July 16, 2014
The Affordable Care Act started changing the country’s health-care system almost from the moment it was signed into law in March 2010. It has already expanded coverage of young adults by allowing them to stay on their parents’ plans until they turn 26, outlawed lifetime limits on what insurance will cover, lowered the cost of drugs for seniors on Medicare, caused 13 million consumers to get premium rebates totaling some $1.1 billion, and expanded access to free preventive care for patients of all ages. Last summer it survived a challenge in the U.S. Supreme Court. But all that is prelude to the transformation coming in 2014, when almost all Americans will have access to affordable health insurance that covers essential care. By Oct. 1, 2013, every state will have an insurance exchange—an organized marketplace where individuals and small-business owners can select from among the entire qualified private health plans available in their area. It’s expected that most consumers will shop on their state’s marketplace online, but they can also shop by phone, through brokers, or with the personal assistance of trained helpers called Navigators. There will also be help available for consumers who don't speak English. The health care law was intended to expand the government-run health program for low-income Americans to cover up to 16 million more people with household incomes up to 133 percent of the poverty line. That includes many at or below the poverty line who aren’t currently eligible.
However, the decision on whether or not to expand Medicaid in this way was handed back to the states as part of the Supreme Court's 2012 ruling upholding the constitutionality of the health reform law as a whole. While many states have announced they will go ahead with the Medicaid expansion, others are still deciding and some have definitely turned down the expansion. In states that decline to expand Medicaid, households with incomes below the poverty line may be left without a source of health coverage. Households between 100 percent and 133 percent of the poverty line will be allowed to purchase coverage, with significant subsidies, on their state's marketplace. All health plans must now use a standardized, consumer-friendly form to provide a uniform summary of benefits and coverage, including information on co-payments, deductibles, and out-of-pocket limits. This makes it easier for you to compare plans. Insurers must have to calculate and disclose a patient’s typical out-of-pocket costs for two medical scenarios: having a baby and treating type 2 diabetes. Employers previously could set limits on their flexible spending accounts at whatever level the chose. But now the most you can set aside tax-free for medical expenses not covered by insurance will be $2,500, with the cap increasing by the annual inflation rate in subsequent years. Plus you can no longer use FSAs to pay for over-the-counter drugs unless you have a doctor’s prescription. For people with 2012-2013 health care plans that run on a fiscal year, the cap kicks in July 1, 2013. Two Medicare-related taxes are impacting high earners in 2013. Individuals earning over $200,000 or $250,000 for couples who file jointly will see their Medicare payroll tax rate increase from 1.45 percent to 2.35 percent. They’ll also pay a new 3.8 percent Medicare tax on unearned income, including investments, interest, dividends, annuities, rent, royalties, certain capital gains and inactive businesses. Seniors who reach the donut hole the point when they have to start paying prescription drug expenses themselves now get a 52.5 percent discount when buying brand-name drugs and a 21 percent discount on generic drugs covered by Medicare Part D. As of March 2013, more than 6.3 million older adults and people with disabilities had saved $6.1 billion in prescription costs since the law was