Some Simple and Easy-to-Understand Answers to Questions about Obamacare

Let’s be honest here. One of the biggest reasons people are still fighting about the Affordable Care Act (also called “Obamacare” and the “ACA”) is because most of us still don’t understand it. The damn bill is big. I’ve read that the condensed version is over 2000 pages long. I’ve seen other reports giving other estimates on its length, but I think everybody in both parties can agree with this statement: The Affordable Care Act is big and complicated.

In many ways I think it’s unnecessarily complicated, but there are also aspects that should be complicated. This is a complicated subject.

The downside, of course, is the fact that politicians (on both sides) use the complexity and size of the bill to distort the facts.

It’s time to stop listening to the politicians on this issue. Please. To them, the actual value of the Affordable Care Act is irrelevant.

The ACA could be the best thing for this country and republicans would still oppose it.

The ACA could be the worst thing for this country and democrats would still support it.

So let’s forget the politicians. House Speaker John Boehner is just pushing an agenda. Senate majority leader Harry Reid is just pushing an agenda.

So let’s just ignore them and think for ourselves, shall we?

With that in mind, I’m going to do my very best to answer most of the basic questions about the ACA. I’m just a guy, so if I post something here you think is inaccurate, tell me in the comments.

My goal is to give straight answers to these questions, without factoring in politics in any way. Straight, easy to understand answers. I’m a pretty opinionated guy, so I might give my thoughts on a thing or two, but when I give my opinion, I’ll preface it with “MY OPINION” so there’s no mistaking the parts that are just opinion.

My actual answers will be an honest attempt to only state facts.

Okay. Let’s get this party started. I’ll start with the obvious question…

What is The Affordable Care Act (the ACA)?

The simplest (and most nonpartisan) definition I could find is from Wikipedia: “The Patient Protection and Affordable Care Act (PPACA),commonly called Obamacare or the Affordable Care Act (ACA), is a United States federal statute signed into law by President Barack Obama on March 23, 2010. Together with the Health Care and Education Reconciliation Act, it represents the most significant regulatory overhaul of the country’s healthcare system since the passage of Medicare and Medicaid in 1965.” Source: Wikipedia

What’s the difference between the Affordable Care Act and Obamacare?

There is no difference. They’re the same thing. “Obamacare” is just the politicized term for the ACA.

Is Obamacare socialism?

This one is debated furiously, but in the most technical sense… no, it’s not a socialist system. The insurance you obtain through the ACA is obtained from private, for-profit insurance companies. A truly socialist medical system is a system where the government directly provides healthcare. That’s not the case here.

However, opponents of the ACA have argued that this is a step toward a socialist healthcare system, simply because the government is so heavily involved in the process.

MY OPINION: We should ignore any and all arguments about the ACA that involve the word socialism. Many people don’t even know what that term actually means and many people don’t realize that many of our most valued institutions in this country are socialist institutions. When it comes to Obamacare, that word is used for one and only one purpose: To incite fear. If you’re afraid of Obamacare, it should be because of the facts of the bill, not because “It’s Socialism!” That’s a scare-tactic that preys on ignorance.

Is Obamacare a tax?

This is another one that has been heavily debated. Republicans called it a tax. Democrats said it was not a tax. In June of 2012, the United States Supreme Court ended that debate. Twenty-six states sued the Federal Government, saying Obamacare’s individual mandate was unconstitutional. The Supreme Court ruled in favor of Obamacare, which was a huge victory for supporters of the ACA. However, the victory was bittersweet because the ruling stated the mandate was constitutional because it is, in fact, a tax.

So yeah. It’s a tax.

More specifically, the individual mandate is a tax.

What is the “Individual Mandate”?

The mandate is part of the ACA that requires all Americans to buy health insurance. The mandate goes into effect on January 1, 2014.

However, if you can’t afford insurance, you will qualify for tax credits that cover that cost for you. How much it covers depends on your yearly income.

If Americans don’t want to purchase insurance, they can choose to pay a yearly penalty instead. This penalty increases each year. In 2014, the penalty will be 1% of your family income (or $95 per adult, whichever is higher). In 2015, the penalty will be 2% of your family income (or $325 per adult). In 2016, the penalty will be 2.5% of your family income (or $695 per adult). Source: CNNMoney

MY OPINION: If the penalty for not getting insurance is an amount you can’t afford financially, odds are good you’ll be better off just getting insurance through the Health Insurance Marketplace (I’ll explain the Marketplace later in this article). Most likely, the insurance will be cheaper or the tax subsidies will cover the majority (if not all) of your insurance costs.

How can I purchase health insurance?

Well, if you already have insurance through your employer, odds are, you don’t have to change anything. I know, I know. You’re hearing a bunch of talk about that. Well, I’ll address that in a bit. For now, let me say that most businesses that offer insurance won’t be denying you insurance because of this.

