Below are the four plan levels that will be offered at Exchanges for people between 138 and 400 percent FPL. Each one has government-approved benefits including prescription coverage. You will be entitled to one free preventive visit each year. Per the most recent study commissioned by the Kaiser Family Foundation, several cost-sharing options were estimated for non-group (individual and family) Bronze and Silver plans. Cost-sharing is the amount you must pay to use your insurance. Your share of the premium is not part of cost-sharing.
The way this works is you will pay for all your medical care until you reach the annual deductible. Then you'll pay the applicable percentage of coinsurance until you reach the annual out-of-pocket spending cap which will be set on a sliding scale. Annual means these amounts start again the following year, and if they change, you will find out when you re-apply for insurance. There will also be copays -- an amount you will pay to the doctor for an office visit.
Here are the current estimates:
Bronze: cheapest and dry as dust with 60/40 coverage -- a win-win for insurers a) annual deductible of $4,375 for an individual (double for a family) with 20 percent coinsurance, b) annual deductible of $3,475 for an individual (double for a family) with 40 percent coinsurance.
Silver: next cheapest -- offers an illusion of coverage at 70/30 a) annual deductible of $2,050 for an individual (double for a family) with 20 percent coinsurance, b) annual deductible of $650 for an individual (double for a family) with 40 percent coinsurance.
Gold: expensive -- 80/20 -- better coverage.
Platinum: most expensive -- 90/10 -- most comprehensive coverage.
A fifth plan will be available for the under-30 crowd and people who have been granted a hardship exemption. See topic 8 in this lesson. Coverage in this plan will be less comprehensive than the Bronze -- it is primarily for major-medical expenses except that it has a free preventive visit. Cost-sharing for people at 138 to 200 percent FPL is estimated to be a bit less than the Bronze and Silver estimates mentioned above.
The high deductibles in all but the two most expensive plans could saddle you with mounting bills for routine care and may stop you from seeking necessary treatment for illness or injuries. Many of you will find that the promise of access to affordable health care really means access to inadequate coverage at a price the government has decided you can afford to pay.
The number of drugs in each plan at an Exchange will vary from state to state. In some states, plans will offer up to 99 percent of available drugs and others only 45 percent which means you may not have access to the specific drugs you need. Perhaps Big Pharma will change its stance on this before 2014.
The cost of plans at an Exchange will vary from state to state based on where you live and your age. The ACA allows insurers to charge older customers up to three times more for a plan, even if they are in good health, as long as the state in which an Exchange is located doesn't have a law that caps age-rating. Some Exchanges will tuck an administrative fee of 2 to 4 percent into premiums to help cover operating expenses.
Cost-sharing tax credits will be available if you are below 250 percent FPL to protect you from high deductibles and copays -- but only if you purchase a Silver plan. If you buy the cheaper Bronze plan, you won't be eligible for these credits, which are, by the way, direct federal payouts to private health insurance companies.
Obamacare has no cost controls. There is nothing stopping the insurance companies from increasing their rates, and Washington has already estimated higher premium costs at the Exchange for 2016 which doesn't mean that 2015 won't have an increase. Sounds like 2014 prices will be an Introductory Offer. Get "em while their hot!
7. PENALTY FOR BEING UNINSURED
The ACA requires that people who have been deemed able to purchase health insurance but decide not to buy it starting in 2014 will owe a penalty (a tax) to the IRS. Here's what this looks like:
a) In 2014, the annual penalty will be $95 per adult and $47.50 per child, up to a family maximum of $285 or 1 percent of family income, whichever is greater.
b) In 2015, the penalty will be $325 per adult and $162.50 per child, up to a family maximum of $975 or 2 percent of family income, whichever is greater.
c) In 2016, the penalty will be $695 per adult and $347.50 per child, up to a family maximum of $2,085 or 2.5 percent of family income, whichever is greater.
The IRS collects the penalty, but the ACA stipulates that taxpayers shall not be subject to any criminal prosecution or penalty, tax liens, seizure of bank accounts or garnishment of wages for failure to pay it and no accumulation of interest on the unpaid balance. So, it appears that all the IRS can do is deduct the penalty from a refund it owes you, and if you're not due a refund, then you'll have an outstanding tax obligation.
Keep in mind that the penalty is described in annual amounts but is really monthly. So, if you are uninsured for only part of the year, you will accrue only 1/12 of the total for each month you are uninsured unless you qualify for an exemption.
8. EXEMPTIONS FROM THE PENALTY
You may be eligible for official permission that excuses you from having to pay the penalty for being uninsured. The requirements are:
a) If the cheapest health care plan available costs more than 8 percent of your MAGI after subtracting the tax credit or employer contribution, whichever is applicable.
b) Your income is so low that you aren't required to file federal income taxes.
c) You are between jobs and without insurance for up to three months.
d) You have a sincerely-held religious belief that prevents you from seeking and obtaining medical care.
e) You are in jail.
f) You are an undocumented immigrant.
g) You are a member of an Indian tribe or a religious group currently exempt from paying Social Security tax.
If item d) is the case, you must file a sworn statement as part of your tax return, and should you obtain care during the tax year, the exemption will no longer apply and you will have to pay a penalty for being uninsured. Per H.R. 6597, medical care is defined as acute care at a hospital emergency room, walk-in clinic or similar facilities. Medical care excludes treatment not administered or supervised by a medical doctor such as chiropractic, dental, midwifery, personal care assistance, optometry, physical exams or treatment where required by law or third parties such as an employer, and vaccinations.
If you think you can't afford the amount the government has decided you can afford to pay for your insurance plan, and you don't fit into any of the categories described above, you can apply for a Hardship Waiver. Details have not yet been provided regarding hardship eligibility requirements under the ACA, but, for an idea of what they might look like, let's check out what the deal is in Massachusetts which already has a mandated health insurance law -- Romneycare! In fact, Romneycare was the model for Obamacare. That's why some people call Obamacare, Obamneycare.
To qualify for a Certificate of Exemption under Romneycare, a Massachusetts resident must demonstrate that health insurance is not affordable due to one of the following: 1) homelessness; 2) eviction or foreclosure notice; 3) domestic violence-related medical trauma; 4) major long-term illness of a child; 5) death of your spouse; 6) your house burned down; or 7) "you can establish that the expense of purchasing health insurance would cause you to experience serious deprivation of food, shelter, clothing or other necessities."
Ya gotta luv number 7. And in Massachusetts, exemptions come with an expiration date, so you have to clean up your act in short order. Under the ACA, the Secretary of Health and Human Services will determine if, indeed, you have suffered a hardship that keeps you from being able to pay for coverage.
9. OTHER TIDBITS
There is much more in the ACA including all kinds of rules and penalties for employers, employees and the self employed as well as the Accountable Care Organization (ACO) model which will be mandated starting in 2014. The latter works as follows: under the simplest option available, a small group of doctors and hospitals -- an ACO -- will manage your care and be graded and paid based on the outcome of all patients who seek treatment with that ACO. The ACO will also be rewarded with a share of the savings in health costs it achieves by following best treatment practices and reaching specific benchmarks set by CMS. The second option, "shared savings plus risk," is for larger ACOs. Providers will receive a lump-sum payment to treat their patients and assume a portion of the risk for above target spending but are eligible to keep a greater portion of the savings.