How the Affordable Care Act affects you

CBS/AP

(MoneyWatch) The Patient Protection and Affordable Care Act, or ACA, was upheld by the Supreme Court Thursday. Specifically, the high court ruled that the requirement that either individuals buy health insurance or pay a penalty is not a violation of the United States Constitution.

But that doesn't change the fact the law is a tangled mess of rules, regulations and policies. Several changes went into effect in 2012 and some of the biggest changes won't happen for several years and some changes will be phased in. There is no doubt that the new health care rules will have an impact on what folks pay for health insurance.

By 2014, when the law is required to be fully phased in, the insurers will no longer be able to turn away anyone because of a pre-existing condition. Also, most people will be required to obtain at least basic health insurance coverage or pay a fee if they do not have health insurance.

Here is what you need to know about some of the changes that have already taken effect.

- No rescissions of coverage: Health plans are banned from dropping people from coverage when they develop an illness or medical condition. For some folks this is nothing new - this provision has been in place under a number of states laws. This means that for some people in certain parts of the country (such as New York, Vermont, New Hampshire, etc.) nothing has changed and others have seen additional coverage and benefits.

- Extending dependent coverage to age 26: Health insurance policies are required to allow dependent children to stay covered on their parents' existing health insurance up their 26th birthday. This is commonly referred to as "Dependent 26." This year's college grads and their parents can breathe easier and will have more time to check into coverage options. But don't' assume this is always the better option. For example, if you are a healthy 20-something grad you can buy an individual health policy for about $150 per month. Or if you snag a job with an employer that offers subsidized health insurance benefits, that may be a better option. Either way, these options may cost less than paying extra to remain on your parents existing policy. But if you're a grad with health issues and you don't have to pay extra to keep covered on your parent's policy, then that may be the better option.

- Eliminate pre-existing condition restrictions for children: No longer can an insurance company deny coverage to children with pre-existing conditions. This applies to all employers' plans and to any new individual policies offered in the market.

- No more annual and lifetime limits: The new rules require that all group health plans and policies sold to individuals can no longer include restrictive annual and lifetime dollar limits for essential health benefits. But its not always clear as to exactly what heath benefits are included as "essential."

- Coverage for uninsured with pre-existing conditions: Individuals locked out of getting health insurance because of a pre-existing condition will be able to buy subsidized health insurance through a nationalized high-risk pool for a limited time. The hitch is that the details have yet to be ironed out on how this national high risk pool will work with existing states programs. Folks who could qualify should check out NAIC for state specific contacts and HealthCare for additional information.

[MDTaber]

As someone who actually saw the Affordable Care Act being drafted in Congress, even I know that there is a way to opt-out of the law without being penalized. You can find the actual language of the opt-out option in Section 1555 of PL 111-148 (formerly known as the Affordable Care Act).

[Banker002]

This brings up the (2) biggest problems with the ACA. (1) being that companies would choose to go with the penalty over providing the insurance benefit and no one knows yet how that would work exactly. In the test area where the ACA was tried most of the companies choose to provide insurance and not pay the penalty. Information on how well it will work if all the companies take the penalty option is unknown. (2) Just for your calculations. A company with 63 employees will only have to pay for 13 employees. When a company adds its 51st employees they dont have to start paying a penalty for 51 employees. They will pay a penalty for 1 employee. That brings up the 2nd biggest problem with the ACA. No one seems to be getting the specifics out on how its going to work or at least they doing a very poor job. As intellegent as the people are who posted here in this chain. There seems to be a shortage of knowledge on the ACA. I took the 8 weeks course provided at Cousera.org on the ACA. I know more than I didi but I wish the class went even deeper into the specifics.

[leelee91914]

BobbyKearan, You misread. The fine is $200 per YEAR not month. Studies show that MANY companies are planning to dump their health care and pay the much cheaper fine if the law is not repealed.

Politinomics, another potential negative of the law is that companies with just over 50 employees may downsize to get under the 50 limit, and many growing companies may choose to stay under 50 where otherwise they would have expanded. Also, there is the redtape factor of the law - it costs time and money to make sure you're in compliance with the ever-growing regulation.

These forces all discourage expansion and hiring, resulting in less available jobs.

Also, between health insurance premiums and all the other things companies are mandated to pay for each employee, they often find it costs less to pay a couple people overtime than it does to bring in a new employee. (The cost of benefits can be almost as much as some salaries). One more thing that discourages hiring.

It doesn't do a person who can't find a job any good to force employers to provide health insurance...

[leelee91914]

I meant 2,000 per year, not 200, sorry.

