Affordable Care Act Frequently Asked Questions

Where can I find a copy of the health care laws?
The U.S. House and Senate passed two laws that contained laws aimed at reforming health care in the United States. The Patient Protection and Affordable Care Act was signed into law first, and seven days later the Health Care and Education Reconciliation Act of 2010 was signed into law. Together, these two bills are called the Affordable Care Act.
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Am I required to purchase health insurance?
Most likely, Yes. The health care laws include an individual mandate that requires most individuals to maintain government-approved insurance coverage for themselves and their dependents starting in 2014. Minimum essential coverage includes coverage under public programs (e.g. Children’s Health Insurance Program, Medicaid, or Medicare) and coverage purchased in the private market that meets government standards.

Individual Mandate Tax. 

The tax is phased in between 2014-2016. In 2016, the penalty is 2.5 percent of applicable income or $695, whichever is greater. The $695 tax is indexed for inflation after 2016 and will be enforced by the withholding of annual IRS tax refunds. Dependents under the age of 18 are taxed at a rate of 50 percent of the applicable adult fine.

Some Exemptions. 

Exemptions are provided for individuals with income below the personal exemption amount for the applicable tax year, certain religious groups, illegal immigrants, incarcerated individuals, and members of Native American tribes.
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What are the exchanges?
Rather than having government health care as some lawmakers advocated, the new health care laws will create “American Health Benefit Exchanges” in 2014. These exchanges will provide individuals and small businesses with information about government-approved health plans. These exchanges are designed to provide information about plans, options, and costs. For more information, visit http://www.healthcare.gov.

Premium Credits. 

Through the purchase of coverage through an exchange, some individuals will be eligible for premium assistance credits from the federal government. To be eligible for a premium credit, individuals must have household income of less than 400 percent of the Federal Poverty Level ($94,200 for a family of four in 2013).
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How do I enroll in health care programs created by the health care law?

For information on enrolling in the exchanges, please visit http://www.healthcare.gov.

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How much does the Affordable Care Act spend?
The health care law spends $2.5 trillion over 10 years of full implementation (2014-2023), and these laws represent a restructuring of one-sixth of the American economy.

Misleading Statements on Deficit Reduction.

Many supporters claim that this legislation will decrease the deficit between 2010 and 2019; however, that is because many of the taxes begin in the years 2010 and 2011, but most of the spending provisions in the bill do not begin until 2014. When estimating the cost of the bill, the Congressional Budget Office considered 10 years of taxes, but only six years of spending, resulting in an incomplete picture of the total cost of the bill.
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What are the tax increases in the bill and will they affect me?

The health care reform laws include nearly $800 billion in new taxes, fees, and penalties on individuals and businesses. According to the nonpartisan Congressional Budget Office these taxes will be passed along to consumers in the form of higher premiums, higher prescription drugs costs, and more expensive medical devices. Some of these taxes include:

  • 40 percent excise tax on high-cost insurance plans. High costs plans are defined as plans where coverage exceeds $10,200 for individuals or $27,500 for families (starting in 2018).
  • 2.3 percent tax on medical device manufacturers.
  • 0.9 percent increase in the Medicare payroll tax.
  • 3.8 percent Medicare tax on investment income. This tax will apply to the sale of single family homes, townhouses, co-ops, condominiums, and even rental income.
  • $14.3 billion annual tax on health insurance companies.
  • $2.8 billion annual tax on drug manufacturers.

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How does this bill affect Medicare?
Medicare cuts will reduce access to care. The new health care laws will cut Medicare by $716 billion, and the cuts to hospitals, home health agencies, nursing homes, and hospice facilities started immediately. The nonpartisan Chief Actuary of the Centers for Medicare and Medicaid Services (CMS) issued a report on the effects of the new law and stated that it will jeopardize access to care for seniors because payment reductions to providers could result in doctors choosing to no longer accept Medicare patients.

Medicare Advantage Cuts.

