There has been so much conversation about what will actually happen when Obamacare kicks in I thought you might want to see what their plans are. This is from CRS without any interpretation from me.
Effective by January 1, 2014
Maximum Out-of-Pocket Premium Payments Under PPACA by Family Size and federal poverty level. (Source: CRS)
▪ Insurers are prohibited from discriminating against or charging higher rates for any individuals based on gender or pre-existing medical conditions.
▪ Impose an annual penalty of $95, or up to 1% of income over the filing minimum, whichever is greater, on individuals who are not covered by an acceptable insurance policy; this will rise to a minimum of $695 ($2,085 for families), or 2.5% of income over the filing minimum, by 2016. Exemptions to the mandatory coverage provision and penalty are permitted for religious reasons or for those for whom the least expensive policy would exceed 8% of their income.
▪ Insurers are prohibited from establishing annual spending caps.
▪ In participating states, Medicaid eligibility is expanded; all individuals with income up to 133% of the poverty line qualify for coverage, including adults without dependent children. As written, PPACA withheld all Medicaid funding from states declining to participate in the expansion. However, the Supreme Court ruled, in National Federation of Independent Business v. Sebelius, that this withdrawal of funding was unconstitutionally coercive, and that individual states had the right to opt out of the Medicaid expansion without losing pre-existing Medicaid funding from the federal government. As of July 10, 2012, the governors of five states: Texas, Florida, Mississippi, Louisiana, and South Carolina, had announced that they would decline to participate in the Medicaid expansion.
▪ Two years of tax credits will be offered to qualified small businesses. In order to receive the full benefit of a 50% premium subsidy, the small business must have an average payroll per full-time equivalent (“FTE”) employee of no more than $25,000 and have no more than 10 FTEs. For the purposes of the calculation of FTEs, seasonal employees, and owners and their relations, are not considered. The subsidy is reduced by 3.35 percentage points per additional employee and 2 percentage points per additional $1,000 of average compensation. As an example, a 16 FTE firm with a $35,000 average salary would be entitled to a 10% premium subsidy.
▪ Impose a $2,000 per employee penalty on employers with more than 50 employees who do not offer health insurance to their full-time workers (as amended by the reconciliation bill).
▪ For employer sponsored plans, set a maximum of $2,000 annual deductible for a plan covering a single individual or $4,000 annual deductible for any other plan (see 111HR3590ENR, section 1302). These limits can be increased under rules set in section 1302.
▪ The CLASS Act provision would have created a voluntary long-term care insurance program, but in October 2011 the Department of Health and Human Services announced that the provision was unworkable and would be dropped, although an Obama administration official later said the President does not support repealing this provision.
▪ Pay for new spending, in part, through spending and coverage cuts in Medicare Advantage, slowing the growth of Medicare provider payments (in part through the creation of a new Independent Payment Advisory Board), reducing Medicare and Medicaid drug reimbursement rate, cutting other Medicare and Medicaid spending.
▪ Revenue increases from a new $2,500 limit on tax-free contributions to flexible spending accounts (FSAs), which allow for payment of health costs.
▪ Establish health insurance exchanges, and subsidization of insurance premiums for individuals in households with income up to 400% of the poverty line. To qualify for the subsidy, the beneficiaries cannot be eligible for other acceptable coverage. Section 1401(36B) of PPACA explains that the subsidy will be provided as an advanceable, refundable tax credit and gives a formula for its calculation. Refundable tax credit is a way to provide government benefit to people even with no tax liability (example: Earned Income Credit). The formula was changed in the amendments (HR 4872) passed March 23, 2010, in section 1001. According to DHHS and CRS, in 2014 the income-based premium caps for a “silver” healthcare plan for family of four would be the following:
Health Insurance Premiums and Cost Sharing under PPACA for average family of 4.
Income % of federal poverty level
Premium Cap as a Share of Income Income $ (family of 4)a Max Annual Out-of-Pocket Premium Premium Savingsb Additional Cost-Sharing Subsidy
133% 3% of income $31,900 $992 $10,345 $5,040
150% 4% of income $33,075 $1,323 $9,918 $5,040
200% 6.3% of income $44,100 $2,778 $8,366 $4,000
250% 8.05% of income $55,125 $4,438 $6,597 $1,930
300% 9.5% of income $66,150 $6,284 $4,628 $1,480
350% 9.5% of income $77,175 $7,332 $3,512 $1,480
400% 9.5% of income $88,200 $8,379 $2,395 $1,480
a.^ Note: In 2016, the FPL is projected to equal about $11,800 for a single person and about $24,000 for family of four. See Subsidy Calculator for specific dollar amount. b.^ DHHS and CBO estimate the average annual premium cost in 2014 to be $11,328 for family of 4 without the reform.