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How the Affordable Care Act Affects You

On Mar. 23, 2010, President Obama signed the Patient Protection and Affordable Care Act, commonly known as the Affordable Care Act, ACA or Obamacare.  Accompanied by the Health Care and Education Reconciliation Act, the law represents a significant government expansion and reorganization of the American health care system. 

The ACA was devised to address rising health care costs, health disparities and unfair business practices on the part of insurance companies. It attempts to streamline health care delivery and improve healthcare. Its focus is prevention and cost saving. 

Parts of the law will take effect Oct. 1 and Jan. 1, but it will not be fully implemented until 2020. Many mandates directed at the health insurance industry—such as requiring coverage of preexisting conditions and parents’ plans to cover children until age 26—have already been implemented. 

A patchwork of programs will be sewn together, building upon existing federal and private programs, to provide health care insurance for the estimated 18.4 percent of non-elderly Americans (those not covered by Medicare) who lack insurance. The largest programs include a national health care exchange, expansion of the Medicaid system for the poor, and individual as well as employer insurance mandates. Initially beset by significant legal challenges, much of the act was upheld by the Supreme Court. The court maintained, however, states’ right to opt out of some of the Act’s provisions—most significantly, the Medicaid expansion. 

Medicaid Expansion in Georgia

Medicaid serves mostly low-income mothers and children, the disabled and the elderly. According to the U.S. Census, the program served 48.6 million (or 15.9 percent) of Americans in 2010.

Twenty-six governors have made the decision to expand their states’ Medicaid programs. Georgia Gov. Nathan Deal was not one of them. Deal has publicly claimed that the state could not afford the expansion. According to the governor’s office, the addition of 650,000 Georgians would cost the state $4.5 billion over 10 years. The federal government’s contribution would be $36 billion.

Proponents claim Georgia cannot afford not to implement the expansion. Citing the state’s costs to keep health facilities afloat amidst a significant (and growing) number of uninsured residents, proponents view the federal government’s investment in Georgia’s health care infrastructure as a necessary jumpstart in the direction of prevention that would also stimulate the state’s economy. 

According to the Selig Center for Economic Growth, expansion would result in a $72 billion economic impact for Georgia during 2014-2023. Hospitals and health care workers would benefit significantly. 

States can elect to opt into the program at any time. 

The Marketplace

The ACA’s Health Insurance Exchange (HIX) offers a marketplace where individuals and small businesses can compare policies and premiums and buy insurance with a government subsidy, if eligible. Those earning less than 400 percent of the poverty threshold, about $48,000 a year in Georgia, are eligible for subsidies.

According to the U.S. Department of Health and Human Services, 1,698,883, or one in five, of Georgia’s non-elderly residents are uninsured. An estimated 94 percent of those people may qualify for either tax credits to purchase coverage in the marketplace or for Medicaid if Georgia were to participate in the Medicaid expansion.

The exchange is expected to be up and running by Jan. 1. States were given the choice of whether to devise their own exchange or allow the federal government to do so. In Georgia, an advisory committee was tasked with deciding whether or not Georgia would operate its own exchange. The committee recommended that Georgia allow the federal government to operate the exchange, and Gov. Nathan Deal approved their recommendation. 

The federal website includes basic information on the exchange. The site will be fully functional after Oct. 1. After that date, citizens can use the Internet to review insurance options and select an insurer. Actual insurance coverage will not begin until after Jan. 1. 

Premium assistance subsidies reduce the amount that an individual or family pays for health insurance coverage by providing a tax credit. Those subsidies are only available through the HIX. Subsidies are based on income. The subsidy is based on a basic plan. An individual or family who wants a more expensive or higher tier plan must pay the difference. 

The ACA provides two forms of subsidies to help pay for health insurance.The first is a monthly premium assistance tax credit that will lower the premium amount an individual or family must pay. The second is cost-sharing assistance, which will limit a person’s maximum out-of-pocket costs, and possibly reduce other cost-sharing requirements like deductibles and co-payments.

The Employer Mandate

Perhaps one of the most contentious provisions of the ACA, the law requires that businesses with more than 50 employees provide health insurance for those employees. The mandate was intended to be implemented in 2014, but the Obama Administration postponed it until 2015. 

ACA opponents claim that the postponement amounts to an admission that the mandate is unattainable for businesses. The Obama Administration states that the postponement was necessary in order to make program changes within the Internal Revenue Service and that the requirements are not unreasonable. 

Private, for-profit employers with fewer than 25 employees, each making less than $50,000 per year, that subsidize at least 50 percent of their employees’ health plans can qualify for small-business credits for up to 35 percent of the employees’ premiums. Nonprofit employers can receive a 25 percent credit. 

Individuals who are insured through their employer can obtain subsidized coverage in an exchange if their premiums are more than 9.5 percent of their household income or the plan pays less than 60 percent of the cost of covered benefits.

The Individual Mandate 

Beginning on Jan. 1, individuals lacking “qualifying health coverage” must pay a penalty, either a flat rate or a share of household income, whichever amount is greater. The individual “responsibility requirement” was integrated into the law in order to spread risk throughout the health care insurance industry. The provision aims to add a majority of healthy participants in order to counteract the minority percentage of individuals with pre-existing or costly conditions, such as diabetes or cancer. The law provides subsidies for premiums and out-of-pocket expenses.  

The flat-rate penalty is phased in over three years beginning in 2014 at $95 per year, and increasing in 2015 to $325 per year, then $695 in 2016. After 2016, the penalty increases annually and includes a cost-of-living adjustment. The maximum flat-rate tax per uninsured family per year is $2,085.  

The other penalty option is based on household income. Penalties start in 2014 at 1 percent of taxable income and increase to 2 percent in 2015. It maxes out at 2.5 percent of taxable income in 2016 and beyond.  

“Qualifying coverage” includes most employer-sponsored health plans and individual market-based plans, including those purchased through the HIX, and public plans such as Medicare, Medicaid and programs within the Veterans Administration. 

The individual responsibility requirement has some exemptions. It does not apply to individuals who cannot afford coverage (defined as those who would pay in excess of 8 percent of their income for premiums), individuals who are not required to file taxes (In 2009, citizens earning less than $9,135 and couples earning less than $18,700), undocumented immigrants, individuals traveling outside of the U.S. for more than one year, incarcerated individuals, Native Americans and individuals who claim to have a conscientious objection.