President Obama’s signature health care legislation, the Affordable Care Act, is very much in place now and in the next few months a number of Americans are going to see a lot more of the regulations and laws come into place. This includes:
Penalties for No Health Insurance. Beginning in 2014, uninsured individuals must buy coverage (individual mandate) – either on their own, through an employer’s plan or through a health insurance exchange – or else pay a tax penalty. It is expected that the individual mandate will lower average premiums by bringing younger, healthier applicants into the health insurance market. The first year, consumers who did not have insurance would owe $95, or 1 percent of income, whichever is greater. But the penalty would subsequently rise, reaching $695, or 2 percent of income. People on Medicare, Medicaid, CHIP, Veterans Affairs, the Indian Health Service, or Tricare all are classified as meeting the individual mandate and so won’t be subject to these penalties either.
Health Insurance Marketplaces (or exchanges). The formation of state-run Health Insurance Marketplaces, with a federal default option for states that do not want to run their own exchange, will allow individuals and small businesses to buy qualified health benefit plans. The aim is that these marketplaces will provide lower cost options with more transparency than current private health insurance options. The exchanges are expected to go live Oct. 1 2013 for coverage in 2014. Note however that the individual state insurance exchanges have nothing to do with the insurance offered by Medicare, Medicaid, or employers.
Low Income Exclusions and Subsidies. Families who fall below the income tax filing thresholds would not owe anything. Nor would people who are unemployed or cannot find a policy that costs less than 8 percent of their income. For families the maximum premium fee is capped at $285 per family, or 1% of income, whichever is greater. By 2016, it will jump sharply to $2,085 per family, or 2.5% of income, whichever is greater. Further those who buy insurance through their state marketplaces will qualify for a subsidy (paid as a tax credit) if their household income is between 100 percent and 400 percent of the federal poverty level. People with household incomes of less than 250 percent of poverty will also get subsidies to reduce their out-of-pocket costs, such as deductibles and coinsurance. Subsidies that people qualify for will be determined when shopping at the health insurance marketplace and it is expected that about $950 billion in subsidies will be paid to lower-income participants over the first 10 years
Small Business Healthcare Tax Credit. Beginning in 2014, employers with 50 or more workers could face federal fines for not providing insurance coverage. But this will be somewhat offset by an expanded small business specific healthcare tax credit which covers as much as 50% of the employer contribution toward premium costs for eligible employers who have low- to moderate-wage workers.