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Obamacare 2017-05-23T22:13:32+00:00

“Obamacare,” formally called the Patient Protection and Affordable Care Act (ACA), is a healthcare reform law signed on March 23rd, 2010 by President Barack Obama.Over time it has expanded and improved access to health care and reduced the spending through regulation and taxes. It earned critical acclaim and it was one of the best aspects of the reforms introduced by Obama. Let’s go through all parameters that will explain ObamaCare or Affordable Care Act.

Here are some of the Obamacare provisions:

  • A mandate for most Americans to have health insurance by 2014, without any health questions or pre-existing clause exclusions
  • All plans must cover preventative care for free.
  • The expansion of Medicaid.
  • The opening of the Health Insurance Marketplaces (“the Exchange”) to help subsidize health insurance premiums.

What does this Mean for You?

  • Young adults can stay on their parents’ insurance plan until age 26.
  • If you don’t obtain coverage and maintain it throughout each year (or get an exemption), you must pay a per-month fee on your federal income tax return for every month you are without health insurance.
    • For the tax year 2016, the penalty will rise to 2.5% of your total household adjusted gross income, or $695 per adult and $347.50 per child, to a maximum of $2,085. For the tax year 2017 and beyond, the percentage option will remain at 2.5%, but the flat fee will be adjusted for inflation.
  • You can buy health insurance each year during the annual open enrollment period, either from the Health Insurance Marketplace (“on exchange”), or directly from the insurance company (“off exchange”). Open Enrollment for 2016 went from November 1, 2015, to January 31, 2016.
  • You won’t be able to buy health insurance outside of Open Enrollment unless you qualify for a special enrollment period (SEP). This prevents people from buying health insurance only after they get sick and need it, instead of having contributed monthly premium payments into the plan all along. If you missed Open Enrollment and didn’t have a SEP, you can only buy a short-term policy. However, these policies are not compliant in meeting the minimum coverage requirements for you to avoid a tax penalty for non-coverage and usually have pre-existing clauses.
  • Insurance purchased by the 15th of each month will start on the first of the next month.
  • Health insurers can’t place a lifetime maximum limits on your coverage. Before the Obamacare, insurance companies had $3-5 Million lifetime maximum on plans, and you could find yourself without insurance if you reached the max.  This is not an issue anymore, as all plans now have unlimited maximums.
  • Preventative care is free on all plans, regardless of the plan’s deductible and co-insurance amounts.
  • There is no monthly premium price difference based on gender. However, costs differ based on age and smoking status.
  • Based on your household income, you may qualify for subsidies to help pay your monthly premiums and cost-sharing that will allow you to purchase a plan with lower out-of-pocket costs.

How do You Determine Your Subsidy and Cost-Share Eligibility?

You can use the Kaiser calculator to determine your subsidy and cost-share eligibility.

Your eligibility for subsidy and cost-sharing for your 2016 insurance plan is determined by where you live, and your estimated adjusted gross household income for 2016 (your income after deductions, but before taxes).  You will be better off shopping on the exchange first if your income is below:

  • $47,080 for an individual
  • $63,720 for a couple
  • $80,360 for a family of three
  • $97,000 for a family of four
  • $113,640 for a family of five
  • $130,280 for a family of six

If your estimated household income is less than 138% of the Federal Poverty Level in states that expanded Medicaid (or less than 100% of the Federal Poverty Level in states that did not), you will be offered Medicaid instead, and will not be eligible for a subsidy or cost-sharing through the Marketplace.  If you are qualified for a subsidy and your state has expanded CHIP – Children’s Health Insurance Plan – under Medicaid, you won’t be able to insure your children on your policy.  You may choose at that point in time to purchase private health insurance at full price for your kids on OR off the exchange, or enroll them in Medicaid.

If you can get qualified health insurance through your employer, you won’t be able to receive a subsidy or cost-share reduction, unless your monthly insurance premium is more than 9.5% of your monthly income.