The Clinton Herald, Clinton, Iowa

Clinton

September 19, 2013

ABCs of Obamacare: What you need to know

Here's a glossary of terms to help when studying health insurance options

WASHINGTON — Major new laws come with their own jargon, and President Barack Obama’s health care overhaul is no exception.

With the first open enrollment season kicking off for the uninsured, here are some terms consumers might want to get familiar with:

Affordable Care Act — The most common formal name for the health care law. Its full title is the Patient Protection and Affordable Care Act. Opponents still deride the law as “Obamacare,” but Obama himself has embraced that term, saying it shows he cares.

Employer mandate — A federal requirement that companies with 50 or more workers pay a penalty to the government if one of their workers obtains taxpayer subsidized coverage through the law. Delayed one year to Jan. 1, 2015. Intended to keep companies from “dumping” employees into public coverage.

Individual mandate — A federal requirement that virtually everyone in the United States has health insurance, either through an employer, a government program or by buying his own plan. Effective Jan. 1, 2014. Exemptions for financial hardship and religious objections. Does not apply to immigrants living in the U.S. illegally. People who ignore the mandate will face fines from Internal Revenue Service.

Essential health benefits — Basic health benefits that most health insurance plans will have to cover starting in 2014. They include office visits, emergency services, hospitalization, rehab care, mental health and substance abuse treatment, prescriptions, lab tests, prevention, maternal and newborn care and pediatric care.

Marketplaces — Online health insurance markets in each state where consumers can get private health insurance, subsidized by the government. They used to be called “exchanges,” but the feds decided that was too confusing and started calling them “marketplaces.” Still, some states stuck with the original name. Open enrollment starts Oct. 1, and the coverage takes effect Jan. 1, 2014. Fifteen states and Washington, D.C., are running their own marketplaces, according to a tally by The Associated Press. The Obama administration is taking the lead in 35 states, in some cases partnering with the state government. All the marketplaces can be accessed online through healthcare.gov. Small businesses will have their own marketplaces.

Medicaid expansion — The health care law also expands the federal-state safety-net program to cover more low-income people. Medicaid is expected to account for about half the 25 million uninsured people who, the Congressional Budget Office estimates, eventually will gain coverage through the law. The federal government will pay the full cost of the new coverage from 2014-2016, then phase down to 90 percent. Twenty-four states plus Washington, D.C., have accepted the expansion, according to AP’s count. Eight states are still considering it. And 18 have rejected it, including Texas and Florida, which have many uninsured residents. Many adults below the poverty level will remain uninsured in the refusing states. A state can change its decision at any time, but the full federal payment for the expansion is only available through 2016.

Metal levels —The four levels of coverage available through exchange plans, called bronze, silver, gold, and platinum. Bronze plans feature the lowest monthly premiums, but cover only 60 percent of average costs. Platinum plans have higher premiums and cover 90 percent of expected costs.

Pre-existing condition — An ongoing or past health problem. Currently insurers can use pre-existing conditions to deny or restrict coverage, or charge more. Those practices will be barred by federal law starting Jan. 1, 2014, and insurers will have to accept all applicants.

Tax credits — Government health insurance subsidies for individuals will come in the form of tax credits. The money will be paid directly to the consumer’s health plan, to help cover premiums. The subsidies are on a sliding scale based on income. Each year, people will have to “true up” with the IRS to make sure they got the right amount. People who receive too generous a tax credit may owe money back to the government.

Tax penalty — The fine levied on individuals who disregard the individual insurance mandate. It starts small and gets bigger in subsequent years. In 2014 it’s $95 or 1 percent of taxable income. By 2016, it’s $695 or 2.5 percent of taxable income, whichever is greater. Thereafter it’s adjusted for inflation.

Small Business Impact

Should your business provide health insurance to your employees or not? That’s a question entrepreneurs have faced for years.

The Affordable Care Act will introduce a new program in 2014 that has been designed to simplify and streamline the process of finding quality, reasonably priced health insurance for small business owners and their employees.

The Small Business Health Options Program (SHOP) is intended to provide more choice and control over health spending, helping owners choose the level of coverage they will offer and define how much to contribute.

Business owners can still use their insurance brokers to access the SHOP, but the simplified process also allows them to review pricing and coverage in side-by-side comparisons.

And, after a delay announced in July, businesses will have more time to prepare for getting their insurance through SHOP.

The Treasury Department announced that businesses with 50 or more employees — those required to buy health insurance for their employees under the law — will not be penalized in 2014 as originally planned.

Instead, the penalties of $2,000 per employee for failing to provide insurance will be delayed until 2015, giving businesses more time to prepare for the law’s reporting requirements.

Tax Breaks

The government is serious about SHOP and offers exclusive access to an expanded small business healthcare tax credit. The resource covers as much as 50 percent of the employer contribution toward premium costs.

Obtaining insurance through SHOP will also open the door to additional tax breaks, including the chance for enrollees and their employees to use pre-tax dollars to make premium payments.

Private Companies

The health insurance plans available in the SHOP will be run by private health insurance companies, the same way small group plans are run now.

All plans will offer the same benefits as a typical employer plan, including real protection against financial catastrophe.

Plans will present their cost and coverage information in a standard format, using plain language that’s clear and easy for business owners and employees to understand, according to HealthCare.gov.

BUSINESS INFORMATION

What Small Businesses Need to Know: From HealthCare.gov

You know the value of providing health insurance to your employees. But it can be a real challenge for small businesses. On average, small businesses pay about 18 percent more than large firms for the same health insurance policy. And small businesses lack the purchasing power that larger employers have. The health care law provides tax credits and

soon — the ability to shop for insurance in the new health insurance marketplace — that helps close this gap.

Top Things to Know for Small Businesses

• If you have fewer than 25 employees, pay average annual wages below $50,000, and provide health insurance, you may qualify for a small business tax credit of up to 35 percent (up to 25 percent for non-profits) to offset the cost of your insurance. This will bring down

the cost of providing insurance.

• Under the health care law, employer-based plans that provide health insurance to retirees ages 55-64 can now get financial help through the Early Retiree Reinsurance Program. This program is designed to lower the cost of premiums for all employees and reduce employer health costs.

• Starting in 2014, the small business tax credit goes up to 50 percent (up to 35 percent for non-profits) for qualifying businesses. This will make the cost of providing insurance even lower.

• In 2014, small businesses with generally fewer than 100 employees can shop in the Health Insurance Marketplace, which gives you power similar to what large businesses have to get better choices and lower prices. In the Marketplace, individuals and small businesses can buy affordable health benefit plans.

• The marketplace will offer a choice of plans that meet certain benefits and cost standards. Starting in 2014, members of Congress will be getting their health care insurance through the marketplace, and you will be able to buy your insurance through the marketplace, too.

• Employers with fewer than 50 employees are exempt from new employer responsibility policies. They don’t have to pay an assessment if their employees get tax credits through an exchange.

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