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Health insurance Q&A

What does the new legislation mean for you? Here are some answers.

March 29, 2010|By Phil Galewitz | Kaiser Health News

The health insurance overhaul package signed into law by President Obama on Tuesday is the most far-reaching health legislation since the creation of the Medicare and Medicaid programs.

The following is a look at the impact of the law, which will extend insurance coverage to 32 million additional Americans by 2019 but which will also have an effect on almost every citizen.

Here's how you might be affected:

I don't have health insurance. Will I have to get it, and what happens if I don't?

Under the legislation, most Americans will have to have insurance by 2014 or pay a penalty. The penalty would start at $95, or up to 1% of income, whichever is greater, and rise to $695, or 2.5% of income, by 2016. This is an individual limit; families have a limit of $2,085. Some people can be exempted from the insurance requirement, called an individual mandate, because of financial hardship or religious beliefs or if they are American Indians, for example.

I want health insurance, but I can't afford it. What do I do?

Depending on your income, you might be eligible for Medicaid, the state-federal program for the poor and disabled, which will be expanded sharply beginning in 2014. Low-income adults, including those without children, will be eligible as long as their incomes didn't exceed 133% of the federal poverty level, or $14,404 for individuals and $29,326 for a family of four, according to current poverty guidelines.

What if I make too much for Medicaid but still can't afford coverage?

You might be eligible for government subsidies to help you pay for private insurance that would be sold in the new state-based insurance marketplaces, called exchanges, slated to begin operation in 2014.

Premium subsidies will be available for individuals and families with incomes between 133% and 400% of the poverty level, or $14,404 to $43,320 for individuals and $29,326 to $88,200 for a family of four.

The subsidies will be on a sliding scale. For example, a family of four earning 150% of the poverty level, or $33,075 a year, will have to pay 4% of its income, or $1,323 annually, on premiums. A family with income of 400% of the poverty level will have to pay 9.5%, or $8,379.

In addition, if your income is below 400% of the poverty level, your out-of-pocket health expenses will be limited.

How will the legislation affect the kind of insurance I can buy? Will it make it easier for me to get coverage, even if I have health problems?

If you have a medical condition, the law will make it easier for you to get coverage; insurers will be barred from rejecting applicants based on health status once the exchanges are operating in 2014.

In the meantime, the law will create a temporary high-risk insurance pool for people with medical problems who have been rejected by insurers and have been uninsured at least six months. This will occur this year.

And starting later this year, insurers can no longer exclude coverage for specific medical problems for children with pre-existing conditions, nor can they any longer set lifetime coverage limits for adults and kids. The Obama administration insists that the law also would bar insurers this year from turning away children with pre-existing conditions. But some insurers and children's advocates say the law isn't clear on that point, and the administration has said it will draft clarifying regulations.

In 2014, annual limits on coverage will be banned.

New policies sold on the exchanges will be required to cover a range of benefits, including hospitalizations, doctor visits, prescription drugs, maternity care and certain preventive tests.

How will the legislation affect young adults?

If you're an unmarried adult younger than 26, you can stay on your parents' insurance coverage as long as you are not offered health coverage at work. This benefit will begin later this year but will require regulations clearly spelling out eligibility criteria.

In addition, people in their 20s will be given the option of buying a "catastrophic" plan that will have lower premiums. The coverage will largely kick in only after the individual has $6,000 in out-of-pocket expenses.

I own a small business. Will I have to buy insurance for my workers? What help can I get?

It depends on the size of your firm. Companies with fewer than 50 workers won't face any penalties if they don't offer insurance.

Companies can get tax credits to help buy insurance if they have 25 or fewer employees and a workforce with an average wage of up to $50,000. Tax credits of up to 35% of the cost of premiums will be available this year and will reach 50% in 2014. The full credits are for the smallest firms with low-wage workers; the subsidies shrink as companies' workforces and average wages rise.

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