[heatflux]

Small businesses will now be forced to provide the insurance to their hardworking employees earning $8-10 per hour. Every body else is already covered by large employers. Is all this fight about providing insurance coverage to poor hardworking employees? What are the other downside of affordable care act?

[Politinomics]

The way the law will work - small businesses with over 50 employees will be compelled to either provide health insurance or pay a $2,000 per year per employee fine/tax.

Small business with under 50 employees will be exempt from the law.

The scenario I outlined below is for an employer with 63 (random number)employees.

[Politinomics]

Here is a real world example of what it will look like at the small business level.

Let's take a business where the average health insurance premium was $1,249 per covered employee per month (note: that is actually what my family pays per month via our current health plan).

The business has 63 covered employees and pays 80% of the monthly premium as part of their benefits package.

Since the fine for not providing health insurance will be $2,000 per year per covered employee, would the owners put them on the gov't program if they had the option? You bet. This would save them $818,244 per year. That's a big savings!

Every two years they might "shop" for a new plan - a very common practice. There are hundreds of insurance companies that specialize in small business plans. Those companies will be directly impacted and not in a positive way.

Now... if they had decide to no longer provide health insurance to their employees than those same employees would go from paying $249/month ($1,249 x 20%) to whatever the government premium will be.

Even if government can provide coverage at a 50% discount to the private market (highly, highly unlikely) than each of their employees would be paying an additional $375 per month or $624.50 per month up from $249.

That is a 150% increase in additional cost for every covered employee.

These are real world numbers not a political hypothesis. We may not like the ACA or we may love it. That's up to each individual.

But the inescapable truth is that unless government can provide health insurance at an 80% discount to the private market then chances are employees will pay more than they are currently paying and NOT have the choice to keep their current insurance provider.

Richard D. Bailey
www.politinomics.com

[Tintern]

You conveniently choose 63 employees for your example. My understanding is that the only small business subject to the fine are those with more than 50 employees. 95% of small businesses in America have less than 50 employees. Therefore the penalty applies mostly to individuals not to small businesses. Cherry-picking facts doesn't help anyone understand this Mr. Bailey.

[BobbyKearan]

Your math is bad off - completely backwards.

For one, why would a company prefer to pay $2000 (fine) instead of $1000 (80% of $1249 cited policy cost rounded up) per employee, per month? That would be a LOSS of $756,000 per year ($1000 x 63 x 12), not a savings.

Company provided health coverage is part of the benefits package, which is part of the employee's salary. If they stopped providing it, they would need to increase the salary to compensate - or workers may go elsewhere.

There will be no "Government Plan" because even in the health insurance exchanges, it will be Private Insurance companies providing the coverage, many companies and plans to choose from, unlike employer plans where you are stuck with whatever company and plans your employer picks for you.

Also, the company has a pool of 63 people. The insurance exchanges will have a much, much larger coverage pool - tens if not hundreds of thousands of people. A bigger coverage pool means much lower premiums. If the company pays their employees crap, the employees will get subsidies (pro-rated) based on their income to help pay for those lower premiums.

Insurance companies get more customers, customers pay lower premiums and have more choice. Seems Win-Win to me.

[bakulaji]

My Dear Ray Martin.

I am Sid Harth.

I don't mind CBS hire a professor, an accountant, a politician, a propaganda person or a messiah to make the Health Care law more complicated than necessary.

A child cannot understand the intricacies of any law, much less a law being discussed. What is your point?

Throw away the law because it is not people friendly? People being the cry babies, starting from Mitt Romney, Boehner-Boss-Man, Nikki Haley, et al?

The same Nikki, alleged tax fraud person, now complaining the Health Care law might increase tax burden, so much so that jobs would go away?

Here is my proof:

IRS not investigating Nikki Haley for tax fraud
By Alicia M. Cohn - 03/30/12 07:21 PM ET

Why not? Nikki ain't no saint. Is she?

Come, come, tell me what is your problem?

...and I am Sid [e-mail]

[milanzm1963]

Historic moment. A huge step forward for Pr. Obama re-election!
I had NO doubt that Supreme Court Justice will conform that health care reform was constitutional , because : This reform " is NOT about politics. This is about people's lives. This is about peoples businesses. This is about our future" - Pr Obama.
Health care reform was HISTORIC moment, making affordable health care accessible to more Americans ( health care coverage was extended to more than 30 million uninsured people). I am glad that CBO estimated that health care law will cut the deficit by $ 124 billion, in period 2012 - 2021. ( WP on 10.15.11)...This reform is so for us, our children, next generations... for USA future.