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What Obamacare means to you

Jane Bryant Quinn
by Jane Bryant Quinn, Dimespring Contributor  (@janebryantquinn)

Nothing is certain yet about the Affordable Care Act. The Supreme Court upheld it, but the November election will decide its fate.

Republicans promise to repeal the ACA, including the coverage that took effect over the past two years. (But they might have to bring back some of the most popular provisions.) Democrats promise to push the plan forward. (Still, they’ll have to wrestle with Congress over funding and scope.)

The law, also known as Obamacare, reaches further than many people realize. Almost everyone is affected, depending on how the politics play out. Check the following list to see what, if anything, you gained from the ACA, and what might happen if it goes down.

Do you have company health insurance?

The law made two significant changes to your coverage.

First, all new plans, including group plans, will have to remove any caps on the maximum they’ll pay for essential medical services. Currently, some of them carry a $1 million lifetime limit or impose a limit on what they’ll pay for specific diseases. You can run through $1 million pretty quickly with a premature birth or a child born with a costly disease such as hemophilia. This rule, now phasing in, will become fully effective in 2014.

READ: Why Obamacare is great news for older Americans

Second, starting next year, new plans have to offer preventive care at no cost to you, meaning no deductibles, co-pays or co-insurance. The services include immunizations, cholesterol tests, and an assortment of procedures specific to women’s health, including mammograms, pap smears, breast-feeding support and contraception. (As I’m sure you know, contraception coverage, in plans offered by nonprofit colleges and hospitals linked to religious institutions, is still being fought out.)

“Grandfathered” health plans – those that were in place on March 23, 2010, when ACA passed – don’t have to make either of these improvements, unless they make substantive changes to their coverage.

Whether all or any of these new rules would outlive the repeal of ACA would depend entirely on your company and what it chose to offer.

Are you on Medicare?

If you make steady use of expensive prescription drugs, you eventually reach the “donut hole,” where insurance stops and you have to pay the full cost yourself. The ACA effectively lowered donut-hole drug costs over the past two years, saving beneficiaries an estimated $3.9 billion. Further discounts lie ahead. You also get free preventive care. To save federal money, the ACA reduces the large government subsidy paid to privately-run Medicare Advantage plans.

As a guess, I’d say that older Americans would demand that Congress reinstate these provisions, if the ACA were repealed. They’re a voting block that’s hard to buck.

READ: What the Obamacare decision means to you

Are you (or your kids) in their early 20s?

ACA lets them stay on a parent’s family health insurance plan up to age 26. Some 6.6 million people in their early 20s took advantage of this change in 2011, the Commonwealth Fund reports. Three large insurers have said they’d continue to include young adults if the ACA were repealed, but others might decide not to. In group plans, coverage would depend on what the employer wanted to do.

Are you uninsured?

Almost 50 million people lacked any kind of health insurance in 2010, according to Census Bureau estimates. The most famous part of the ACA requires most of them to find their own coverage starting in 2014. Federal subsidies, partly paid for with taxes (see below), will help families with modest-to-middle incomes pay the premiums on individual policies. You might also qualify for an expanded state Medicaid plan, at low or no cost. If you stay uninsured, you’ll pay a fine.

For those of you who want an individual policy but can’t afford it, the ACA will help – assuming that the subsidy does indeed make the premium affordable. The same is true for people who can afford insurance but have been turned down due to health issues. Starting in 2014, new plans have to take people with preexisting medical conditions, without charging them extra. (Coverage for children with health problems, and under 19, took effect in 2010.) Insurers selling individual plans will no longer be able to charge women more than men for the same policy.

Those of you who are uninsured and want to stay that way (or don’t want to pay anything for coverage) will be rooting for repeal. There’s currently no talk of other paths to covering the uninsured.

Do you have a green card?

Legal residents of the United States are covered under the ACA, just as citizens are. Illegal aliens are expressly barred.

Will the law reduce the cost of health care?

No, or at least not at first. The ACA is aimed primarily at getting health care coverage for people who can’t afford it or are refused a policy.

But the law does push health insurance companies to hold down premiums and costs. In 2011, health insurers were required to spend at least 80 cents out of every premium dollar on health care, with no more than 20 cents going toward administration and other expenses. If they spent more, they had to send rebates to their customers ($1.1 billion in rebates is being paid this year, the government says). For 2012, insurers have to spend 85 percent of your premium dollar on care.

READ: Timeline of Obama healthcare law legal battle

Will you face new taxes because of ACA?

A few of you, yes. The law includes a variety of medical-spending cuts and money-raising provisions to cover its costs.

One change affects flexible benefit plans. If your company offers such a plan, you can put aside money, tax-free, to pay medical bills that your insurance doesn’t cover. This year, you can put as much as $4,000 into these plans. Next year, you’re limited to $2,500.

A new direct tax affects single people with adjusted gross incomes of $200,000 or more and joint filers with $250,000 or more. Starting next year, you’ll pay an extra 0.9 percent in Medicare taxes and 3.8 percent on part or all of your net investment income, including interest, dividends, rent and capital gains.

Repealing the law would stop the taxes and the cuts in medical spending, too. Surprisingly, that could add $109 billion to the federal deficit over 10 years, according to the non-partisan Congressional Budget Office. Repealers don’t believe the CBO analysis. In November, voters will decide.

 

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Jane Bryant Quinn is a nationally known commentator on personal finance, with books and columns read and trusted by millions. In her long career, she has established herself as America’s most reliable voice for people trying to manage their money well. Read more of Jane's articles here