If, however, you don’t get insurance from your employer, you can get it by utilizing Obamacare’s  Health Insurance Marketplace, also called the Health Insurance Exchange.

What is the Health Insurance Marketplace?

Simply put, the Marketplace is a government run database that allows you to shop for insurance in a pool of insurance providers that comply with certain regulations meant to benefit the consumer. The Marketplace opens to the public on October 1, 2013. You can access the Marketplace online, by mail, or in-person. There will also be a telephone help line. By enrolling in the Marketplace, you’ll be able to browse what insurers are available in your area, compare costs and benefits, and see if you qualify for tax credits based on your income.

One potential downside to the Exchange is the speculation that some insurance companies will take other measures to offset the costs of meeting the Obamacare requirements and offset the cost of lower rates. This means they might end up having a smaller circle of healthcare providers they cover, thereby limiting the number of doctors and hospitals available to consumers. The New York Times recently posted an article discussing this exact issue. Source: NYTimes

MY OPINION: Since the Marketplace offers a side-by-side comparison of available insurance companies, I think the benefits of the Marketplace will greatly outweigh the potential downsides. This is capitalism at its purest. Competition usually breeds better service. Truth is, though, we’ll just have to wait and see how it pans out. Right now, it’s all speculation because this is something new for us.

When can I start using the insurance I buy on the Marketplace?

Open enrollment started on October 1. Coverage begins on January 1. Open enrollment ends on March 31.

What kinds of insurance is available?

You’ll be able to browse four tiers of insurance plans on the Marketplace: Bronze, Silver, Gold, and Platinum. Lower plans cover less but cost less. Higher plans cost more but cover more. For example, if you get a bronze plan, you’ll have lower monthly premiums but your out-of-pocket costs for healthcare (deductibles, copays, percent of bill covered) will be higher. If you get a Platinum plan, your monthly premium will be higher, but it will cover more, have lower deductibles and copays, and it’ll pay for more of the medical bill.

How much will I save on insurance through tax credits?

That obviously depends on your income. The lower your income, the more tax credit you get. The tax credits are among the most valuable aspects of Obamacare, but determining those credits can get very confusing. It’s a complex process.

Anybody earning up to 400% of the national poverty level will be eligible for tax subsidies. The less you make, the more subsidies you qualify for. For example, if you make $17,235 a year, you’ll never have to pay more than 4% of your yearly income ($57 a month). If you make between $34,470 and $45,960 you’ll never have to pay more than 9.5% of your yearly income ($364 a month). In addition to insurance subsidies, those making less than 250% of the poverty line ($28,725 for a single person and $58,875 for a family of four) will be eligible for extra subsidies to defray out-of-pocket costs, such as deductibles and co-payments. Source: CNNMoney

It’s all very confusing, but for many folks, the credit will be significant. The Kaiser Family Foundation created a very good tool to help calculate your insurance costs after you receive your tax credit. You can check it out here. Keep in mind, this calculator is an estimate, but it will give you a very good idea of what you’re going to be paying. Source: The Kaiser Family Foundation

When will I get my tax credits?

I’ve seen a ton of misinformation about this question, so I’ll do my best to clear it up here.

You can choose to pay the costs up front, then get it back during tax time or you can opt to have the tax credits applied up front (called an “advanced payment”), based on an estimate of your yearly income. If you choose to have the tax credits up front, the payment goes directly to the insurer. If you end up making more than your estimate, you’ll need to pay the difference on your taxes. If you end up making less than your estimate, you’ll get a refund on your taxes. Sources: CNNMoney, Fox Business

NOTE: The second option is where I’ve seen some misinformation. I’ve seen people complaining that – even if they get the tax credits at the end of the year – they can’t afford to pay them up front. Well, the ACA has a provision so you won’t have to.

Are there penalties for smokers?

Yes and no. While the ACA does not apply active penalties for smokers, it does allow the private insurance companies to apply penalties for smokers.

MY OPINION: If you smoke, I recommend quitting . I personally think smokers are going to be hit hard by insurance companies after Obamacare is fully implemented. Think about it. Smokers are the perfect targets for them to charge very high premiums without ever having to take any public relations backlash. So if you smoke, I say now’s a good time to quit. It’s better for you anyway, and I think it’ll save you a ton of money.

How many companies are going to cancel insurance because of Obamacare?

We’re all seeing the claims that businesses are going to cancel insurance or go out of business or lay off employees because of Obamacare.  Honestly, there’s no real answer to this that doesn’t involve some speculation, but let me start by giving some facts:

The ACA will eventually require all businesses with 50 or more employees to provide health insurance for their full-time employees.

This mandate does not go into effect until 2015.

