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Understanding Obamacare – What You Need To Know

CC Photo Courtesy of Nancy Pelosi via Flickr
CC Photo Courtesy of Nancy Pelosi via Flickr

There is so much confusion on the Affordable Care Act (ACA-Obamacare). Before I started to study it, I felt the same way. I was completely overwhelmed. However, as I studied it, I realized two things. First, the government has done a horrible job marketing the concept and explaining how it works. Second, when you understand the basic elements, the ACA is easy to understand.

Obamacare is not a Health Insurance Policy

I have heard people say that they don’t want Obamacare Insurance. The ACA is a set of rules and regulations that dictates how health insurance will work going forward. Health insurance is the same. If you are getting individual coverage, you can get a minimum coverage policy all the way up to a benefit rich policy. The health insurance companies are still administering the policies. This is socialized healthcare and not nationalized healthcare where the government takes everything over … at least for now.

It is All About the Mandate

The biggest aspect of the ACA is the individual mandate, which states health insurance companies have to provide insurance for everyone. There are no pre-existing conditions. You could have cancer, heart disease or kidney problems, and as of January 1, 2014, a health insurance company of your choosing has to pay all of your medical expenses after you satisfy deductibles/co-insurance, etc.  Nothing can be excluded from coverage.

The Exchange or “The Marketplace”

The Government figured out that the word “exchange” was difficult to understand. So they changed it to The Marketplace. If you don’t have insurance, you go to the Exchange/Marketplace (which is a website that apparently doesn’t work) to compare insurance policies from those insurance companies that are participating on the Exchange/ Marketplace. For example, in Texas, only two insurance companies, Blue Cross Blue Shield and Cigna, are operating on the Exchange/Marketplace. There are a ton of other insurance companies to choose from in Texas. It just so happens only two of them participate on the Exchange/Marketplace, which is the only place where you can get …

Subsidies

Only on the Exchange can you apply for subsidies, or money from the government to offset your health insurance premiums. They give it to you in the form of a tax credit that can be applied at the end of the year on your taxes, or month to month toward your insurance premiums. The subsidy chart shows you what subsidies are offered, based on your income level and your family size. Click here for a look at the subsidy chart.

Fines

If you are over the age of 18 (as far as we know), not participating in Medicare/Medicaid, or have no other form of health insurance, you are required to participate in the ACA or face paying a fine. If you are unable to afford coverage, you could be exempt. For a look at the fines, go to this link.

Enrollment

Enrollment for any new health insurance plan bought on The Marketplace started October 1 and goes to March 31, 2014. Then enrollment will close, and the only way you can get coverage is by experiencing a qualifying event such as a marriage, birth of a child, loss of employer coverage, etc.

Health Insurance Will Become Outrageously Expensive

The math is pretty simple. If I am an insurance company and I have to start covering everyone who is facing major medical expenses and paying out expensive claims, I am going to recoup money through the raising of premiums.

Is there anyone who can help you through the process?

This is where you want to be careful, for a few reasons. First, you want someone who can answer your questions. Second, you want to be careful of scammers. Prudent Money is available to point you toward resources that can help you with the ACA. Email me (ask Bob) and I will be happy to answer your question, as well as make sure you are taken care of.

About Bob Brooks

Bob Brooks is a 21-year veteran of the financial services business and is president of Prudent Money Financial Services. Since 2002, Bob has hosted the daily financial talk show, "The Prudent Money Show." Bob is also the author of the book, "Deceptive Money." His passion is teaching people, from a Christian perspective, what they need to know to solve financial problems and get informed. By presenting the other side of the story, Bob helps listeners and readers become better stewards of their finances.
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