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Shots - Health News

You Ask, We Answer: Demystifying The Affordable Care Act

Originally published on Tue July 2, 2013 9:25 am

The biggest changes in health insurance coverage under the Affordable Care Act are set to begin less than three months from now. Oct. 1 is when people can start signing up for coverage in new state health exchanges. The policies would kick in on Jan. 1, 2014.

It can all be a little confusing, we agree. So two weeks ago, we asked what you wanted to know about the health law.

You weren't shy; our inbox was stuffed. Here are some answers. If you don't see your question, or one like it, don't despair. We'll be doing this again periodically throughout the summer and fall.

You can email more questions to morningedition@npr.org.

"I'm currently employed part time, and I pay for my own health insurance, it's not through my employer," writes Marsha Harman of Chicago. "Will I be eligible to participate in the exchanges, or to take advantage of the tax credits to purchase insurance?"

This is one of the biggest misconceptions about the exchanges — that they're only for people who don't have insurance.

The big PR campaigns you'll be seeing in the coming weeks are aimed mostly at the uninsured, but the exchanges are most definitely also open to people who already buy their own insurance.

In fact, there are about 14 million people in the individual insurance market now. That includes people like Ms. Harman who work part time and don't qualify for benefits; people who are self-employed; or people who may have retired early and don't yet qualify for Medicare.

"I've heard that the amount for people to qualify for assistance in terms of income for individuals is as low as $11,000," writes Daniel Salgado of Eustis, Fla. He says he makes more than that, "but I don't think that my income necessarily would be enough that I could afford insurance on my own. Which is why I don't have it now. So I am wondering what sort of penalty I may face taxwise if I end up being in a pinch where I don't qualify for assistance by the government's definition, but still can't afford insurance on my own."

There are a couple of questions here. First, who gets financial help paying for coverage? Within the exchanges, there's a sliding scale of assistance. The smaller your income, the more help you get paying your premium. And Mr. Salgado is correct that for an individual, the subsidies start for people whose modified adjusted gross income is the equivalent of the poverty level, $11,490 or above. The help is reduced for people who make more money, and is cut off altogether at 400 percent of the poverty level, which is $45,960.

Bottom line: If you're an individual making up to $45,950, you should be eligible for at least a bit of a subsidy.

Now, there may be cases where someone doesn't qualify for help, or does qualify for help but still can't afford the premium. And those people won't be required to have insurance. The law says if you would have to spend more than 8 percent of your income on insurance, you are excused from having to pay any penalty for not buying insurance. There are several other types of people who are excused. And you can always seek a hardship exception if you think you truly can't afford coverage.

How much will the premiums be? That information is just starting to come in from some of the states. It will depend on a lot of factors — where you live, how old you are, whether you want to pay a higher premium and have a lower deductible, or pay a lower premium and have a higher deductible. And, of course, whether you're eligible for a subsidy. But from what we've seen so far, premiums for the standard "silver plan" seem to be averaging between $200 and $400 a month for an individual, without subsidies.

"I'm a veteran who participates in my regional healthcare plan through the military Tricare system," writes Rick Espinoza of San Antonio, Texas. "How would the ACA affect my health care?"

Not at all. The health law lays out several categories of what it considers minimum coverage that satisfies the requirement to have insurance. It's the coverage that about 80 percent of the population already has: employer coverage, including COBRA and retiree coverage; or a government program like Medicare, Medicaid, the Children's Health Insurance Program, VA benefits or Tricare. If you have any of those kinds of health insurance, you don't have to do anything, and you will have satisfied the requirement to have coverage.

Emily Lieberman of Doylestown, Pa., has insurance through her husband's job, but wants to know if the new law might give her family a better deal. "It's very expensive, we pay a very high premium, and I am not satisfied with the coverage," she writes. "So I was wondering if we would be able to buy health insurance through the health insurance exchanges."

Probably not. You know how President Obama has been saying, "If you like the coverage you have you can keep it?" That was shorthand for saying that the law was intended to maintain the existing system, where people get insurance through a job or through a family member's job. And to make sure that didn't change — for the first several years at least — people who are offered health insurance through an employer or a family member's employer are not allowed to go to an exchange to get insurance, except in very limited cases. Or they can go to an exchange, but they won't be eligible for any help paying their premiums.

Here's the tricky part: If the premium offered by the employer costs more than 9.5 percent of a person's household income — for coverage of an individual, not a family — or if the employer's plan pays less than 60 percent of the cost of covered benefits, then the employee is allowed to opt out of employer coverage and go to an exchange for health insurance.

"I know that the insurance companies will no longer be able to turn down people with preexisting conditions," writes Martha Hoff of Takoma Park, Md. "But can they ask about them? And if so, will such people have higher premiums than those without them?"

In a word, no. Starting Jan. 1, 2014, discrimination based on preexisting conditions won't be allowed. You can't be turned down, and you can't be charged more. This will mean some healthy people will pay higher premiums, to offset the cost of those sicker people paying less. But the whole idea of requiring most people to have coverage is to get more healthy people into the insurance pool to spread the risk more broadly.

