The nation's health care system has been on the minds of a lot of people recently -- from employees who lost their health insurance when they lost their jobs to politicians railing for or against health care reform legislation. In late March 2010, the issue took center stage when President Obama signed the Patient Protection and Affordable Care Act into law, a sweeping health care reform bill that makes health insurance mandatory and (hopefully) affordable for all individuals and families.
Given the ambition and scope of the new health care reform bill (it checks in at more than 2,300 pages), understanding what's in store can be complicated. So, while the ink is still drying on the new law -- and keeping in mind that changes to its key provisions aren't out of the question -- let's take a look at ten things you need to know about the new health reform law.
The crux of the new health care law is this: by 2014, all citizens and legal residents in the United States will be required to have at least basic health insurance coverage, and those without coverage will be subject to a phased-in tax penalty that goes up every year a person isn't covered. The penalty won't go into effect until 2014, and a person would be penalized only after going more than three months without insurance. The penalty won't exceed the cost of a basic health plan.
Since its estimated that 95% of people in the U.S. will have health insurance under the new law, you may be wondering about the remaining 5%. Certain groups will be exempted from the mandatory insurance requirement, including illegal immigrants, people in jail or prison, members of Native American tribes, people with very low income, and people with religious objections.
As of 2019, however, the part of the law requiring you to pay a penalty if you don't have coverage is repealed. So, beginning with the 2019 plan year (for which you'll file taxes in April 2020), the penalty is no longer applicable.
If you're currently insured -- you're covered through an employer's plan, for example -- proponents of the new health care law are stressing that you'll be able to keep the coverage you have. You won't need to find a new doctor or make any other changes to your health insurance plan, and your costs won't go up under the provisions of the new health care law. In fact, if you currently pay for all or part of your plan coverage (through monthly premiums, for example), your costs could actually decrease, according to estimates from the Congressional Budget Office -- in part because the new health coverage mandates should lead to increased competition among insurance companies.
Starting in 2014, U.S. citizens and legal residents will be able to buy health insurance through a new system of exchanges run by state government agencies or nonprofits (these exchange programs are officially called "American Health Benefit Exchanges"). Families and individuals whose income is on the lower end of the scale -- up to four times the federal poverty level -- will be entitled to credits and subsidies to help with some or all of the costs for coverage.
The amount that an individual or family will need to pay for health coverage will be based on total income -- the more you make, the more you'll pay for coverage. The CBO estimates that 20 million individuals and families will be entitled to receive subsidized health insurance under the new law.
Beginning in 2014, employers that have 50 or more workers will be required to offer health insurance to their employees or incur a hefty fine. If any worker -- even just one -- ends up getting coverage that is subsidized by the federal government, the employer will owe a $2,000 penalty for every full-time employee on the payroll.
Many employers (those with 100 employees or fewer) will be able to buy health coverage for their employees under the Small Business Health Options Program (SHOP) Exchanges, which will be run by state government agencies or nonprofits. Smaller employers (those with 25 employees or less) can get a phased-in tax credit based on the business's contribution to payment of employees' health insurance premiums.
The new health care law gives specific protections to children and adults who are in danger of being denied health insurance coverage because of a preexisting medical condition -- which can include anything from asthma to diabetes and heart disease. Under the new rules, insurance companies cannot deny coverage to children due to a preexisting medical condition (beginning six months after the bill's enactment). And by 2014, no one with a preexisting medical condition can be denied health insurance coverage.
The new health care bill expands Medicare coverage to all individuals and families whose income is at or less than 133% of the federal poverty level -- and the federal government will pay all costs of coverage for those who are newly Medicare-eligible, through 2016. By 2014, adults without children will be entitled to Medicaid coverage for the first time in the program's history.
Under the new health care law, parents will be able to include their older children on a group health insurance plan until the children are 26 years old. The child does not need to be a full-time student -- or be claimed as a dependent on the parent's income tax return -- in order to qualify. But since there are no restrictions on how much the parent (as the group health plan participant) may need to pay to get coverage for an older child, group plan administrators (employers) may end up passing most or all of the coverage costs along to the parent.
Costs for implementing the new health care bill should top out at more than $900 billion by the year 2021, the CBO says. It will be paid for in a number of ways, including:
Even though it's been signed by President Obama and Congress has already agreed to some early modifications to the bill, health care reform -- and the debate over it -- isn't a done deal.
Critics of the new health care bill have objections that range from the theoretical to the practical. Some say the federal government has no business mandating and subsidizing health care for individuals. Others worry about the impact of treating the more than 30 million new patients who will enter the health care system in the next ten years -- with concerns ranging from a potential shortage of primary care physicians to patients having a tougher time finding a doctor (and spending more time in the waiting room once they do).
Stay tuned to Nolo.com for the latest updates on health care reform.
For tips on health insurance and coverage options, read Nolo's articles Understanding Your Health Insurance Coverage.
Originally Posted: October 2011
Updated: July 2019