If you follow the news at all, you know that the ObamaCare-mandated healthcare exchanges open today, October 1, 2013. But even if you are an avid news-watcher or reader, you may not understand all the details of the Affordable Care Act (ACA).
You’re certainly not alone! The ACA is a complex law, and it’s confusing since it’s completely different from what Americans are used to.
Here, we’ll give the quick answers to the most common ObamaCare questions – starting with whether or not you even need to worry about the law. Look for our more in-depth guide to ObamaCare in the coming weeks.
Will I need to buy insurance through an exchange?
If you’re like most people, you’re already insured through your employer, or through Medicare or Medicaid. In this case, you don’t need to buy insurance through one of the new exchanges.
Though your employer might change plans or premiums on January 1st (as many employers do each year, anyway), you’ll have little to do with the health insurance exchanges.
(Note: If your employer’s health insurance doesn’t meet minimum federal standards or costs you more than 9.5% of your annual household income, you can opt out of your employer’s plan and use the exchange to shop for more-affordable insurance.)
Likewise, people who are insured through Medicare or Medicaid won’t need to shop for health insurance through an exchange.
If you are using Medicaid – or if you’re just outside of the limits to qualify for your state’s Medicaid program – you may benefit from ObamaCare’s Medicaid expansion in many states.
Though the Supreme Court overturned the mandatory Medicaid expansion under ObamaCare, some states are still choosing to expand Medicaid programs. You can find out here whether or not your state is expanding its Medicaid program.
What if you currently buy your own health insurance? For small business owners, the self-employed, and others who buy their own health insurance, the ACA’s implementation could mean much lower or higher premiums, depending on your specific circumstances and where you live.
Healthcare exchanges should make it easier for you to comparison shop for insurance, and the mandates of Obamacare will make it easier for individual’s to get affordable health insurance.
If you are uninsured right now, you can get insurance through your state’s healthcare exchange, or, for some individuals in certain states, through an expanded Medicaid program. In fact, starting January 1st, 2014, you’ll be required to buy some form of health insurance, or you’ll have to pay a fine.
How will the healthcare exchanges work?
Under Obamacare, each state in the US has to set up an online healthcare exchange or the federal government has created an exchange for them. Although many states have set up their own exchanges, many states’ marketplaces will be administered by the federal government. This map will tell you where to go online to access your state’s exchange.
Even though the Health Insurance Marketplaces won’t look exactly the same, they’ll be similar. As of today, you can apply for health coverage online, by mail, or in person if you need a bit more help.
In the health insurance exchanges, you can shop for various levels of coverage from a variety of insurance providers. Each level of coverage will offer similar benefits, and all plans must cover outpatient care, emergency services, hospitalization, maternity and newborn care, and certain preventative and wellness services. You can read the whole list of mandated benefits here.
Through the exchange, you’ll be able to easily compare different health insurance plans – similarly to comparing car insurance coverage online. This way, you can choose the plan that best suits your needs and budget.
How much can I expect to pay for insurance?
How much you’ll pay in health insurance premiums will vary dramatically depending on your family size, age, health, and the level of insurance coverage that you purchase. This calculator from the Kaiser Family Foundation can give you a rough estimate of annual health insurance premium costs.
The bottom line is that individual health insurance coverage can still seem expensive, but self-pay premiums are likely to be lower now than what they were before the healthcare exchanges were set up.
What about subsidies and tax credits?
To make healthcare even more affordable, the ACA mandates that certain American individuals and families will be eligible for subsidies on health insurance premiums. If you earn too much to qualify for Medicaid but earn less than 401% of the year’s federal poverty level, you’ll qualify for a subsidy.
400% of this year’s poverty line is $45,960 for an individual, or $94,200 for a family of four.
ObamaCare subsidies limit the percentage of income that you use to pay health insurance premiums. If, for instance, you make around $17,000 a year, you shouldn’t pay any more than 4% of your income in insurance premiums. The subsidy will cover any payments over 4% of your income.
The more money you make, though, the bigger percentage of your income is set aside to be used for health insurance premiums. Those who are right at 400% of poverty level, for instance, will pay a maximum of 9.5% of their income in premiums.
Those making less than 250% of the poverty level will be eligible for further subsidies to offset other out-of-pocket costs, like deductibles and co-payments.
You can apply for your subsidy up front when signing up for ObamaCare. Just estimate your income for 2014, and the government will make subsidy payments directly to your insurer.
Be careful, though, because if you end up making more than you thought you would, you may have to repay some of the subsidy when you file your 2014 taxes. On the flip side, if you over-estimate your income, you may get a bigger tax return, as your remaining subsidy will come to you in your tax refund check.
Obviously, this isn’t all there is to the ObamaCare law and shopping through a health insurance exchange. But these basics will get you started, especially if you’re one of the uninsured or self-paying individuals who will have a particular interest in your state’s health insurance exchange.