The Patient Protection and Affordable Care Act, better known as Obamacare, has been around for more than five years now, but there are still many aspects of the healthcare law that many people don't understand. Part of the blame for that goes to the politically charged way in which many discuss Obamacare and the ongoing debate it has caused. Below, you'll find three facts about Obamacare that most people haven't realized about the program in its first several years of existence.
1. Obamacare has had a big impact on Medicare recipients.
Most people saw the Affordable Care Act's main goal to be giving uninsured Americans access to healthcare coverage. As a result, many figured that Obamacare's impact on Medicare recipients would be minimal, since those who participate in Medicare already have coverage.
However, key aspects of Obamacare have big implications for Medicare participants. The Affordable Care Act implemented provisions to close the so-called donut hole for Part D prescription drug coverage by having drug manufacturers offer discounts on brand-name drugs and having the plans themselves cover a percentage of costs of generic drugs. For 2016, that means you'll only pay 45% of the cost of brand-name drugs and 58% of generic-drug costs in the donut hole.
In addition, Obamacare gave Medicare participants access to some new preventive benefits. New enrollees are entitled to a one-time health assessment that covers a wide range of services. Then, annual wellness visits are also provided as part of Medicare coverage. For a program largely serving younger Americans, it's surprised many to see how much Medicare participants have seen from the reform.
2. The most important subsidy for many participants isn't for premium costs.
Most of the attention on subsidies under Obamacare goes toward the money available to help cover monthly insurance premiums. In general, those who earn less than four times the federal poverty level are eligible for subsidies to help their total premium outlays stay at a specified percentage of their income. The exact percentages vary by income level.
Yet as important as subsidies to buy insurance are, they do little good when people can't afford the high deductibles involved with many lower-tier plans. For instance, the average deductible for bronze-level plans in 2015 was almost $5,200. That's extra money that participants have to pay out of pocket before coverage kicks in.
That's why subsidies for out-of-pocket costs are so critical. Available only to those on silver-tier plans, those making 100% to 250% of the federal poverty level are eligible for cost-sharing reductions. Those subsidies can lower the initial deductible, and also reduce the amount you pay for coinsurance or copayments for doctor visits and other covered expenses. Different levels of cost-sharing reductions apply to different income levels, but those subsidies can be critical in getting people to use their coverage and get the care they need.
3. Obamacare penalties added up to about $1.5 billion for 2014.
The individual mandate in Obamacare started imposing penalties for those who didn't obtain qualifying healthcare coverage beginning in 2014. All in all, the IRS reported that about 7.5 million taxpayers ended up paying the penalty on their 2014 tax returns, which was larger than most had expected. With the average penalty paid amounting to roughly $200 per taxpayer, the total collections amounted to $1.5 billion.
It will be interesting to see how those numbers change in 2015. On one hand, the amount of the potential penalty rose substantially from 2014 numbers. Uncovered adults paid a penalty of $95 in 2014, but that number rose to $325 in 2015. Family maximums more than tripled from $285 in 2014 to $975 in 2015, and the income-based alternative calculation doubled. As a result, it's possible that more people will choose to get covered to avoid higher penalties.
Obamacare has changed healthcare in the U.S., and many of its reforms have been quite visible. Yet there are other things that have escaped Americans' notice about Obamacare, and being aware of all of its facets will help you make better decisions about taking care of your own healthcare needs.