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OBAMACARE EXPLAINED This page is designed to help you get past all of the confusion concerning Obamacare (also called the Affordable Health Insurance Act). If you are presently have decent low cost insurance through your employer then there is no reason to read further unless you believe this situation will change. If your employer provided insurance is expensive (over 9.5% of your income) or the insurance has lousy benefits (the policy covers less than 60% of costs) you are eligible for health insurance through Obamacare. Also, if you are over 65 years old and on Medicare, you will not be eligible for Obamacare. Hopefully, you have enough credits earned for Medicare coverage. Regardless of what you think about the law, if you don't have medical coverage due to cost or a pre-existing condition, you need to look at Obamacare. Your cost of insurance will probably go down and a pre-existing condition is no longer an issue. And if you could not get health insurance in the past, now you can. For at least the last 15 years, every year I have had at least 5 or clients who filed for bankruptcy. Amost all of them filed due to medical bills. Also, I have heard too many horror stories about medical coverage being denied or revoked due to a seemingly bogus item, sometimes after several years of premium payments. If you are under 30 years old and single, most likely you don’t feel like there is a need for medical insurance. While a serious illness (e.g. land in the hospital) is not very likely, an injury requiring expensive medical care is. For proof visit the waiting room of an orthopedic surgeon. And if you end up with an expensive medical problem you may have to wait up to a year before you are able to buy medical insurance. Finally, based upon your income, the cost of medical insurance could end up at either no cost or a very low cost after taking into consideration the insurance subsidy credit (for insurance subsidy credits are press here). Finally, don't pay too much attention to the kinky TV ads, expecially the ads picturing a scarry Uncle Sam. The ads are funded by very wealthy individuals who for sure have medical insurance coverage for their entire families. As the final details on this topic evolve, this page will be updated. Are you eligible for health Generally, you are eligible for health insurance under Obamacare if you are over 18 years old and under 65 years old. However, if you are under age 26 and being claimed as a dependent by another person, you are not eligible. No longer can you be denied coverage due to a pre-existing condition. How do I purchase health insurance If you live in Illinois or Indiana, click for the website - WWW.healthcare.gov and follow the directions. The reports that I have heard indicates that the website is working after a horrific start in October. Also, the site is very secure. Also, not be alarmed at the questions concerning your identity (one of the questions involved my Ford Focus). I was asked the same question when I applied for a credit card; apparently, the government is using a commercial database. You will be probably be financially ahead purchasing your health insurance through your state specific exchange because you may be able to have the US Goverment pay for part of all of the cost of your health insurance. This government credit is in the form or a credit that is discssed next. In any case, before deciding to go with insurance through the state exchange, compare the exchange's products with other medical insurance policies (not offered through the governement exchange). If you decide to go through a broker, and not the insurance exchange, keep in mind that the broker financially benefits if you purchase the policy though him; he earns a commission. There are no commissions involved with the government run insurance exchange. Also, if you want to look at the insurance products offered by the government sponsored exchange, always start your search with the US Government website, WWW.healthcare.gov. If you use a search engine (e.g.Google or Bing) you may end up on one of the Koch Brothers sponsored websites or worse, another ad showing a kinky Uncle Sam. Are you eligible for a credit to help If you purchase your health insurance through an government run insurance exchange, and you meet fairly generous income requirements, you will be entitled to a government credit that will reduce your cost of your medical insurance. In many cases, after taking into effect the government credit you will get your medical coverage for free. The credit will be available to indivuduals applying for single coverage and families applying for family coverage. The income ranges are up to $45,560 of "modified adjusted gross income" for a individual up to $94,200 for a family of four individuals. The income ranges are higher if the the family members exceed four individuals. The income requirements are based upon fairly complex calculations. To make life easier, you can use any number of website that will calculate both your cost of mecdical insurance and a credit that could reduce your net cost to $-0-. If your insurnace exchange website does not have a calculator, you can use the cost calculator on the Keiser Foundation website. For purposes of this calculator, you need to estimate your 2014 income. Most likkely, you will be able to use your 2013 income as a guide. This element will probably be clarified shortly. If you are entitled to the government credit, you