By Larry W. Lockwood, 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.
I recently saw a very scary commercial on television for a book entitled “The Obamacare Survival Guide.” In that commercial, a grizzled looking fellow in a white coat and a stethoscope around his neck pretending to be a doctor, talks about “big changes that could affect you. . . “ and pitches the book. The commercial makes a point of mentioning Medicare, the program that covers most of our seniors. I haven’t read the book. The commercial, however, was clearly devised to frighten people into buying the book, and aimed at a segment of our society that feels most vulnerable to changes in medical services. I will refrain from giving a personal opinion about people who take advantage of other people for personal gain though fear tactics, and simply write this little guide.
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 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. That is all I am attempting to do, in a simple manner, here.
So what does the act mean for YOU. . . really depends on who YOU are.
YOU ARE YOUNG.
Good news for you; 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
Good news for you. 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.
Good news for you. 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.
Good news for you. 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.
Good news for you. 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
It’s a mixed bag for you, depending on how you look at it, and the tax penalties and incentives are complex. Here is a quick low down. The law does not require employers to offer health insurance to employees, however, businesses with 50 or more employees that do not offer coverage, or that offer insurance that is too expensive or does not meet minimum standards, 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 States and employ nearly 34 million people. If a company doesn’t offer insurance, its employees can buy insurance on the online marketplace, which will supposedly offer the benefits of a “group plan” without the employer group.
YOU ARE RICH
First, good for you for being rich. Whether Obamacare is good or bad for you depends, probably, on how you look at certain aspects of the bill. 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 you, 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 (basically, wall street rich people income.) 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, except in rare cases.
If you believe what many say, that the cost savings, and efficiency of the bill will bring down health care costs for all, and lead to the increased health and productivity of the workforce, leading to substantial wealth creation for all that exceeds the minor increase in costs for the rich, you win. If you think that is all a bunch of garbage and looking at the bottom line, see a small decrease in your net income, you lose – a very small bit.
YOU DON’T HAVE INSURANCE, AND DON’T WANT INSURANCE.
It may be good or bad for you, depending on how and when you look at it. If you live to be 70, never had a major medical problem, and right as a bus is about to hit you, you think “I sure did save a lot on that medical insurance I didn’t need, I KNEW IT – WINNING!- BAM, DEAD” then it’s bad for you. If, like most of the rest of us, you at some point need a surgery, hospitalization, or extensive medical care, and had insurance because of this bill, when you wouldn’t have if it weren’t for this bill, you will probably look back and say it was good for you.
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.
OTHER STUFF (which is the real bang in the bill)
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 at fewer costs. For those without insurance, but are working, generally the “working poor,” you will either get insurance from your employer, or have cost effective insurance options that were not available before (and a stiff incentive to pay for it). For medium and big businesses, the accounting/tax/payroll firm that you have been using for years will tell you that you have to offer partially business paid health insurance to your employees; and for the wealthy individuals among us, you will have to pay a little more into Medicare, a wee 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.