"I would like to know if it is true that some people, for so-called religious reasons, will be getting a free ride," writes Bob Ivey of Rotonda West, Fla. "If this is true, then who are these people, how many are there, and who will pay for their coverage?"

It is true that people who are members of certain religious groups are exempt from the requirement to have health insurance. Examples include the Amish and some Mennonite sects, because they don't pay into Social Security. But they are not "getting a free ride." Some members of such groups have a form of insurance through cooperative ventures or "health care sharing ministries," where members of a group pool together to pay each other's medical bills. Others may remain uninsured.

"I'd like to know how the ACA will affect me, a permanent resident of Japan," writes Bill Lonergan of Yokohama, Japan. "I've heard time and again that all Americans will be required to buy health insurance or face a penalty, but what about those of us living permanently or semi-permanently outside the USA?"

Not to worry, Bill. You and the estimated 6 million American expats were not forgotten by those who wrote the health law. And you don't have to rush out and buy health insurance. The law stipulates that anyone who lives outside the U.S. for at least 330 days in a 12-month period is "treated as having minimum essential coverage for the year or period" and thus meets the requirement to have health insurance.

Copyright 2014 NPR. To see more, visit http://www.npr.org/.

Transcript

RENEE MONTAGNE, HOST:

This is MORNING EDITION, from NPR News. I'm Renee Montagne.

DAVID GREENE, HOST:

And I'm David Greene.

Today in Your Health, we are answering your questions about the federal health law, the Affordable Care Act. Now, the biggest changes being made by the law are set to begin less than three months from now. October 1st is when people can start signing up for coverage in new state health exchanges, for insurance that would start next January 1st. We know people are more than a little confused, and two weeks ago, we asked what you most wanted to know about the new health law. You were not shy, we should say. Our inbox was stuffed.

And as promised, we've brought NPR's Julie Rovner into the studio to answer some of the most common queries. You will also find some more of your questions answered on the Web, at our website npr.org.

But let's get right to it. Julie, thanks for coming in. Good morning to you.

JULIE ROVNER, BYLINE: Good morning.

GREENE: OK, so before we dive into the finer points of this, let's start with something very basic. How do people sign up for this coverage? I mean, is there a website that they go to? They get a packet in the mail? What happens?

ROVNER: Well, it's not automatic. People will have to take some action. The government's trying to make it as easy as possible. Last week, the federal government re-launched its website, Healthcare.gov. There's lots of information on how to get ready to sign up. Remember, nothing happens till October 1st. And states and other organizations are launching huge publicity campaigns to get the word out, starting just about now.

Most of the actual sign-up activity will take place online, but there are also paper applications. And literally thousands of people are being trained this summer to help guide people through the process. So, really, the actual mechanics are probably the last thing people should be worrying about right now.

GREENE: Other things, even if they don't have the Internet, they'll be able to sign up.

ROVNER: Yes.

GREENE: I mean, the paper options.

ROVNER: There will be ways to help people sign up.

GREENE: Good to know. OK, we got the basic out of the way. Let's turn to some other questions from our listeners, here. Here's the first one.

MARSHA HARMAN: My name is Marsha Harman, and I live in Chicago, Illinois. I'm currently employed part-time, and I pay for my own health insurance. It's not through my employer. So I'm just not sure if I will be eligible to participate in the exchanges, or to take advantage of the tax credits just to purchase insurance. How will that work?

GREENE: Julie?

ROVNER: This is one of the biggest misconceptions about the exchanges, that they're only for people who don't have insurance. Now, the big campaigns you'll be seeing in the coming weeks are aimed mostly at the uninsured. But the exchanges are most definitely open to people like Ms. Harman, and anyone else who buys their own insurance. In fact, there are about 14 million people in the individual insurance market now. That includes people like the questioner here, who work part-time and don't qualify for benefits, people who are self-employed, or people who may have retired early and don't qualify for Medicare yet.

But it's been very difficult to get insurance through the individual market for a variety of reasons, and it's been very expensive for people who do have it. It's considered the most dysfunctional part of the health insurance system, and a big part of building these exchanges has been an effort to fix that.

GREENE: OK. Well, Marsha Harman wasn't alone. I mean, we have a lot of people who seem eager to buy insurance. But there were also some people, as well, who don't sound that eager, and are worried about the part of the law that goes into effect in January that requires most people to have insurance or pay a penalty. And here's one of those people.

DANIEL SALGADO: My name is Daniel Salgado, and I'm from Eustis, Florida. I've heard that the amount for people to qualify for assistance, in terms of income for individuals, is as low as $11,000. Now, in my case, I certainly wouldn't qualify for that. But I don't think that my income necessarily would be enough that I could afford insurance on my own, which is why I don't have it now.

So I'm wondering what sort of penalty I may face tax-wise if I end up being in a pinch where I don't qualify for any assistance, by the government's definition, but still can't afford insurance on my own.

