By Larry W. Lockwod, Jr.
Since I do personal injury cases, and have been a lawyer doing mostly personal injury cases for eighteen years, I probably know more about how insurance works, and how it fails, than lawyers who work with other areas of law. I spend much of my time looking through medical records, counting up medical bills, and dealing with clients about their medical care, bills, insurance and insurance companies.
The stated goals of the act, which was passed into law on March 23, 2010, includes decreasing the number of uninsured American citizens and reducing the cost of health care for individuals through cost controls, increased participation in group health plans, competition among health plans, and increased quality and efficiency of health care delivery. I am not writing this to debate the politics of the act. There is reasoned and sincere debate whether it is fair, will be more or less expensive than proposed, and how well it will or will not work. That’s politics. As a lawyer, I can read the law, and tell what it means. We lawyers must constantly remind our clients; “we don’t write the law, we help people understand it, and work with it.” I determined that I would boil Obamacare down to its bare essentials, and write as simply as possible how it would effect most of our clients.
I will admit to you that it was no easy task. I didn’t trust any single external source of information. I relied on many legal sources, and the act itself. When I say “legal sources,” I mean scholarly, written by lawyers for lawyers, boring, treatises and articles that only a lawyer would want to read. This is my best attempt at a very short guide to Obamacare.
How Obamacare effects you, can be best determined by what category you may fit in.
YOU ARE YOUNG
If you are under 26, your parent’s plan must allow your parent to add you to his or her policy, regardless of whether you live at home, attend school, or are married. Exception: Some health plans need not extend benefits to young adults if they can get coverage at work; this exception goes away in January 2014. Children under 19 with pre-existing conditions cannot now be denied coverage by most insurers. Until 2014, however, insurers can charge more for premiums than they charge for someone without such conditions. Even if you don’t have a parent that has a group plan, there is still good news. If you don’t have a group plan because you are a college student, or as many young people are right now, unemployed or underemployed, you will be able to buy into a group plan.
YOU ARE OLD, AND ON MEDICARE
Nothing of substance, as far as I can tell, is going to change for you – there will be some tweaking. If you are on Medicare now, you will most likely continue to be on Medicare, and in fact, some things, especially in the area of wellness and preventative care that was previously not covered, will be covered.
YOU HAVE A PRE-EXISTING CONDITION
Adults with pre-existing conditions who have been without coverage for at least six months may be eligible for subsidized coverage through the temporary Pre-Existing Condition Insurance Plan in their state. Previously, if you had a pre-existing condition, private group policies could exclude coverage for that condition altogether, or require a waiting period before coverage would begin. If you qualify for a group plan, no group plan may exclude coverage for your pre-existing condition for any period of time.
YOU ARE REALLY, REALLY SICK AND ARE GOING TO HAVE A LOT OF MEDICAL BILLS
A group plan may not establish annual or lifetime dollar value benefits limits for any participant or beneficiary for essential medical care; though a plan may establish lifetime limits for non-essential benefits. Previously, many if not most group plans could cut-off benefit coverage at a certain level, leaving the very, very sick to fend for themselves. Essential benefits has been expanded to include, among other things, psychiatric care, prescription services, maternity care, behavioral health services such as substance abuse services, pediatric eye and oral care.
YOU HAVE BEEN REALLY SICK FOR AWHILE, OR YOU HAVE A GENETIC PREDISPOSITION TO HAVING AN ILLNESS, OR SICKNESS
A plan may not exclude you, or charge you more based on your past receipt of medical care, your genetic disposition, your medical condition, health status, disability or evidence of insurability.
YOU GOT SICK REALLY QUICK, AND/OR ARE A WOMAN
Health insurers may not require pre-authorization for emergency services; must cover emergency services provided by any providers, even those not on a list, and may not require a “referral” for OB/GYN care.
YOU ARE A BUSINESS
The law does not require employers to offer health insurance to employees, UNLESS that businesses has 50 or more employees and does not offer coverage, or that insurance coverage is too expensive or does not meet minimum standards (as set forth in the law.) In that case, the employer may have to pay penalties. Companies with fewer than 50 employees won’t face any penalties for not offering coverage to employees. These small employers represent about 75 percent of the firms in the United State.. If a company doesn’t offer insurance, its employees can buy insurance on their own in the online marketplace, which will supposedly offer the benefits and low prices of a “group plan,” without the employer group.
HIGH INCOME EARNERS
Two new taxes in 2013 will help fund the Medicare program that covers people over 65. These taxes apply only to income above $200,000 for individuals and above $250,000 for couples who file jointly. For high income earners, there may be extra payroll tax of 0.9 percent Medicare on wages over $200,000 (individual) or $250,000 (family). There is also a new unearned income tax of 3.8 percent on unearned income, including investments, interest, dividends, annuities, rent, royalties, certain capital gains, and inactive businesses. Exemptions include income from tax-exempt bonds, veteran’s benefits, and qualified plan distributions such as those from an IRA or 401(k). The new tax does not apply to profits from the sale of a principal residence (i.e. your family home,) except in rare cases.
YOU DON’T HAVE INSURANCE, AND DON’T WANT INSURANCE.
It is estimated that those who have insurance, pay over $1,000 more per year in insurance premiums and for medical care costs because the health care industry shifts the losses occasioned by treated uninsured persons who cannot pay to those who can and do pay. In addition, the societal costs of the uninsured are huge, with 62% of personal bankruptcies (and the associated family stress, economic uncertainty, and difficulties) being caused by large medical bills for uninsured care.
Starting in 2014, if you don’t have insurance, and don’t qualify for an exemption, then you have to get insurance, or pay a tax penalty, and that tax penalty goes up sharply after 2014. The exemptions include having insurance through your employer or purchase individual insurance on your own; You already have insurance through Medicare, Medicaid, Children’s Health Insurance Program (CHIP), Veteran’s Administration and/or Tricare for active duty and retired military, Indian Health Services, or a health-care sharing ministry, or you would have to spend more than 8 percent of your household income on the cheapest qualifying health insurance plan, even after tax credits and subsidies.
Boiled down to its essentials, if you can afford health insurance, you can’t choose not to have it without paying a large tax penalty that will eventually equal what you would have had to pay for the least expensive qualifying health insurance plans. That penalty will be $95 in 2014, $345 in 2015, and $695 thereafter indexed to the CPI.
The bill has very, very extensive legislation regarding the development of exchanges, which seek to standardize medical benefits, increase the pool of beneficiaries, cap profits of insurance firms, and require reporting and publication of profit margins. The bill also has extensive legislation requiring the collection of information intended to help identify areas where medical care is insufficient, products are defective, drugs are dangerous, or treatment is substandard. Interestingly, the bill prevents the collection of information regarding the lawful possession of firearms. Boiled down, in this humble lawyer’s opinion, those of you who are working and have insurance will see little change — perhaps more benefits a lesser cost. For those without insurance, but are working, generally the “working poor,” you will either get insurance from your employer, or have more cost effective insurance options that were not available before (and a stiff incentive to pay for it). For medium and big businesses owners, the accounting/tax/payroll firm that you have been using for years will tell you that you have to offer partially paid health insurance to your employees. For the wealthy individuals among us, you will have to pay a little more into Medicare, a bit more in taxes, and eventually, if you still have that big bankroll at age 65+, you will get a bit less out of Medicare than those with less financial means.