ObamaCare Basics & Facts: Everything You Should Know

Written by Ashley Henshaw. Posted in Insurance

ObamaCare Basics & Facts: Everything You Should Know

The Patient Protection and Affordable Care Act (PPACA), also known as ObamaCare, is a bill that was signed into law in 2010 to reform the health care industry. Since it was first introduced, ObamaCare has become a hot topic in the political world, with proponents and critics of the plan weighing in on the various aspects of the bill. The PPACA can be somewhat complicated for the average citizen to understand – that’s why we’ve narrowed it down to the need-to-know facts about ObamaCare.

Requirement To Purchase Insurance

One thing that many Americans are particularly interested in concerning ObamaCare is the requirements to purchase insurance. Starting in 2014, individuals who don’t have any health care coverage will have to purchase insurance. The penalty for failing to do so will be a fine with a minimum payment of either $99 or 1% of income annually. That penalty can increase based on the situation, so it’s important that every person make an effort to secure health insurance coverage. Those who can’t afford coverage may qualify for Medicaid.

(Also read: Things To Know Before Purchasing Health Insurance.)

Access To Preventative Services

A major aspect of the ObamaCare bill is preventative services. The goal of making preventative services a priority is to reduce health care spending in the long run by avoiding illness and disease whenever possible through early detection methods, regular health checkups, immunizations, etc. ObamaCare requires that all insurance plans cover preventative services starting in January 2014, many of which will require no out-of-pocket costs for consumers.

Incentives Based On Wellness Programs

Wellness programs are becoming more popular in the workplace since they have the potential to reduce health care costs for the employer. ObamaCare allows employers to make adjustments to premiums and contributions based on an employee’s participation in these types of wellness programs. This provides an incentive to workers to get involved in wellness programs that promote healthy lifestyles. Employers who choose to offer these incentives will have to monitor employee participation in order to make adjustments to health care costs.

Prescription Drug Coverage For Seniors

An issue that many seniors have faced with their health care is coverage for their prescription drugs. With Medicare Part D, there is a coverage gap that has lead to financial struggles for many older Americans. Although seniors will continue to pay for about 25% of their prescription drug costs under the new law, ObamaCare will eliminate the coverage gap by 2020.

(Also read: Effective Ways To Save Money On Prescription Medication.)

Removal Of Pre-Existing Condition Clauses

Traditionally, insurance companies have been able to deny coverage to individuals based on a pre-existing condition. ObamaCare will removal this clause from all insurance company practices to ensure that everyone can have access to affordable health care.

Caps On Insurance Carrier Premiums

Another part of ObamaCare is that it will place a cap on insurance carrier premiums. This protects consumers from hikes in rates that are made by insurance companies purely for profit. In fact, any insurance company will have to provide detailed justification for any rate hike of over 10% and also have to disclose how their funds are being spent.

Tax Increases

There will be several tax increases created in response to ObamaCare being signed into law. Those tax hikes include:

  • Medicare Payroll Tax of 2.35% for individuals making over $200,000 and married couples making over $250,000 a year.
  • Taxes on medical device manufacturers, health insurers and brand name drugs.
  • Possible taxes on unearned income (like dividends and interest, for example) for individuals with higher income.
  • 40% tax for employers on employer-sponsored benefits which exceed $10,200 per year for individuals or $20,500 per year for families (starting in 2018).

ObamaCare may have some pros and cons, but an important factor to keep in mind is the savings that this new bill will offer. It’s projected that the deficit will be reduced by billions of dollars thanks to the changes made in response to this bill. In addition, many people who previously did not have access to health care coverage may be able to seek treatment for conditions and live healthier lifestyles.

Sources

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Ashley Henshaw

Ashley Henshaw

Ashley Henshaw is a freelance writer based in Chicago. She is a graduate of Loyola University Chicago with a bachelor's degree in English. She has previously written about health, fitness, finance and travel topics for sites such as LIVESTRONG.com, USA Today, The Huffington Post, AOL's City's Best, All Things Frugal and Campus Explorer.

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