The mandate will affect some small businesses. But how many?

Of all the small businesses in America, roughly 3% will be required to provide insurance (because 97% of small business don’t have 50 employees).

Of that 3%, the overwhelming majority already offer insurance that adheres to the requirements of Obamacare.

At the end of the day, Obamacare will impact about 1% of the small businesses in America. These companies, however, will qualify for tax credits based on these changes. Sources: Forbes, CNNMoney

That said, some businesses will take actions because of Obamacare. Some businesses will move employees from full-time to part-time status. Some already have. Some businesses have already stated they’ll be raising their product prices because of this.

That said, despite the rhetoric, the literal impact of Obamacare will be relatively small on businesses. Of course, if you’re one of the employees who work for one of those businesses, the impact won’t feel small at all.

MY OPINION: The businesses that are making these kinds of changes based on the ACA are despicable. That has nothing to do with whether or not I like Obamacare. They are using it as an excuse (in my opinion) to take advantage of their employees and the public. I’ve seen businesses raise prices because the mandate was expected to come in 2014. Well, the mandate was delayed until 2015, but guess what? I’ve not seen them making any press conferences saying, “Cool! I guess we can lower our prices again!”

How will Obamacare affect Medicare?

There are many fears about how Obamacare will affect Medicare. From everything I can find, almost all of those fears are unfounded. For example, people are afraid Medicare premiums are going to go up. Well, yes, they are, but it has nothing to do with Obamacare. They’re going up because of a pre-existing formula that was created long before Obamacare.

From what I’ve found, there’s only one area in which Medicare is negatively affected by Obamacare. High income recipients of Medicare (beneficiaries receiving more than $85,000 a year) will pay slightly higher prices for medications. This amounts to about 5% of Medicare recipients. Most Medicare recipients, however, will see lower prices for medication.

Everything I could find states that the ACA will actually lower most of the Medicare costs, working to close the “Donut hole.”

With Obamacare, will my taxes pay for abortions?

Simple answer: No. Under Obamacare, your tax dollars are not paying for abortions.

This is because of two reasons:

1. The ACA allows each state the option to forbid abortion coverage if they choose to do so.

2. Even if abortion coverage is allowed by a state, that insurance company cannot use federal dollars to pay for those abortions. The insurance company is required to keep those funds separate, so your tax dollars do not go toward those abortions. Sources: Fox News, The Huffington Post, Wikipedia

I spend my retirement traveling. I have private insurance that supplements my Medicare. Will I still be able to receive medical care wherever I go? Also, will my company push me into the ACA and drop my insurance?

On the Medicare side of things, nothing changes for you. Just keep on doing what you’re doing. You don’t have to enroll in the Marketplace. The only difference is that you might be paying less for certain services because the ACA has worked toward making the “donut hole” smaller. There is, however, an exchange program that’s specifically for Medicare recipients if you’re interested. Starting on Oct. 15th, seniors can shop for prescription drug or Medicare Advantage managed-care plans in online exchanges (separate from the ACA Marektplace) that let them compare features and prices. Source: Reuters

As for your second question, that’s a little more complex. To combat the costs of insuring retirees, some companies have made changes to retirees’ insurance programs (most notably Time Warner and IBM). What these companies have done is this: Instead of providing insurance to retirees, they gave the retirees money to purchase their own plans. If that happens with your company, the plan you purchase should still be okay. The ACA makes it illegal for any company to deny coverage based on pre-existing conditions, which is often the biggest barrier for retirees. Source: NBC News

So the short answer: It’s very unlikely anything will change for you, even if you do travel regularly. However, if you’re concerned about changes coming from your company, I would advise contacting the company.

I should note here that finding information for retirees is exceptionally difficult. Most of what I’m finding simply says nothing will change for folks on Medicare. That said, this system is still based on private companies, so there are going to be variances. If you have questions about how your private insurance company is going to respond to Obamacare (if at all), my best recommendation is to contact that company and ask them.

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Okay, so that’s it for now.

As time goes by, I’ll be adding more questions and possibly altering existing answers based on new information.

Let me wrap this up by saying I’m not an Obama zealot. The man has let me down in many ways (especially when it comes to personal liberty).

I’m also not a blind supporter of Obamacare. It has many problems I’d like to see addressed.

But I personally think that if we can strip away the politics, Obamacare will benefit many Americans of low and middle income.

If you have any suggestions, don’t hesitate to suggest them. If you have questions you’d like me to add, don’t hesitate to ask. If you have opinions you’d like to give, don’t hesitate to give them.

My only goal here is to give accurate information about Obamacare. If I’ve failed in any way, I promise it wasn’t intentional. I’m not trying to influence you here. I’m just trying to give accurate information.

Thanks.

–Jerry