Included in the cuts to Medicare is a $300 billion cut to Medicare Advantage (MA) plans. One in four seniors, or 11 million Americans choose Medicare Advantage for their health care insurance, largely due to the fact that MA plans often provide more comprehensive care for seniors compared with traditional Medicare. The CMS report estimates that enrollment in such plans will decrease by 50 percent as the plans reduce extra benefits that they currently offer. Seniors leaving the private plans would still have health insurance under traditional Medicare, but millions of beneficiaries will face higher out-of-pocket costs and will have fewer choices.

Unelected Bureaucrats Will Make Benefit Decisions.

A new federal board called the Independent Payment Advisory Board will be created with the power to make binding recommendations for Medicare, putting unelected Washington bureaucrats between patients and their doctor.

Unsustainable Payments To Doctors.

Despite the fact that doctors are at the center of health care, the health care reform laws excluded language providing adjustments to the Medicare formula that governs physician reimbursement levels, also known as the “doc fix.” As a result, Congress has continued to pass a series of short-term extensions, leaving doctors and seniors with uncertainty about future reimbursement levels. The lack of a long-term doc fix provision was partly by design since bill supporters feared that its inclusion would have raised the overall cost of the Patient Protection and Affordable Care Act by hundreds of billions of dollars.
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How do these laws affect Medicaid?

Expands Medicaid.

Initially, States were required to expand Medicaid eligibility to all individuals earning up to 138 percent of the federal poverty level ($32,500 for a family of four in 2013). Prior to the law, low income, childless adults were generally ineligible. However, on June 28, 2012, the United States Supreme Court ruled that while the expansion of the Medicaid program may be constitutional, the provision that would have stripped states of all Medicaid funding if they did not participate in the expansion was ruled unconstitutional. Now states are allowed to decide if they would like to participate in the expansion.

States Will Foot The Bill.

Medicaid is a financial partnership between states and the federal government. The law only provides states with the full funding needed to expand their Medicaid program through 2016, subsequently leaving state taxpayers to pay part of the cost. Many states could not afford their Medicaid program before the health care bill was signed into law, and many state budgets will be subject to intense pressure if they choose to expand. The expansion also prohibits states from making changes to the program in an effort to reduce costs. 

Inability To Find a Doctor.

Medicaid currently pays physicians 40 percent below rates charged to private insurance plans. Many physicians already limit how many Medicaid-eligible patients they see or simply choose not to accept them, creating a situation where beneficiaries may have a Medicaid insurance card, but no access to a physician who will see them. The influx of newly eligible Medicaid beneficiaries will only compound this problem.
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How do these laws affect small businesses?

Requirement to Provide Health Coverage.

Small businesses with more than 50 full-time employees that do not offer government-approved health insurance coverage will be required to offer approved health insurance or pay a fine beginning in 2014. The fine imposed from this new requirement is estimated to raise $52 billion off the backs of small businesses.

Full time is defined as working 30+ hours per week. Seasonal employees who are full time for less than 120 days of the year are exempt from the employer mandate calculation.

Those employers who do not provide government-approved coverage will be subject to penalties.

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How are Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs) treated in the new laws?

New Caps on FSAs. 

The new health care law caps FSAs at $2,500 beginning in 2013. Previously, individuals could set aside up to $5,000 through their FSAs to help budget for certain health care expenses. The new health care laws will not only restrict the amount individuals can contribute to their FSA, but they also place new restrictions on qualifying medical expenses.

New Limits on HSAs. 

The new health care laws will change the tax provisions on HSAs, making them less attractive. HSAs will likely be prohibited from participating in the national exchange due to the fact that it could be difficult for them to meet the “essential health benefit” criteria that all health care plans must meet.
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What should have been done to reform the health care system?

Step By Step Reform.

I believe Congress should have implemented step-by-step reforms that are proven to reduce health care costs. To see health care reform principles I support, click here.

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How will this bill affect the care I currently receive?

Possible Shortages and Price Increases.

The nonpartisan Chief Actuary of the Centers for Medicare and Medicaid Services (CMS) issued a report on the likely effects shortly after the legislation was passed. The report stated that health care shortages and price increases are “plausible and even probable.” 

Employers May Drop Coverage.

A nonpartisan Congressional Budget Office report stated that 20 million people could lose their employer-sponsored coverage. Smaller employers may be inclined to terminate coverage so their workers can qualify for coverage through the exchange.
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