Questions and answers about the Affordable Care Act

On Tuesday, the federal Affordable Care Act, also known as Obamacare, will open the marketplace for people to purchase insurance before the individual mandate kicks in Jan. 1 and penalties arrive.

If you think the new world of health care sounds complicated, you aren’t alone. Misinformation is abundant regarding Obamacare, and it seems most people outside the insurance industry aren’t sure what the next few months will entail.

Here are some answers to often-asked questions about the Affordable Care Act.

What happens Oct. 1?

The open enrollment period for the marketplace begins. Essentially, individuals are able to shop and make decisions about what health-care plan will work best for them. This could be as simple as signing up with an employer’s health plan, as daunting as looking on the open market if an employer does not provide certain levels of care or as complicated as applying for tax subsidies to alleviate the cost of care (provided you are under a certain income level).

Individuals can apply online to see what plans might work best for them. Prices and plans will be available at www.healthcare.gov starting Oct. 1. For most people who already have insurance through Veterans Affairs benefits, work insurance, Medicaid or Medicare, nothing will change. You will likely get to sit back and not worry about the change. If you aren’t sure, calling your insurance company to find out won’t hurt.

Isn’t Obamacare already in effect?

That’s a complicated question. Parts of the Affordable Care Act have been in effect for months. People with existing insurance have had 100 percent of preventive care (things such as cancer screenings, immunizations and hospital checkups) covered. Medicaid and Medicare services have been expanded, and an excise tax of 2.3 percent has been in place on medical equipment such as pacemakers and defibrillators.

The individual mandate, perhaps the most controversial aspect, is what goes into effect Jan. 1. Any individual who doesn’t have insurance (and any employer that doesn’t provide “affordable” or “minimum value” health insurance) will pay penalties.

Penalties?

Yes. Individuals who do not have health insurance after the open enrollment period (Oct. 1 to March 1) will pay a penalty in 2014 of $95 per adult for the year or 1 percent of total income, whichever is greater. In 2015 it increases to $325 or 2 percent. In 2016 it goes up to $695 or 2.5 percent. For those who resist buying insurance, the fines will be indexed further.

Employers are only mandated to provide insurance for workers if they employ more than 50 full-time employees. For workplaces with fewer than 50 employees, providing insurance is optional. Full-time is defined as working more than 30 hours a week. Employers with more than 50 employees encounter the “pay or play” rule.

What is ‘pay or play?’

Employers opting not to provide any insurance for employees will pay a penalty of $2,000 for each uninsured employee (excluding the first 30). Employers who do provide insurance but who do not make it “affordable” or “minimum coverage” will pay a $3,000 penalty for each employee.

Who defines affordable?

The government. “Affordable” is defined as a plan in which the employee-required contribution is less than 9.5 percent of the employee’s household income. Minimum value plans need to cover at least 60 percent of costs.

How is this legal?

The legality was challenged and made its way to the Supreme Court, where five justices ruled it was within Congress’ constitutionally granted taxing powers.

What if I can’t afford to buy into this individual mandate?

There are options. Depending on individual or household income, you could fall under several umbrellas of protection. It all goes to the federal poverty level of $11,490 for an individual or $23,550 for a family of four. If an individual or family falls under that level, they are eligible for Medicaid. If a person is 65 or older, they are eligible for Medicare.

But what about relatively low-income people who don’t fit into the federal poverty level?

There are tax subsidies available for any person or family between 100 percent and 400 percent of the federal poverty level. The high end of this chart means a person making up to $45,960 or a family of four making $94,200 are eligible for these subsidies.

But these are only available to those who have not been offered insurance by their employers. If a person waives “affordable” or “minimum coverage” insurance plans, they are not eligible for subsidies.

What if I have a pre-existing condition?

Part of the Affordable Care Act stipulates insurance companies cannot turn down people for pre-existing conditions, nor can they charge more for pre-existing conditions.

Are insurance companies getting the short end of this deal?

Not really. While it might be costly to provide insurance for people with those conditions, there is a protective clause built into the act. If someone declines to buy insurance in the open enrollment period, he cannot buy insurance if he gets sick in the interim until the next open enrollment period. This incentivizes people to buy insurance ahead of time and protects insurance companies from someone buying into a health plan after they find out they are sick.

Insurance companies may also charge more for people who are older, but never more than three times the rate of the youngest person they insure.

Are there exceptions?

Yes. There are qualifying events that will open up an enrollment period, including birth of a child, death of a family member, marriage or divorce. A newly diagnosed health condition does not count as a qualifying event. Another way to access health insurance in the interim is by being hired at a job with health insurance. The care act mandates that an employer and employee have 90 days from the date of hiring to sort out the insurance.

Why has this been controversial?

Many people have a problem with the individual mandate. They claim it is an additional cost (albeit a legal tax) imposed by the government.

Is there anything particular to Montana I should know?

Yes. Jennifer McKee, the communications director for the Montana Commissioner of Securities and Insurance office, said many Montanans are asking similar questions.

“The subsidies go to the national poverty level,” she said. “Many Montanans who do not consider themselves poor by a stretch will qualify.”

This means semi-retired or work-at-home Montana residents will be able to access tax breaks.

“They might find a nice surprise,” McKee said.

McKee also said Montana’s insurance regulations have been in place long before Obamacare.

“I’m not saying your rates are going to go down,” she said. “But they are not going to go up as much as an actuary table said they would have if Obamacare hadn’t passed.”

Can you sum this up?

Oct. 1 is the opening of the marketplace. Individuals need to get health insurance by March 1 or face a tax. Employers will pay penalties if they do not provide affordable health insurance to their employees (but only if they employ more than 50). Insurance companies get millions of new customers, but they must accept those who are already sick. The plus side for them is that they are protected from Johnny-come-latelys trying to game the system. However, exceptions exist to protect new parents, married couples and others.

How well is all this going to work?

Opinions differ. Time will tell.

How can I get more information?

The federal government’s website, www.healthcare.gov, offers a wealth of information if you know where to look.

The Montana Commissioner of Securities and Insurance has a website, http://montanahealthanswers.com, that answers questions specific to Montanans.

The Kaiser Family Foundation has a calculator that can help determine just how much you can be expected to pay out of pocket and what subsidies are available. The calculator is available at http://kff.org/interactive/subsidy-calculator.