Under 65? How The New Healthcare Law Affects You
By Mary Johnson, Editor
At 63, my learning-disabled brother still puts in a 40-hour work week as a welder with no plans to retire yet, but for most of his life he's had no health insurance. He and his wife are fortunate to receive blood pressure and asthma meds through a pharmacy assistance program, and qualify for services at a local health clinic. Now a heart condition has him waiting in line for a stress test and EKG services.
His patchwork health coverage will be changing soon. The new healthcare law requires all Americans to have health insurance effective January 1, 2014, or pay a penalty. Beginning in October of this year, middle-income seniors under the age of 65 who are not eligible for coverage through their employer, Medicare, or Medicaid, like my brother and his wife, will be able to apply for federally subsidized coverage that will be sold through state health insurance "exchanges."
The exchanges are new marketplaces where consumers will be able to compare benefits and costs of health plans side-by-side, and choose from several levels of coverage. The healthcare law is intended to make it easier for uninsured consumers to obtain health insurance coverage, and more affordable. But while the coverage may be more easily obtained, the cost of coverage is likely to remain a big obstacle for many. Costs won't be fully known until the Open Enrollment starts in October 2013, and people like my brother and his wife, will need a lot of assistance choosing and understanding a new health plan.
Under the new law, you can't be denied coverage due to pre-existing conditions, or charged higher premiums because of your health and age. Your health insurance is guaranteed, as long as you pay your premiums. Insurance coverage will no longer have lifetime or annual dollar limits on coverage.
To make coverage more affordable, the new health law provides premium tax credits, paid directly to insurers, to lower the cost of premiums and to lower out-of-pocket costs. People with incomes up to 400% of the Federal Poverty Level will qualify for tax credits that reduce premium costs and people with incomes up to 250% of poverty are also eligible for reduced deductibles and copayments. The federal poverty level varies by family size. Currently it is $11,490 for a single adult and $23,550 for a family of 4 in 2013.
The amount of the tax credit that a person can receive is based on premiums in the exchange and area where you purchase your coverage. The amount you pay depends on the percentage of income over the federal poverty level. If you're like me and this doesn’t tell you enough, you can get a rough idea of the costs, by using the Subsidy Calculator on the website of the non-partisan Henry J. Kaiser Family Foundation.
Using the Subsidy Calculator I entered the following information for my brother:
- Income in 2013 — $24,000
- Employer coverage? — No
- Number of Adults in household — 2
- Age- 63, No Tobacco
- Age- 53, No Tobacco
The following information was displayed as his results:
|Household Income in 2013:||155% of poverty level|
|Unsubsidized Health Insurance Premiums in 2013:||$15,066|
|Maximum % of income you have to pay for the non-tobacco premium, if eligible for a subsidy:||4.22%|
|Amount you pay for the premium:||$1,012 (which equals 4.22% of your household income and covers 7% of the overall premium)|
|You could receive a government tax credit subsidy of up to:||$14,054 (payable directly to the insurer which covers 93% of the overall premium.)|
In addition, my brother will also qualify for a reduction on cost-sharing and pay about 13% instead of 30%. While a $14,054 subsidy is a HUGE benefit, $1,012 and new cost sharing is still a major investment for my brother's household that won't be any easier for them to budget for. With the new coverage, the two of them may no longer qualify for the pharmacy assistance programs that have been covering the cost of their prescription meds.
After a lifetime of assisting my brother with handling finances, I suspect my brother will balk at having to buy health insurance and make premium payments, but what he pays in 2014 is likely to be less than what he will pay after starting Medicare.
To learn more about the healthcare law visit The Henry J. Kaiser Family Foundation website.
Sources: "Explaining Health Care Reform: Questions About Health Insurance Subsidies," Kaiser Family Foundation, July 2012.