can elect to have the credit off set the monthly cost of your medical insurance or you can claim the credit on your tax return for that year. Most likely, if you are entitled to a government credit, you will elect to have the credit offset your montly cost of your medical insurance. What income counts for purposes Generally, your “adjusted gross income” from your tax return (with the modifications discussed next) is the number you start with. The income of family members that will be covered under your family heath insurance policy needs to be added to your income. If the particular family member is required to file their own Federal income tax return, their "modified adjusted gross income" is included with your income. However, if the particular family member has income but it is below the threshold for filing a tax return, you ignore his or her income. The estimated threshold for 2014 tax return filings is either unearned income of more than $950 or earned income of over $6,000. Also, if the particular family member is applying for his or her own insurance (or already has health insurance) that person's income is excluded. You can find your “adjusted gross income” by going to the following lines on your tax return:
Line 37 - Form 1040 (the long form) Line 21 - Form 1040A (the short form) Line 4 - Form 1040EZ (the EZ form) There are a few types of inome that have to be added to your “adjusted gross income” to come up with "modified adjsuted gross income"; these items are the following: 1) any tax free municipal interest your received during the year 2) the non-taxable portion of any social security benefits you received during the year, and 3) any foreign income you received that is not inclluded on your tax return 4) deductions for IRAs and student loan interest has to be added back Maximum out of pocket costs and plan types Regardless of what plan you pick, your maximum out of pocket cost is $6,350 for individual plans and $12,700 for family plans. If you qualify for a subsidy your maximum out of pocket could be much less; press here for this topic. As far as plan types go, there are 4 types of plans: 1) Bronze - the lowest cost option but the hightest out of pocket cost - these plans qualify for a subsidy (press here for this information) 2) Silver - higher cost but somewhat lower out of pocket cost than Bronze Plans, these plans also qualify for a subsidy (press here for this information) 3) Gold - higher cost but somewhat lower out of pocket cost than Silver Plans, there is no government subsidy for these plans 4) Platinum - these are the highest cost plans but with much lower out of pocket costs Your choice of plans first should start with the subsidy question. If you are applying for an individual policy and your income is low enough to qualify for a government subsidy, choose either a Bronze or Silver plan. The same rational applies if you are applying for family coverage and your family income qualifies you for a subsidy. Pres here for this topic. Are there any good sources of info other One of the best sources we have found so far is the Kaiser Foundation website. Press here to visit this website. The Keiser Foundation website also includes a calculator that you can use to determine the net monthly cost of your health insurance, after taking into effect both the monthly cost of the health insurance and the credit that reduces your cost. Press here to visit this link to use their handy calculator. You qualify for an "insurance subsidy credit", if your "modified income" is between 100% to 400% of the published US Governement povery levels. If your "modified income" is below 100% of the povery level you don't qualify for a subsidy; your options are either pay full price or go on Medicaid. The options for Medicaid are not discussed on this webpage. If your "modified income" is above 400% of the poverty level you don't qualify for a subsidy. The "insurance subsidy credit" effectively reduces the cost of your medical insurance. You can either elect to have the subsidy automatically applied to your monthy cost of health insurance or refunded to you when you file your income tax return. Electing to apply the subsidy to your monthly insurance cost is has the advantage of reducing your monthly cash requirements. However, be careful with your income estimate. You could end up with a big bill in the following year. This topic is discuessed in a different section. The calculation of the subsidy credit is explained below. Since it is fairly complex, you may want to use the Kaiser Foundation calculator. It is both easy to use and we have been told that it is fairly accurate. Press here for the Kaiser Foundation calculator. The computation of your subsidy takes into effect two factors:
The following table contains the various "modified income" levls used to compute the subsidy levels (described in the table below this table. This first table does not apply to residents of either Alaska or Hawaii.
Your subsidy is the difference between the cost of the silver plan discussed above and your maximum medical insurance premium cost based where your "modified income" falls in the following table which defines your maximum out of pocket cost for health insurance:
Your annual subsidy is the difference between the cost of the specified "Silver Plan" and your maximum out of pocket cost for health insurance. "Modified income" is discussed on this webpage and can be accessed by pressing here.
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