healthcare FAQ
Posted by Todd Fries
Q: I don’t have health insurance. Would I have to get it, and what happens if I don’t?
A: Under the legislation, most Americans would have to have insurance by 2014 or pay a penalty. The penalty would start at $95, or up to 1 percent of income, whichever is greater, and rise to $695, or 2.5 percent of income, by 2016. This is an individual limit; families have a limit of $2,085.
Q: I want health insurance, but I can’t afford it. What do I do?
A: Depending on your income, you might be eligible for Medicaid, the state-federal program for the poor and disabled, which would be expanded sharply beginning in 2014. Low-income adults, including those without children, would be eligible, as long as their incomes didn’t exceed 133 percent of the federal poverty level, or $14,404 for individuals and $29,326 for a family of four, according to current poverty guidelines.
Q: What if I make too much for Medicaid but still can’t afford coverage?
A: You might be eligible for government subsidies to help you pay for private insurance that would be sold in the new state-based insurance marketplaces, called exchanges, slated to begin operation in 2014.
Premium subsidies would be available for individuals and families with incomes between 133 percent and 400 percent of the poverty level, or $14,404 to $43,320 for individuals and $29,326 to $88,200 for a family of four. The subsidies would be on a sliding scale. For example, a family of four earning 150 percent of the poverty level, or $33,075 a year, would have to pay 4 percent of its income, or $1,323, on premiums. A family with income of 400 percent of the poverty level would have to pay 9.5 percent, or $8,379.
Q: How would the legislation affect the kind of insurance I could buy? Would it make it easier for me to get coverage, even if I have health problems?
A: If you have a medical condition, the bill would make it easier for you to get coverage; insurers would be barred from rejecting applicants based on health status once the exchanges are operating in 2014.
Q: I own a small business. Would I have to buy insurance for my workers? What help could I get?
A: It depends on the size of your firm. Companies with fewer than 50 workers wouldn’t face any penalties if they didn’t offer insurance.
Companies could get tax credits to help buy insurance if they have 25 or fewer employees and a workforce with an average wage of up to $50,000. Tax credits of up to 35 percent of the cost of premiums would be available this year and would reach 50 percent in 2014. The full credits are for the smallest firms with low-wage workers; the subsidies shrink as companies’ workforces and average wages rise.
Firms with more than 50 employees that do not offer coverage would have to pay a fee of up to $2,000 per full- time employee if any of their workers got government-subsidized insurance coverage in the exchanges. The first 30 workers would be excluded from the assessment.
Q: I’m over 65. How would the legislation affect seniors?
A: The Medicare prescription-drug benefit would be improved substantially. This year, seniors who enter the Part D coverage gap, known as the “doughnut hole,” would get $250 to help pay for their medications.
Meanwhile, government payments to Medicare Advantage, the private-plan part of Medicare, would be cut sharply starting in 2011. If you’re one of the 10 million enrollees, you could lose extra benefits that many of the plans offer, such as free eyeglasses, hearing aids and gym memberships. To cushion the blow to beneficiaries, the cuts to health plans in high-cost areas of the country such as New York City and South Florida where seniors have enjoyed the richest benefits — would be phased in over as many as seven years.
Beginning this year, the bill would make all Medicare preventive services, such as screenings for colon, prostate and breast cancer, free to beneficiaries.
Q: How much is all this going to cost? Will it increase my taxes?
A: The bill is estimated to cost $940 billion over a decade. But because of higher taxes and fees and billions of dollars in Medicare payment cuts to providers, the bill would narrow the federal budget deficit by $138 billion over 10 years, according to the Congressional Budget Office.
If you have a high income, you face higher taxes. Starting in 2013, individuals would pay a higher Medicare payroll tax of 2.35 percent on earnings of more than $200,000 a year and couples earning more than $250,000, up from the current 1.45 percent. In addition, you’d face an additional 3.8 percent tax on unearned income such as dividends and interest over the threshold.
Starting in 2018, the bill would also impose a 40 percent excise tax on the portion of most employer-sponsored health coverage (excluding dental and vision) that exceeds $10,200 a year for individuals and $27,500 for families.
The bill also would raise the threshold for deducting unreimbursed medical expenses from 7.5 percent of adjusted gross income to 10 percent.
Q: What will happen to my premiums?
A: That’s hard to predict and the subject of much debate. People who are sick might face lower premiums than otherwise because insurers wouldn’t be permitted to charge sick people more; healthier people might pay more. Older people could still be charged more than younger people, but the gap couldn’t be as large.
