How Does the New Health Care Bill Affect Me?

By now nearly everyone has heard about the health care bill that President Obama signed into law in 2009 call the Patient Protection and Affordable Health Care Act, AKA “Obamacare”.  Recently, after much debate in lower courts, the Supreme Court upheld the law saying it was indeed constitutional.  What most people do not know is how the law will actually affect Americans.  Many people are left scratching their heads wondering if they will be required to purchase insurance, where will they buy it, are there penalties for not buying, subsidies for lower income earners, or what is going on?

Coverage for All

The biggest thing this law is trying to do is allow people to get coverage who would otherwise be unable to purchase insurance.  Those with pre-existing conditions will now be able to get the insurance that they need in order to receive the care that they need.

Insurance Exchanges

In order to make the insurance more accessible, each state will be responsible to set up an insurance exchange.  This can be looked at like a shopping mall for insurance.  A one-stop place where a person can go to shop for the coverage that suits them best.  For states that are slow at getting their exchange set up, or those who outright refuse, there will be a federal exchange in their place.  Americans who choose to purchase from the exchange will be eligible for a government subsidy if they meet certain income limits.  The subsidies are phased out completely when the household income passes 4 times the poverty level (in 2012 this is about $44,000 per year for an individual, about $90,000 for a family of 4).

Small Business

Small business is said to be the backbone of America.  A major controversy of this bill is that it will require small businesses to provide coverage for their employees and essentially drive them out of business.  This is only half true.  Employers who have 50 or fewer employees are exempt from this mandate.  Those who have over 50, and do not provide health insurance, will be faced with a $2,000 per employee per year penalty.  On the other side of that, a small business with 25 or fewer employees that chooses to provide insurance will have a 35% – 50% of the cost of insurance tax credit for doing so.

Mandatory Coverage

The debate rages on whether the government has the authority to require citizens to purchase a product from the private market.  The reason behind the idea that people need to purchase the insurance or face a penalty is simply that healthy people, as well as sick, need to contribute.  If the insurance was not mandatory, healthy people would likely opt out.  This would cause much less money to be coming in to pay for the costs those with pre-existing conditions are incurring.  Those who decide they do not want insurance will face a penalty of 1% of their income in 2014 going up to $2,085 in 2016.

So how does this affect most Americans?  Initially it really will not.  If you already have insurance, as most people do, you will be able to keep it.  Those who do not have coverage, due to not being able to afford it or being denied, will now be required to buy insurance.  Taxes will increase for those earning $250,000 or more per year, and the deductions allowed for medical expenses will go down for everyone.  Unfortunately, there are so many little nuances there is not an overall explanation of how the new law will affect Americans.  If you want, you could take the time to read all 974 pages of the bill, or check out the easier to use Health Care Law and You.  At this point there is still a lot of speculation, on both sides, about what the actual outcome of this law will be.

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What are your thoughts on the new Healthcare bill?