. For those companies and non-profits who employ less than 25 individuals, tax credits of up to 35 percent can help to offset insurance costs. These tax credits will increase in 2014.

You should remember that this article is not intended to provide you with legal advice; it is intended only to provide guidance about what ObamaCare Law brings to the table.

If you have any questions or concerns about any legal issue, you can call me at (315) 422-5673, send me a fax at (315) 466-5673, or e-mail me at joseperez@joseperezyourlawyer.com. The Law Office of Jose Perez is located at 120 East Washington Street, Suite 925, Syracuse, New York 13202. Please look for my next article in the January edition. MERRY CHRISTMAS AND HAPPY NEW YEAR 2014!!!

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