ObamaCare, or the Affordable Care Act (ACA) is a Federal law that was signed by President Obama on March 23, 2010. The Affordable Care Act aims to “increase the QUALITY and AFFORDABILITY of health insurance, lower the uninsured rate by expanding public and private insurance coverage, and reduce the costs of healthcare for individuals and the government.” Let’s explore some of the mechanisms of this Act.
A “mandate” is an “official order to do something.” In the case of ObamaCare, everyone must either buy health insurance or pay a penalty. The individual mandate is done to increase the size and diversity of the insured population – in other words there needs to be enough people (health or sick) paying premiums to cover those who use the system. And, by having the penalty, income is even generated from those who do not buy the insurance.
A “subsidy” is financial support extended to an individual or a group (based on economic factors) with the aim of promoting some benefit or social outcome for that individual or group. For example, for a family of 4 living at 150% of the poverty level ($35,325) in the United States (25 year old parents, no tobacco use, with 2 children) the approximate annual premium is $9,893 and the family would receive a $8,480 subsidy which would mean they would only pay $1,413 per year ($117.75/month) for the “Silver Plan” coverage. They could opt for the Bronze plan and pay nothing, but may have higher out-of-pocket costs during the year.
To see what your subsidy might be, click on this Subsidy Calculator by the Henry J. Kaiser Family Foundation.)
Bronze, Silver, Gold, & Platinum Plans
Health Insurance coverages generally follow 4 different plans, based on the maximum amount of out-of-pocket expenses you will pay for approximately the same “essential health benefits.” The plans are generally as follows:
- Bronze Plan – 40% Out of Pocket – 60% Insurance Paid
- Silver Plan – 30% Out of Pocket – 70% Insurance Paid
- Gold Plan – 20% Out of Pocket – 80% Insurance Paid
- Platinum Plan – 10% Out of Pocket – 90% Insurance Paid
Health Insurance Exchanges
Under ObamaCare, federal and state based insurance exchanges will be setup where individuals and small businesses may purchase private insurance plans. These exchanges will be regulated, virtual marketplaces administered by the federal or state government. In Alabama no state exchange will be setup therefore the federal exchange will be used. Individuals may purchase insurance through these exchanges beginning October 1, 2013 and lasting through March 31, 2014.