This is an updated version of a story that was last published on April 13.
The new health law signed by President Obama this spring contains the most sweeping changes to the American health system in a generation.
The law will extend health insurance to 32 million currently uninsured Americans by 2019, and will also have an impact on how nearly every American buys insurance and what insurance must cover.
Here’s how you might be affected:
Q: I don’t have health insurance. Will I have to get it, and what happens if I don’t?
A: 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 percent of income, whichever is greater, and rise to $695, or 2.5 percent of income, by 2016. This is an individual penalty; families have a maximum penalty of $2,085. Some people are exempted from the insurance requirement because of financial hardship or religious beliefs or if they are American Indians.
Q: I want health insurance, but I can’t afford it. What do I do?
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A: Depending on your income, you might be eligible for Medicaid. Medicaid is the state-federal program for the poor and disabled, which will be expanded sharply beginning in 2014. For the first time nationwide, low-income adults without children will be eligible, as long as their incomes don’t exceed 133 percent of the federal poverty level, or $14,404, according to current poverty guidelines.
Q: What if I make too much for Medicaid but still can’t afford coverage?
A: 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. These will start operating in 2014.
Individuals and families can get help to pay premiums if their incomes are between 133 percent and 400 percent of the poverty level. That’s $14,404 to $43,320 for individuals and $29,326 to $88,200 for a family of four.
The subsidies will be granted on a sliding scale. For example, a family of four earning 150 percent of the poverty level, or $33,075 a year, will have to pay up to 4 percent of its income on premiums. A family with income of 400 percent of the poverty level could pay up to 9.5 percent.
Q: Will the law make it easier for me to get coverage, even if I have health problems?
A: If you have a medical condition, the law will make it easier for you to get coverage. Health insurers will be barred from rejecting applicants based on health status in 2014.
Until the new exchanges are up and running in 2014, the law created temporary high-risk insurance pools for people with medical problems who have been uninsured at least six months. The new risk pools which will be run by the states and the federal government – are scheduled to start accepting members in September.
Also, starting Sept. 23, 2010 insurers can no longer deny coverage to children with pre-existing conditions and insurers will be banned from setting lifetime coverage limits for adults and kids.
In 2014, annual limits on coverage will be banned.
Also in 2014, new health insurance policies sold on the exchanges will be required to cover a minimum range of benefits, including hospitalizations, doctor visits, prescription drugs, maternity care and certain preventive tests.
Q: How will the new law affect young adults?
A: If you’re an unmarried adult younger than 26, you can stay on your parent’s insurance coverage as long as you are not offered health coverage at work.
This benefit will begin Sept. 23 or whenever the new plan year begins – January 2011 for many health plans. Some insurers, including Aetna and UnitedHealthcare, have decided to offer this benefit immediately, but many employers have deferred.
Q: I own a small business. Will I have to buy insurance for my workers? What help can I get?
A: 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.
These tax credits of up to 35 percent of the cost of premiums have already been made available.
Firms with more than 50 employees that do not offer coverage will have to pay a fee of up to $2,000 per full-time employee if any of their workers get government-subsidized insurance coverage in the exchanges. The first 30 workers will be excluded from the assessment.
Q: I’m over 65. How will the legislation affect seniors?
A: The Medicare prescription-drug benefit will be improved substantially. This year, seniors who reach a certain threshold of out of pocket drug expenses known as the “donut hole” will get $250 to help pay for their medications.
Beyond that, drug company discounts on brand-name drugs and federal subsidies and discounts for all drugs will gradually reduce the gap, eliminating it by 2020.
Meanwhile, government payments to Medicare Advantage, the private-plan part of Medicare, will be frozen starting in 2011, and cut in the following years. If you’re one of the 10 million enrollees, you could lose “extra” benefits that many of the plans offer, such as free eyeglasses, hearing aids and gym memberships.
To cushion the blow to beneficiaries, the cuts to health plans in high-cost areas of the country such as New York City and South Florida – where seniors have enjoyed the richest benefits – will be phased in over as many as seven years.
Beginning this year, the law will make all Medicare preventive services, such as screenings for colon, prostate and breast cancer, free to beneficiaries.
Q: How much is all this going to cost?
A: The package is estimated to cost $938 billion over a decade. But because of higher taxes and fees and billions of dollars in Medicare payment cuts to providers, the law is actually projected to narrow the federal budget deficit by $143 billion over 10 years, according to the Congressional Budget Office. Still, the cost of the bill could rise another $115 billion if Congress approves additional spending, the CBO said.
If you have a high income, you face higher taxes. Starting in 2013, individuals who earn more than $200,000 a year and couples who earn more than $250,000 will pay a Medicare payroll tax of 2.35 percent. That’s up from the current 1.45 percent they pay.
Also, people at these income levels face an additional 3.8 percent tax on unearned income like dividends.
Starting in 2018, the law will also impose a 40 percent excise tax on employers who offer insurance that exceeds $10,200 a year for individuals and $27,500 for families. The tax is often called the “Cadillac” tax.
The law will also limit the amount of money you can put in a flexible spending account to pay medical expenses to $2,500 starting in 2013.
Want a tan without going outdoors? Tanning booths will add a 10 percent tax to your bill starting Sept. 23.
Q: What will happen to my premiums?
A: That’s hard to predict and the subject of much debate. People who are sick might face lower premiums than otherwise because insurers won’t be permitted to charge sick people more. Healthier people might pay more. Older people could still be charged more than younger people, but the gap couldn’t be as large as it is now.
The bigger question is what happens to rising medical costs, which drive up premiums. Efforts in the legislation to control health costs won’t have much of an effect for several years.