How Obamacare Health Subsidies Will Work - Are You Confused About Obamacare?

How Obamacare Health Insurance

Subsidies Will Work

Beginning in 2014, enormous

insurance premium subsidiesand payment supports will

be available under the Affordable Care Act (ACA)

to millions of lower-income individuals and families.

www.AIADirectQuote.com

While Obamacare could always be overturned before then, the

law has been upheld as constitutional by the U.S.

Supreme Court. And short of historic landslide victories in this November's elections by the law's largely Republican opponents, changing major aspects of it will be difficult.

U.S. News spoke to officials in the U.S. Departments of Health

and Human Services and Treasury,

which have primary oversight of ACA tax and subsidy

benefits. They are producing a growing mountain of rules to implement the law. Beyond

ideological and financial disputes, the ACA is also an

extraordinarily extensive and complex package.

The law's consumer subsidies -- premium tax credits and

help with out-of-pocket health expenses -- will be available to

people who cannot meet its individual mandate to have health insurance, meaning

they are unable to find affordable coverage from

employers or other private insurance plans.

The law's consumer subsidies -- premium tax credits and

help with out-of-pocket health expenses -- will be available to

people who cannot meet its individual mandate to have health insurance, meaning

they are unable to find affordable coverage from

employers or other private insurance plans.

Instead, they will turn to the new state insurance exchanges

that are scheduled to be created next year. The law says

states can create their own exchanges or let the federal government do it for them.

Many states, mostly those with Republican governors, are holding off on this decision

until after the elections.www.AIADirectQuote.com

Eligibility for supports will be determined by the relationship

of individual or family gross income levels to the national federal poverty level (FPL). In 2012, the FPL is $11,170 for a

one-person household and rises by $3,960 for each

additional family member. For a four-person family, for example, the 2012 FPL is

$23,050. It increases each year due to inflation so will be a bit

higher in 2014.

Higher health taxes have gotten much of the

attention in the debate over health reform. But

the law also includes two types of extensive

financial help for lower-income Americans.

Under the ACA, individuals and families with incomes from

100 to 400 percent of the FLP will qualify for tax credits to

reduce the premiums for health insurance purchased through the exchanges. In

addition, incomes from 100 to 250 percent of the FPL also

will qualify for help in paying out-of-pocket costs for the co-

pays and deductibles not covered by their health

insurance.

Both assistance programs are tied

to the development ofstandardized healthcare

policies. Modeled after the Massachusetts health

reform law, these policies will be offered in four tiers -- bronze, silver, gold, and

platinum.

To qualify for a tier, the private insurance companies

developing these plans must promise they will cover

specified percentages of the typical healthcare expenses for

people covered by the plan. These "actuarial value"

thresholds are 60 percent for bronze plans, 70 percent for

silver, 80 percent for gold, and 90 percent for platinum.

The silver plans have a special role in the tax credits and

payment subsidies. In a state insurance exchange, the

second cheapest silver plan will become the benchmark for

tax credits. (Using the cheapest plan might have led to insurers trying to game the system.) Because healthcare

costs differ around the country, this benchmark

premium will not be the same in every state.

However, the percentages of this premium that can be

received as health insurance tax credits will be the same. They are based on a sliding scale of FPL percentages.

People and families earning 133 percent of FPL, for

example, will have to pay only 2 percent of their income

toward the health insurance premium.


They will receive the difference as a tax credit.

The payment limit for those at 400 percent of FPL is

much higher -- 9.5 percent of their income -- so their tax credit will be smaller.

Here's the list of FPL percentages and sliding scales of income that people must pay toward their health insurance premiums:

•Up to 133 percent of FPL: Payments are 2 percent of income.

•133 percent up to 150 percent of FPL: Payments begin at 3.0 and rise to 4.0 percent of income.

•150 percent to 200 percent of FPL: Payments begin at 4.0 percent and rise to 6.3 percent of income.•200 percent to 250 percent of FPL: Payments begin at 6.3 percent and rise to 8.05 percent of income.•250 percent to 300 percent of FPL: Payments begin at 8.05 percent and rise to 9.5 percent if income.•300 percent to 400 percent of FPL: Payments are 9.5 percent of income.

Your guide to the Affordable Care Act.

• Why do you need health insurance?

• Where will you get health insurance in 2014?

• Mistakes to avoid when buying health insurance

•How to get the most for your health insurance dollar

• How the health insurance mandate penalty will work

• Should I pay the Obamacare tax penalty?


“Are You Confused Yet

About Obamacare And What

Impact It Will Have On YOU”?

We cannot predict the outcome of any future legislation or

litigation related to Healthcare Reform. As described under “Item 1. Business—Health

Insurance Industry and Market Opportunity,” we expect

Healthcare Reform to result in profound changes to the

individual health insurance market and our business.

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What You Know!”


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How Obamacare Health Subsidies Will Work - Are You Confused About Obamacare?