The Patient Protection and Affordable Care Act, otherwise known as its more politically charged name, Obamacare, has been in effect since 2010. But the cornerstone portion of the legislation, the individual mandate, was on shaky ground until the Supreme Court upheld its constitutionality this summer.
So what does the Affordable Care Act (ACA) mean for you, outside of all the political posturing?
It means different things for different people, but at its most basic level, it means that all Americans must have insurance.
If you don’t have insurance, open enrollment under the ACA will begin in October 2013, and Americans have through 2014 to buy insurance before facing penalties.
Every American must obtain insurance in 2014 or it will cost each person $95 or 1 percent of his or her income, whichever is higher. For a family, the penalty is $285 per household or 1 percent of income in 2014. In 2015, the individual penalty rises to $325, or 2 percent of income, and in 2016 it rises to $695 or 2.5 percent of income. The penalties, which are assessed through annual taxes, get steeper each year by the cost-of-living adjustment.
Some states and the federal government will set up online exchanges—places where people can look for insurance coverage and compare plans. You can already compare insurance coverage options at HealthCare.gov, where you can learn more about the ACA.
If you already have health insurance through an employer, there are other portions of the law, some already in effect, that will impact your health insurance.
- Children will be covered longer under their parent’s health insurance until they are 26 years old.
- Health insurance providers can no longer deny insurance to people with preexisting conditions. This rule does not take effect until 2014, but until then people who have been without coverage for at least six months can join a Pre-Existing Condition Insurance Plan, sponsored either by the federal government or the state in which the individual lives.
- “Already over 77,000 people have enrolled in the Pre-Existing Condition Insurance Plan, and it is now illegal for children under 19 to be denied coverage due to a preexisting condition,” said Fabien Levy, press secretary at the U.S. Department of Health and Human Services, in an e-mail.
- Women cannot be charged a higher premium for their health insurance coverage.
- More preventive coverage is mandated, including wellness visits, certain immunizations, and certain health screenings. See the full list of preventive services covered.
- Insurance companies can no longer raise premiums by double digits without justification, Levy said. The law includes an 80/20 rule, meaning that 80 percent of all premium dollars (or 85 percent for insurance offered by large employers) must be spent on health care, not administrative costs like overhead or CEO salaries.
- Premium subsidies will be available for individuals and families with incomes between 133 percent and 400 percent of the poverty level, or $14,404 to $43,320 individual annual income and $29,326 to $88,200 for a family of four. These families will pay a percentage of their incomes toward their premiums, depending on how much they make.
The big question that politicians and pundits wrestle over is the true cost of the legislation. Will it mean higher or lower health insurance costs? Will it mean more congested waiting rooms and waning care? Will it mean an expansion of the medical industry?
Until the law is fully implemented, it’s hard to tell.
Ilyce Glink is a best-selling author, real estate columnist, and web series host. She is the managing editor of the Equifax Finance Blog and CEO of Think Glink Media. Follow her on Twitter: @Glink