How the Affordable Care Act Impacts You and Your Insurance

The Affordable Care Act (ACA) was implemented by the Obama Administration in 2009, although it is only just now coming into effect for the average American. The individual mandate begins in 2014, which requires every American adult to have insurance for face a tax penalty. The impact of this new law is widespread, with both the cost and types of insurance changing drastically from 2013. Additionally many people may be unaware that healthcare is no longer a choice, and rather, they must carry it at all times or face penalties that will slowly rise as the years pass and the law is fully realized.

After a challenging launch in 2013, the website is now up and running with few errors being seen. Any individual can now visit the website and begin selecting which policy they prefer. For those under the age of 30, they can choose cheaper catastrophic coverages which have very large deductibles, but smaller premiums. However, there are numerous big changes that the ACA has made to the US healthcare system, which people will quickly find out as they start using this new coverage in 2014. The law has changed many things for both employer and individual polices.

ACA Changes to Insurance Beginning in 2014

  • There are no longer any pre-existing condition exclusions on policies. For as long as there has been private health insurance in the USA, there has been exclusions for pre-existing conditions. If you developed a chronic illness you would have to stick to any insurance you had indefinitely, otherwise it would no longer cover your needs from the prior condition. Rarely was it possible to switch between insurance companies and retain coverage for pre-existing conditions. This basically only occurred as a part of benefit packages from highly skilled labor positions. The ACA has eliminated this entirely.
  • There are no longer tiers for Insurance Premiums. Previously, a young, healthy person would pay significantly less for equivalent insurance versus an older and/or less healthy individual. Similar to car insurance, there was a monetary incentive to stay healthy and not smoke for those that paid for their own insurance, as it significantly lowered premiums for them. This is no longer the case. There were significant downsides to very high premiums for the sick, as they often could not pay them and the burden fell to the taxpayer. The ACA hopes to eliminate this by charging everyone around the same premium for similar coverage, regardless of pre-existing or chronic conditions.
  • All American adults must carry Insurance for at least 9 months each year. All US residents and US persons residing in the country must carry insurance for at least 9 months a year. There will be a forgiveness period for 3 months at the beginning of each year, when the insurance marketplaces are open. This will allow new individuals to come into the market without penalty, and allow people to remedy any lapses in coverage without needing to be penalized. A penalty will be incurred for those that do not keep insurance for 9 months, and will be administered in the form of a tax on a person’s refund check at the end of the year. This penalty is only $95 for 2014, as the law aims to give people the opportunity to get used to the new system. It will increase to $325 by 2015, or 2% of family income (gross taxable income).
  • Premiums will rise for Individual Insurance Policies. Premiums are set to rise, for catastrophic insurance policies, by at last 400%. This is the level seen by the most healthy and young individuals. In this way, the ACA hopes the young and healthy, which do not use health insurance much at all, will subsidize much of the care required by society at large. This also is causing the prices for the infirm and ill to drop significantly, usually by around the same amount (400-500%).
  • Though Policy Holders are encouraged to stay healthy, no discounts will be given on premiums for health and fitness classes taken. Many of us have joined gyms and worked out with co-workers because our employer policies offered discounts for staying healthy. Great care was sometimes given to weight matters, as reducing BMI was an important thing to receive rebates on insurance. This is no longer the case after the ACA is implemented. The ACA mandates a set premium level, which will remain regardless of the health or fitness of the policy holder. This is both good and bad, as the healthy will undoubtedly see this as a negative, but the unhealthy will see this as a positive thing.
  • Employer healthcare is now required for those working over 32 hours per week at any business. No longer is it the case that employer’s can have full time workers without health coverage. Even part-time workers must be covered by insurance from their employers with the ACA. Only if the person is truly part time (less than 32 hours a week) will the employer be exempt from providing coverage, though the individual will still be required to purchase coverage through the exchange or an outside policy. This helps provide a lot more extensive coverage without significantly burdening individuals who are working.

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