AFFORDABLE CARE ACT

TAKES EFFECT

The era of the Affordable Care Act ("ACA"), commonly referred to as "ObamaCare" began on January 1, 2011. This legislation has been the subject of significant political rhetoric and spin doctoring, much of which, from Sarah Palin's warnings about death panels to the President's promise that you can keep your current coverage, was untrue.

In this article, we attempt to answer some common questions regarding ObamaCare in a hopefully unbiased fashion:

1.  How does ObamaCare affect me?

Although some aspects of ObamaCare began implementation as early as September 2010, the biggest changes will be felt this year.

The first is that all Americans and documented resident aliens must have health insurance. If you do not, you will have to pay a fine.

The second is that insurance policies must contain provisions mandating a certain level of quality and a certain number of services offered. For example, a person with a pre-existing condition cannot be denied coverage, cannot be charged a significantly higher premium and cannot be subject to an extended waiting period or have his benefits curtailed.

2.  Can I keep my current plan?

Despite repeated assurances from President Obama, the answer is technically yes but practically no.

Because all new policies must meet ObamaCare mandates, insurance companies are modifying current plans to be compliant rather than creating new compliant plans to be offered alongside older non-compliant plans.

Michigan's insurance department issued a ruling in November confirming that health insurers could extend policies which were slated for cancellation because they did not meet the requirements of the ACA.

Both Blue Cross Blue Shield of Michigan and Health Alliance Plan were quick to issue press releases explaining that the cancellation of non-complying plans would proceed as planned.

3.  Are there any exemptions from the mandate?

If you are currently insured through Medicare, Medicaid, your employer or a Veteran's health program you do not have to participate because you are already insured. Prisoners, undocumented immigrants, some religious groups and those American Indians subject to the laws of their tribal community are exempt.

4.  Will I be able to keep my current employer sponsored insurance?

Employers with 50 or more employees are required to offer health care coverage or be subject to a fine of $2,000 per employee per year. Some analysts have suggested that the combination of premium subsidies available for low income workers combined with the fact that most health care policies cost employers far more than $2,000 per year per employee will be an incentive for employers to no longer provide the benefit. Employers with fewer than 50 employees may cancel their group health plans without penalty.

As explained above, most policies are likely to be modified and you will see an increase in costs, deductibles and co-pays as a result of the new coverage requirements. 

5.  Will ObamaCare raise my taxes?

There are 19 new "taxes" in the form of fees, penalties and taxes which now take effect. Most of these affect the health care industry and so, indirectly, will be passed down to consumers in the form of higher costs.

Individuals and families will see a 20% penalty for early withdrawals from health or medical savings accounts and indoor tanning products now incur a 10% excise tax.

The ACA instituted a 3.8% tax on net investment income above a threshhold amount of $125,000 for single individuals and $250,000 for married couples.