It's officially nail-biting time for millions of people across the United States as the deadline to enroll for health insurance in 2014 as outlined by the Patient Protection and Affordable Care Act is just five days away.
In spite of this apparent time crunch, and what's been a multi-month effort to improve awareness of this sweeping health reform law known best by its shorthand, Obamacare, a large number of Americans are still on the outside looking in when it comes to knowledge about the law or understanding how it affects them personally, or their family.
A Kaiser Family Foundation poll released in January showed that 39% of all respondents didn't have enough information to understand how Obamacare would affect them, while 54% reported having not been personally affected by the new law as of yet.
Another poll from Gallup, also from January, finds that 31% of individuals identified themselves as "not too" or "not at all" familiar with Obamacare. Disappointingly, this figure was actually up three percentage points from the late November poll.
It will be very difficult for the remaining uninsured to make informed decisions if they don't understand Obamacare and how it will affect them. Today, in an effort to confront that lack of knowledge head-on, we'll take a look at some of the most pertinent Obamacare questions and cover some varying scenarios so you can head into these final five days prepared to make an educated decision.
What is Obamacare, and what will this new law accomplish?
Obamacare is the new law of the land, passed in 2010 and fully implemented on an individual level as of Jan. 1, 2014, designed to reduce the number of uninsured people in the United States. Under Obamacare, individuals are required to purchase health insurance by law, or they could face a penalty when they file their taxes. The goal of Obamacare is to include as many previously uninsured citizens into the health care system as possible so medical costs are spread out over a greater number of people and insurance premiums hopefully rise much slower than in previous decades.
How will Obamacare seek out new members?
There are two ways Obamacare will add new members: either through expansion of the Medicaid programs by individual states, or through individuals signing up on their state-run or federally run exchanges.
What's the difference between a state and federally run exchange?
The only major difference between state and federal exchanges is that the 14 states that developed their own exchanges were allotted federal money to aid in the construction of their online marketplace. States were also responsible for seeking their own contractor to build their marketplace. The federal exchange, known as Healthcare.gov, by contrast, covers 36 states and was helmed by a single contractor, CGI Group, which has since been replaced by Accenture.
How does the Medicaid expansion work?
As part of Obamacare, the federal government set aside billions in funding to aid all 50 states if they chose to expand their Medicaid program, which offers government-sponsored insurance to low-income individuals and families up to 138% of the federal poverty level. Overall, 26 of 50 states (plus DC) chose to expand their Medicaid programs while 24, at least as of now, have chosen not to. For those states that chose not to expand, their reasoning was that the long-term costs of sponsoring Medicaid members would rise significantly following the federal government's scaling back of financial assistance beginning in 2017.
Do I qualify for a federal subsidy?
In order to qualify for a subsidy on Obamacare's state or federal exchanges you need to have earned between 100% and 400% of the poverty rate in the prior fiscal year. As it relates to this year's enrollment within the 48 contiguous states, individuals who earned between $11,490 and $45,960 will qualify for a subsidy. For families, simply add $4,020 for each extra person covered within a household on the low-end income ($11,490) and $16,080 on the high-end income ($45,960) to determine if you qualify for a subsidy. Hawaii and Alaska have a slightly different federal poverty income table.
Do I have to buy insurance?
According to the Patient Protection and Affordable Care Act you are required to purchase health insurance in 2014 or face a penalty. Should you choose to go without insurance, you would be in violation of the individual mandate.
What's the individual mandate?
The individual mandate is the actionable portion of the PPACA that requires individuals to purchase insurance. Should they not, they will be liable for a penalty that is the greater of $95 or 1% of their individual or household modified adjusted gross income in 2014. This penalty will increase in pre-set dollar and percentage terms until 2016, and will increase by the rate of inflation each year thereafter.
Are there any individual mandate exemptions?
Actually, there are quite a few exemptions that will get you off the hook, so to speak. Back in November, I covered eight such exemptions, which you can read more about by clicking here. Some of the key points include citizens who can claim a hardship, individuals who would be required to spend more than 8% of their annual income on health insurance premiums, and citizens who were uninsured for a period of less than three months during the calendar year are exempt from the penalties associated with the individual mandate.
Can the IRS come after me to collect these penalties?
No. Unlike serious crimes such as tax evasion the IRS will not garnish your wages or seize your property for not purchasing health insurance. However, if you're due a federal tax refund (and more than 80% of tax filers usually are) the IRS can take the penalty amount you owe out of your refund.
What about insuring my spouse or kids?
Your spouse and children need to have health insurance as well. The simple rule is that if your spouse or children are your dependents, then you are required by the individual mandate to make sure they are covered. If you purchase health insurance for yourself but fail to insure your spouse or children, you will face a fine of the greater of $95 per adult and $47.50 per child up to the age of 18, up to a maximum of $285 per family in 2014, or 1% of your family's modified adjusted gross income.
When is the deadline to enroll for health insurance?
This coming Monday, March 31, is the last day you can enroll for health insurance in 2014. This means you can still enroll on March 31, start your coverage on May 1, and not violate the individual mandate. Those who qualify for Medicaid, however, will still be able to sign up within select states throughout the year on private platform portals such as eHealth (NASDAQ:EHTH), which operates independently of the government-run exchanges.
My policy was cancelled. Will I face a fine?
Due to the PPACA's beefier minimum benefit requirements, millions of citizens found out that their existing health plans would be insufficient and had them cancelled by insurers on Dec. 31. The Obama administration, however, granted a two-year extension to individuals who had their plans cancelled and who can't afford insurance on the Obamacare marketplaces earlier this month. This leaves individuals with cancelled plans two possible choices. They can either continue to purchase their previous plan that doesn't meet the new minimum benefits scope of the PPACA without the fear of penalties for two more years as long as their state allows insurers to still offer these plans, or they can document their cancellation and inability to afford insurance through the online marketplaces and claim an individual mandate exemption.
Are employers required to comply with Obamacare?
Yes, but midsized and large businesses were given a reprieve until Jan. 1, 2016 before the employer mandate (the actionable portion of the PPACA that relates to full-time employees) will go into full effect.
I have health insurance through my employer. Do I need to do anything?
Probably not. Most corporate health plans haven't changed, and if your plan no longer met the minimum benefit requirements of the PPACA, you would have known by now. For those of you who have been ushered by your employer into a private exchange and given a company-paid subsidy, you'll need to use that exchange to shop and compare policies and make your selection.