The revised health-care reform bill passed by the House of Representatives will eventually affect nearly every American if, as expected, President Barack Obama signs it Tuesday and the Senate approves "reconciliation" measures to the House version. Here are questions and answers involving some common scenarios.
Q: I’m 28, single and healthy. I don’t have health insurance. Is it true the new law would penalize me unless I buy a health care plan? If so, why?
A: Yes, you would be penalized, through a phased-in system that kicks in four years from now: $95 or 1 percent of your taxable income in 2014, whichever is greater; $325 or 2 percent of your taxable income in 2015; $695 or 2.5 percent of your taxable income in 2016 (with a household maximum of $2,085); and amounts afterward that are based on the cost-of-living adjustment.
Here is the government’s justification for penalties: You are now what economists call a "free rider." Your decision not to pay anything for health care, they say, is tantamount to ignoring the ever-present risk that you might get sick or injured. And if you do get sick or injured now, your care is effectively paid through taxpayer funds — through charity or emergency care, for example — even though you lack the insurance plans that other people pay for. For health-care reform to be sustainable, and to make financial sense for insurance companies, even relatively healthy people must have a plan. They can’t wait until they get sick or hurt to buy one.
Q: Okay, so individuals will be legally mandated to enroll in health plans starting in 2014. But what if I don’t have enough money to buy one?
A: Until you turn 26, you will be eligible to be picked up by your parents’ coverage plan, starting six months after the bill becomes law — as long as your employer doesn’t offer you coverage. (New Jersey actually already allows people to be covered under their parents’ plans until their 31st birthday.)
In other cases, starting in 2014, when the requirements for individuals kick in, you will be eligible for subsidies if your income is between 133 percent and 400 percent of the federal poverty level. (In 2009-10, the federal poverty level in the 48 contiguous states and Washington D.C. was $10,830 for one person, $14,570 for a family of two, $18,310 for a family of three, and $22,050 for a family of four). If you wish, you could apply for an exemption based on financial hardship.
If your income is less than 133 percent of the federal poverty level, you will be eligible for Medicaid under that program’s expansion.
Q: I have chronic health problems. I am now able to treat them through health insurance that is provided by my employer. What happens if I lose my job?
A: Ninety days after the bill becomes law, you would be eligible for insurance from special high-risk pools for people with pre-existing conditions. The price you pay for it, and whether you receive subsidies, would depend on your new income. The pools are meant to be a temporary solution until the state-run exchanges come into effect by 2014. At that point, insurance companies would not be able to deny insurance to people based on pre-existing conditions.
Q. What about increases in Medicare tax on earned income?
A. The bill also increases the individual’s share of Medicare tax currently imposed on salaries starting at $200,000 for individuals and $250,000 for couples from the current 1.45 percent to 2.35 percent.
The combination of the new Medicare taxes and Obama’s budget proposals, if they were in place this year, would cost a married couple with a household income of $5 million an extra $287,100 in taxes, according to an analysis by the consulting firm Deloitte Tax in Washington.
The Medicare taxes superseded an earlier Senate proposal to tax high-value employer-provided insurance coverage, dubbed "Cadillac plans." That 40 percent excise tax was delayed until 2018, when it would begin to apply to benefits over $10,200 for individuals and $27,500 for couples.
Q. Can I shop for a new plan in the health insurance exchange? What are the exchanges, anyway?
A. It depends. If you’re eligible for Medicare, you cannot join. If you work for a large firm — more than 100 employees — that offers you insurance, you can join only if you spend a certain percentage of your income on your plan. The exchanges are meant mostly for small businesses and the self-employed or unemployed.
The state-run exchanges are supposed to act like a marketplace where consumers can shop for deals from private insurers or learn more about different plans that have a regulated set of minimum benefits. What the exchanges will look like — a retail shop in the mall, for instance, or just an online website — will be decided later. The exchanges must operate a call center and offer at least four tiers of plans by cost — platinum, gold, silver and bronze. Federal subsidies will be offered based on income.
The exchanges should be up and running by 2014, but if a state hasn’t done so by then, the federal government can step in.
Q. I’m a senior on Medicare. Will the bill change how I buy prescription drugs?
A. Yes. The bill will close the so-called "doughnut hole" in the Medicare Part D program, which leaves a gap between an initial spending limit and catastrophic coverage. The new legislation will give recipients stuck in the gap $250 and gradually provide 75 percent discounts on brand-name and generic drugs by 2020.
But Medicare Advantage, a private plan with roughly 10 million enrollees, will lose some government subsidies, which will be frozen in 2011. Spending levels will then be reduced further the year after that, but will be phased in over seven years. (SOURCE: House of Representatives)
Compiled by staff writers Jeff Diamant and Rohan Mascarenhas.
Sources: Center for Studying Health System Change, Kaiser Family Foundation, U.S. Department of Health and Human Services, U.S. House of Representatives
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