GREENE: I know, Julie, a lot in have had questions about this penalty. So tease this out for us if you can. What's the answer here?

ROVNER: Yeah. Well, there's a couple of questions there. First of all, who gets help? Within the exchanges, there's a sliding scale of assistance or subsidies. Mr. Salgado is correct. For an individual, the subsidies start at 100 percent of poverty, which this year is just under $11,500. And the help stops for people with incomes above 400 percent of poverty, which this year is just under $46,000. Obviously, the smaller your income, the more help you get paying your premiums.

Now, there may, in fact, be cases where someone doesn't qualify for help, or does qualify for help, but still can't afford the premium. And those people, in fact, won't have to have insurance. The law says if you would have to pay more than 8 percent of your income on insurance, that's considered unaffordable, and you'd be excused from having to pay any penalty.

There are a bunch of other exceptions to the penalties, too, including having a gap of less than three months when you don't have insurance. And officials can make case-by-case hardship exceptions for people who can demonstrate they truly can't afford coverage.

GREENE: So, Mr. Salgado, if his concern is he really can't afford insurance on his own, he might very well quality for this exemption from the penalty.

ROVNER: That's right.

GREENE: OK, and not have to have insurance.

ROVNER: That's right.

GREENE: OK. Do we know yet how much this coverage under this new law will cost?

ROVNER: That's obviously one of the biggest questions that people have been asking. We're just starting to get premium information from some of the states. We won't have all of it till this fall. And it's going to depend on a lot of things: where you live, whether you want to pay a higher premium and have a lower deductible, or have a lower premium and a higher deductible, and, of course, whether you're eligible for a subsidies we've been talking about. But from what we've seen so far - just from the few states - premiums for the standard, so-called silver plan - that's the mid-level plan - or seems to be averaging between about $200 and $400 a month, that's without subsidies.

GREENE: And that's rough, though. I mean we're going to have to hear a lot more details from the state.

ROVNER: Absolutely.

GREENE: Well, we several questions from people with coverage through the military or through the Department of Veterans Affairs. And they are wondering if they have to go out and buy private coverage now, as well.

ROVNER: No. The law lays out several categories for what it considers minimum coverage that satisfies that requirement to have insurance. It's basically the coverage that about 80 percent of the population already has: coverage through an employer, including COBRA and retiree coverage, Medicare, Medicaid, or Children Health Insurance Program, VA, or Tricare. If you have any of those kinds of health insurance, you don't have to do anything and you will have satisfied that requirement to have coverage.

GREENE: There's your answer from NPR's Julie Rovner.

Well, we have more. Our next question, Julie, comes from Emily Lieberman of Doylestown Pennsylvania. Now she has insurance through her husband's job, but was wondering if the new law might give her family a better deal than she's getting.

EMILY LIEBERMAN: It's very expensive, we pay a very high premium, and I am not satisfied with the coverage. So I was wondering if we would be able to buy health insurance through the health insurance exchanges that will be available, or if those are only open to people who don't have currently have coverage through an employer.

ROVNER: The short answer is probably not. You know how President Obama has been saying, if you like the coverage you have you can keep it?

GREENE: Mm-hmm.

ROVNER: For a lot of people that's turned out not to be the case. But that was really shorthand for saying this law was intended to mostly maintain the existing system where most people get their insurance through their job, or through a family member's job. And to make sure that happened, for the first several years at least, individuals who are offered health insurance through an employer, or a family member's employer, are not allowed to go to the exchange instead, except in very limited cases. Or they can go to the exchange, but they won't be eligible for any help in paying their premiums - any of those subsidies.

GREENE: What are the very limited cases where they could go to the exchange?

ROVNER: If the premium offered by the employer costs more than nine and a half percent of their household income - and that's for an individual, not for the family - or if the employer's plan pays less than 60 percent of the cost of covered benefits, then and only then, can the employee opt out of employer coverage and go to the exchange and get help instead.

GREENE: OK, so a specific formula. We have one more question and it's about a part of the law a lot of people have been waiting for.

MARTHA HOFF: My name is Martha Hoff, and I live in Takoma Park, Maryland. I have a question about the continuing impact of pre-existing conditions. I know that the insurance companies will no longer be able to turn down people with pre-existing conditions. But can they ask about them? And if so, will such people have higher premiums than those without them?

ROVNER: In a word, no. Starting January 1st next year, that won't be allowed. You can't be turned down, you can't be charged more. This will mean some healthy people will pay higher premiums, to offset the cost of those sicker people paying less. But the whole idea of requiring most people to have coverage is to get more healthy people into the insurance pool to spread the risk more broadly.

GREENE: Ok. Julie, thanks so much.

ROVNER: Thank you.

GREENE: We'll be doing this again every few weeks as the new health law rolls out. And if you have questions for Julie, you can send them along to MORNING EDITION@npr.org.

This is MORNING EDITION from NPR News. Transcript provided by NPR, Copyright NPR.

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