Few laws have generated as much opposition–or confusion—as the Affordable Care Act.
Since its stormy passage in 2010, polls have consistently shown that many Americans have major misconceptions about what the health-care law does, including the false notion that it replaces private coverage with a government-run insurance system.
Americans even have different opinions of the law, depending on what it's called. According to a recent CNBC poll, more people are opposed to “Obamacare” than the Affordable Care Act—even though they are one and the same.
The health-care law’s supporters hope the confusion and hostility will begin to subside now that the exchanges, which launched October 1, are open for business. That said, according to a recent Kaiser Health Tracking Poll, about half of those surveyed said that they didn’t have enough information about the law to know how it would affect their families.
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Don Silver, an attorney, was once one of those consumers who was desperate for more clarity. So he read through all 900-plus pages of the law (twice!)—plus around 15,000 pages of health-care regulations—and then wrote "The Best ObamaCare Guide." Given his expertise, we asked Silver to separate fact from fiction—as well as share some little-known knowledge about the law.
LearnVest: What does the Affordable Care Act do?
Don Silver: The big picture is that the Affordable Care Act extends coverage, either through private insurance or Medicaid. It’s important to point out, however, that the law does not guarantee access to care. It also does not control medical costs. There is no real rate control on the federal level, although there is some in certain states.
Some new benefits that affect everyone: You cannot be turned down for insurance due to preexisting conditions, and there are also no longer any annual or lifetime caps on coverage. Additionally, 10 essential health benefits—including doctor visits, maternity care and hospital visits—are now required coverage.
Young adults can now stay on their parents’ plans until age 26, but there can be some downsides if kids live in a different area than their parents, in which case medical care might be all out of network and out of pocket. Women will also now pay the same premium rate for coverage as men, which has not been the case in most states. And the unhealthy will pay the same amount as those who are healthy, which also has not generally been the case.
The employer mandate—employers with 50 or more full-time and full-time-equivalent employees now have to provide insurance or pay a penalty—is also new, but that’s been delayed for one year.
RELATED: The 2014 Health Care Cost Forecast
Does the new law affect me if I already have insurance?
It may or may not affect you. For the bulk of people—the vast majority—there is no major change with the Affordable Care Act. The change is mainly with the uninsured, the self-employed, small businesses and employees of businesses that do not provide or decide to drop insurance coverage. That’s where the law is going to have its biggest effect.
What are the exchanges?
They are essentially state-level insurance marketplaces. Fourteen states and the District of Columbia are running their own exchanges. In 36 states, the federal government is either running the exchanges itself or in partnership with the states.
The exchanges offer four "metal" tiers or levels of coverage: platinum, gold, silver and bronze. Bronze, at the lowest level of coverage, pays roughly 60% of medical costs. Silver pays around 70%, gold is 80% and platinum covers 90%. This is not an exact percentage—it’s what the whole population of people with plans in each metal category can expect, in general.
Costs on the exchanges will not only vary from state to state but also within states. So someone in New York City may pay a different rate from someone in Albany.
Most insurance companies are participating in the exchanges, but some of the big ones are staying out of certain states because they are unsure of how healthy or unhealthy their population will be, and don’t know how much to charge. So there will be some wait-and-see for the first few years until insurance companies will be more comfortable knowing whom they are insuring. Some companies also want to have a lower premium to attract more business, so they are offering a narrower network of doctors and hospitals. So some people may find that they can no longer see their current doctor under the narrower network.
Insurance costs on the exchanges will not only vary from state to state but also within states. So someone in New York City may pay a different rate from a person in Chicago but also from someone in Albany. And the differences can be substantial—people could move as a result of the rates.
Will I be subject to a fine if I don't want health insurance?
Yes—and the amount of the penalty goes up each year. There are some exemptions, but for 2014 you'd pay the greater amount of these two options: Either $95 per adult (and $47.50 per child under 18 up to a total of $285 per family), or 1% of household income in excess of $10,000 for an individual or $20,000 for a family. For example, if an individual has a household income of $30,000, he would pay 1% of $30,000, less $10,000. So the penalty would be 1% of $20,000, which is $200.
What’s a common misconception about the law?
A big one is the idea that people can sign up for insurance anytime—even in the ambulance on the way to the hospital. That is wrong. There is an open enrollment period that goes from October 1, 2013, to March 31, 2014. So if you don’t apply within that time period and, say, something happens in May—you get pregnant or get in a car accident—you cannot get insurance until the next enrollment period, unless you qualify for one of the exceptions allowing special enrollment. So you can’t count on holding off on applying, and then get health insurance anytime.
What if you need help paying for health insurance on the exchanges?
The law provides two types of subsidies—for premiums and for cost sharing. There are different requirements, based on household income, to qualify for each subsidy.
For premiums subsidies, you must earn less than 400% of the federal poverty level. So for an individual, that’s under $45,960; for a couple, it's $62,040; and for a family of four, it would be $94,200. If you fall under those amounts, there is a premium subsidy available.
For example, if a family of four with a household income of $90,000 selected a policy with an annual premium of $16,550, they'd qualify for a subsidy of $8,000, leaving a net cost of $8,550 for the premium. In addition, they'd have an annual, out-of-pocket maximum for deductibles of $12,700. So the family might pay $21,250 each year—a subsidized premium of $8,550 and medical costs of up to $12,700.
For cost-sharing subsidies—which can lower deductibles, coinsurance payments and annual maximum out-of-pocket costs—you must earn less than 250% of the federal poverty level. For an individual, that’s around $28,725; $38,775 for a couple; and $58,875 for a family of four. Although you can buy any metal plan with a premium subsidy, you can only buy a silver plan with a cost-sharing subsidy.
Are there any surprises with the new law?
Getting married or divorced can cost you when it comes to qualifying for subsidies because of the income qualifications. Sometimes it can be beneficial, but sometimes it could be detrimental.
Geography will also become much more important. It isn’t just because coverage will have different costs between states and within states, but that states will have different health insurance coverage. There are 50 different state plans, with distinct model insurance plans. Parents of children with autism, for example, may find that autism treatment coverage may not be available in their state, but it could be in another state.
Should people be worried about fraud risks?
Here’s a quote from the Federal Trade Commission: “It’s enough to make you sick. No sooner had the U.S. Supreme Court ruled on the Affordable Care Act than scam artists began working the phones. Claiming to be from the government, they’re saying that, under the Affordable Care Act, they need to verify some information. For example, they might have the routing number of the person’s bank, and then use that information to get the person to reveal the entire account number. Other times, they have asked for credit card numbers, Social Security numbers, Medicare ID or other personal information .... If you get a call from someone who claims to be from the government and asks for your personal information, hang up. It’s a scam.”
Where can people get more information?
Healthcare.gov is the main federal site. From there, they can get information on the state exchanges and ask questions on those sites. And, of course, they can get my book if they want to read a nonpolitical guide that demystifies the dos and don’ts of the Act and provides strategies to follow. But depending on what a person needs, they should consult with a qualified exchange representative, an attorney, a CPA and/or an insurance agent to get advice on a specific situation.
Are there any economic benefits to the Affordable Care Act?
I can confidently say no one knows for sure. Some people will benefit economically and some will not. There will be benefits with preventive care. And there will also be additional taxpayer expenses for subsidies and for expanded Medicaid. But how do you determine the actual dollars-and-cents benefit? Since it will be difficult to quantify these things, people will be arguing about it for decades. As a nation, we are rolling the dice on how things will work out.