This is the first in a series of weekly blogs by Marcus Rey Williams MD, addressing major concerns of readers regarding healthcare reform. Dr Williams will relate relevant, up-to-date, and hard-to-find information throughout the series, which will run weekly through the end of December 2013.
The Affordable Care Act (ACA), commonly referred to as Obamacare, has been the subject of much controversy and confusion. One of the most confounding aspects of Obamacare are the penalties imposed on people who neglect to sign up for a qualifying insurance plan. Let’s take a closer look at the Obamacare penalties so that you know where your concerns should be focused.
Approximately half of individuals in the US are covered by employer-based health insurance, and another third either by Medicare and/or Medicaid. Nearly 1 in 10 Americans purchase their own private insurance policies and the rest, about 30 million, remain uninsured. A well-done video by The Kaiser Foundation and the youtoons crowd offers a witty and entertaining 6-minute video covering the basics of Obamacare, and may be viewed here. (link to: http://kff.org/health-reform/video/youtoons-obamacare-video/)
To Whom Do The Penalties Apply?
When Obamacare was first being pitched to the American public, it was made clear that people who were content with their current insurance plans would be able to keep them. People who are currently insured either on their own or through their employer do not have to worry about any penalties. However, if your current plan becomes too unaffordable to maintain, or your employer either drops their plan or decreases your employed hours to part-time, making you ineligible for coverage, then you may become subject to the penalties.
The penalties only apply to people who do not have an insurance plan of any kind. However, some of these people may also be exempt from penalties. If the most inexpensive Obamacare plan costs more than 8% of your income, you will not be penalized for not having insurance. There are also exclusions for people whose religious beliefs do not allow insurance. Native Americans are also exempt from the Obamacare penalties. The business mandate and its penalties do not kick-in until 2015, and do not cover small businesses with less than 50 employees.
When is The Deadline Really?
The penalty for Obamacare is applied to anybody who is without insurance for three consecutive months after the Affordable Care Act goes into effect for individuals. The open enrollment period continues through the end of March 2014. However, once you’ve signed up for a plan, it does not go into effect until approximately a month later. In effect, this delay means that you must have a valid insurance plan before the end of February 2014. (Currently there is some congressional movement to delay the individual mandate further by 30 or more days.)
How Much is the Penalty?
The initial penalty for being uninsured starts at $95 per adult and $47.50 per child. There is a $285 limit per family. The actual amount owed increases relative to your total household income. These penalties will increase up until 2016.
How Are the Penalties Paid?
The Obamacare penalties are paid through your tax returns. The new tax forms will include a section for your insurance and any penalties that are owed. Penalty fees that you owe will be subtracted from your tax refund. If you owe money that is greater than the amount of your refund, you will be required to mail a check to the IRS for the value of the difference. If you do not, the money will be removed from future tax refunds and further penalties may apply.
The Future Of The Penalties?
Regardless of your personal opinion on the ACA, crowd experience has made plain that cats don’t grow into kittens, dogs don’t turn into puppies, and penalties or “taxes” as the Supreme Court termed them, never seem to go down, only up. There also is a built-in incentive to increase the penalties to force younger people to purchase insurance, in order to offset the increased cost of taking care of older Americans. Don’t be surprised if the penalties are expanded to businesses with fewer than 50 employees sooner rather than later, since small businesses employ more total individuals nationally than businesses with 50 employees or greater.
What about Obamacare Alternative Programs?
The ACA includes a number of alternative delivery systems to foster competition and innovation. Direct Primary Care (link to:http://www.dpcare.org) is a developing novel and affordable subscription plan, which has also been described as “blue collar concierge care” and is written into the Obamacare legislation. Some DPCs provide comprehensive Patient-Centered Medical Homes (PCMH) (link to en.wikipedia.org/wiki/Medical_home) and others have demonstrated remarkable cost-saving benefits in demonstration projects around the country. When combined with a wraparound insurance policy, they may become qualifying plans.
Adjusting to the new rules imposed by Obamacare may be a confusing ordeal for some. However, if you are sure to get a proper insurance plan and stay informed of your rights, you will not find yourself owing any money that you shouldn’t. Maybe. Probably. Almost certainly. Unless, of course, it changes.
Where Can I Find A Plan That Qualifies?
The Insurance Exchange: Pennsylvania is one of the states, which opted into Obamacare and agreed to offer their own insurance marketplace. In return, Medicaid will be expanded in PA at mostly Federal expense. The Federal Insurance Marketplace is currently handling the PA application process, so for now they are one and the same and can be accessed here: www.healthcare.gov/. The exchange offers both individual and business plans.
Alternative Programs: Direct Primary Care is exceptionally affordable for those with high deductible plans, HSAs, HRAs, and FSAs. Through DPC membership, the working underinsured and uninsured can save money by receiving regular private physician illness and preventive care. This precludes unnecessary visits to high-cost environments like hospital emergency departments and otherwise avoidable, astronomically expensive, or even bankruptcy-inducing, hospitalizations. However, they do not alone exempt individuals from the penalties. Newer strikingly affordable wraparound policies may be ideal for micro, small, and self-employed businesses. Information regarding current local availability of such wraparound and other types of cost-effective coverage may be accessed here: www.obamasavings.com.
Marcus Rey Williams MD, is a board certified Internal Medicine physician
and medical director of NewPath MD, P.C. www.newpathmdpc.com
Located In The Exton Medical Arts Building
80 West Welsh Pool Road
Exton, PA. 19341-1225