Despite the Affordable Care Act being signed into law more than six years ago, and Obamacare, as the ACA is more commonly known, being fully in effect in the individual market for three years, a lot of Americans still don't really understand it.
According to an analysis conducted last year by Rice University among respondents in Texas, nearly 51% who didn't have coverage had no clue what the term "premium" meant. Furthermore, 45% of all respondents didn't understand what "coinsurance" was, and 30% were unclear what "provider network" meant. Texas is a pretty large state, and thus this sampling of ACA knowledge is probably a pretty good marker of what Americans understand about Obamacare nationwide.
What's more, it doesn't appear that much has changed over the past few years. A 2014 survey published in the Proceedings of the National Academy of Sciences found that of the 6,000 respondents questioned, half were unaware of the health exchanges set up to allow them to compare plans and shop for health insurance, and 40% couldn't accurately describe a "deductible."
The scary reality is that not understanding the ins and outs of Obamacare could lead you to pay far more than you need to for coverage. Are you leaving cash on the table by being an uninformed consumer? Let's find out.
Do you have the knowledge to pass an Obamacare quiz?
Below I've devised a 10-question Obamacare quiz where every answer is either "True" or "False." All 10 questions will be listed first, then the answers will follow below, along with an explanation, to keep your eyes from wandering and inadvertently cheating.
Have your pen and paper ready? Let's get started.
1. Maternity and newborn care are among the 10 minimum essential benefits on all Obamacare-compliant plans.
2. You can be charged up to 50% more for your monthly premium because of tobacco use.
3. Automatic reenrollment is the smart thing to do so you don't lose your insurance coverage.
4. Your income needs to be below 400% of the federal poverty level to qualify for subsidies.
5. Cost-sharing reductions are only available to silver plan enrollees.
6. Bronze plans cover 70% of your eligible medical costs.
7. The Advanced Premium Tax Credit lowers your fees at the doctor's office.
8. The Shared Responsibility Payment is a fixed rate penalty for not buying health insurance.
9. Special enrollment periods allow you to enroll in Obamacare if you lose your employer health coverage.
10. Children are able to stay on their parents' health plan until age 22.
Got your answers? Let's see how you did.
Did you pass?
1. Maternity and newborn care are among the 10 minimum essential benefits on all Obamacare-compliant plans. TRUE
One of the biggest changes when Obamacare was implemented compared to the way things were before Obamacare was the addition of maternity and newborn care as a minimum essential benefit. In order to be ACA-compliant and be listed on Obamacare's marketplace exchanges in the individual market, plans are required to cover maternity and newborn care.
2. You can be charged up to 50% more for your monthly premium because of tobacco use. TRUE
You can count on one hand how many factors can affect what you pay for your premium under Obamacare. Your age, geographic location, plan category, individual vs. family coverage enrollment, and yes, tobacco use are the only factors that impact your premium. You cannot be turned away simply because you have pre-existing conditions. Under Obamacare, select states allow insurers to charge an individual up to 50% more for their premium given the laundry list of chronic conditions and comorbidities caused by tobacco use.
3. Automatic reenrollment is the smart thing to do so you don't lose your insurance coverage. FALSE
In many instances, one of the worst moves you can make is to allow yourself to be automatically reenrolled in your prior-year Obamacare plan without searching around for a better value. Please note that a "better value" doesn't necessarily mean a cheaper plan. It means the plan that fits your medical care needs best, and is also the most attractively priced. Health insurers can change their premium pricing, provider network, and coverage every year. If you aren't carefully comparing plans, being automatically reenrolled could mean paying far more than you should and/or losing your primary care physician.
4. Your income needs to be below 400% of the federal poverty level to qualify for subsidies. TRUE
This is a true statement. In 2017, the federal poverty level is $11,880, meaning individual income below $47,520 may qualify for subsidies that could make your health coverage more affordable. According to the Centers for Medicare and Medicaid Services, 84% of the 10.4 million paying Obamacare enrollees through Jun. 30, 2016 were receiving cost-saving subsidies.
5. Cost-sharing reductions are only available to silver plan enrollees. TRUE
This is a big one that you don't want to get wrong, especially if you qualify for subsidies based on your income. Cost-sharing reductions, which can help lower copays, coinsurance, and deductibles for individuals and families earnings 250% or less of the federal poverty level, are only available to consumer who purchase a silver tiered plan. Even though bronze plan have lower premiums, consumers who purchase a bronze plan are not eligible for cost-sharing reductions.
6. Bronze plans cover 70% of your eligible medical costs. FALSE
There are four metal tiers that consumers can choose between -- bronze, silver, gold, and platinum -- and each offers a unique trade-off. Bronze plans have the cheapest monthly premiums, but they also have the highest out-of-pocket costs before coverage kicks in. Bronze plans cover just 60% of your eligible medical expenses. On the opposite end, platinum plans have the highest monthly cost but lowest out-of-pocket expenses. Platinum plans cover 90% of your eligible medical expenses. Silver and gold cover 70% and 80% of your medical expenses, respectively.
7. The Advanced Premium Tax Credit lowers your fees at the doctor's office. FALSE
Actually, cost-sharing reductions are the subsidy responsible for lowering your costs, such as copays or coinsurance, at the doctor's office. The Advanced Premium Tax Credit is the subsidy you receive for having an income below 400% of the federal poverty. It's responsible for lowering your monthly premium to make it more affordable.
8. The Shared Responsibility Payment is a fixed rate penalty for not buying health insurance. FALSE
Over the past three years, the Shared Responsibility Payment (SRP) has grown rapidly. In 2014, the penalty was the greater of $95 or 1% of your modified adjusted gross income (MAGI). In 2015, it rose to the greater of $325 or 2% of MAGI, and in 2016 it was the greater of $695 or 2.5% of MAGI. The silver lining here is that the SRP isn't going to grow by leaps and bounds in 2017 and beyond. However, it's not a flat-rate penalty, either. It increases in step with inflation beginning in 2017 and moving forward.
9. Special enrollment periods allow you to enroll in Obamacare if you lose your employer health coverage. TRUE
The 2017 enrollment period began on Nov. 1, 2016, and it'll end on Jan. 31, 2017. Forgetting to enroll isn't a good enough excuse to allow you to enroll beyond Jan. 31, 2017, but a handful of special exemptions could allow you the opportunity to enroll outside of the usual enrollment period. For instance, losing coverage from an employer, being denied Medicaid, getting married, having a baby, and leaving incarceration are all examples of somewhat common circumstances that could qualify someone for a special enrollment period.
10. Children are able to stay on their parents' health plan until age 22. FALSE
This final statement is false. One of the more popular additions to Obamacare compared to pre-Obamacare plans is that children are allowed to stay on their parents' plans through age 25, not age 22. This can be especially helpful for college students and those who recently graduated and are looking to find a job.
How'd you fare? If you got at least seven out of 10 correct, then congratulations on passing. However, keep in mind that missing even one question could wind up costing you money or locking you into a non-optimal health plan. If your score wasn't perfect, there's still time to brush up on your Obamacare knowledge with open enrollment still ongoing for about three more weeks.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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