Obamacare countdown: What is slated to happen over next year?
The health-care reform law, aka Obamacare, is poised to enter a crucial 12 months that includes setting up state exchanges, levying taxes on the wealthy, and preparing for the individual mandate.
Obamacare lives. That may be one of the most sweeping consequences of the 2012 presidential election. By winning a second term, President Obama has essentially ended Republican hopes of rolling back his signature Affordable Care Act before it takes full effect. Even adamant opponents of the health-care reform law in the GOP-controlled House recognize that it's pointless to continue pushing repeal legislation, at least for now.
With its immediate future secure, the health-care law now enters a crucial 12 months. Federal and state officials must race to prepare for Jan. 1, 2014, which is opening day for some of the Affordable Care Act's most far-reaching provisions. As Health and Human Services Secretary Kathleen Sebelius noted in congressional testimony this past spring, "2013 will be a critical year for building the infrastructure and business operations" needed to expand health insurance coverage to millions of low-income Americans.
It's possible that some aspects of Obamacare (as many people, including the president, now call it) could be scaled back in budget negotiations intended to avert the "fiscal cliff" crisis. But here's a primer on top upcoming milestones as the law currently stands.
State insurance stores. By 2014, each state (and the District of Columbia) is supposed to have a health insurance exchange up and running. Basically, these will be health insurance stores – markets intended to provide a more organized and competitive way for people to buy a product that's often complicated and confusing.
Those eligible to shop at the exchanges will include people whose employers don't offer affordable health coverage, and others who need to buy insurance on their own for some reason (such as, they're self-employed, or they're retired and not yet eligible for Medicare).
States are supposed to tell Washington by Dec. 14 whether they'll run their own exchanges, partner with the federal government, or not get involved, in which case Uncle Sam will set up and run insurance stores for them.
Whoever controls them, there's a lot of work to get ready for October 2013. That's when exchanges are supposed to open their (presumably online) doors and allow potential customers to check out their products and begin the selection process. Between now and then, exchange officials will have to sort and certify offerings from insurance providers, while building the information systems and electronic customer interfaces they'll need to conduct business.
Coverage purchased through exchanges is slated to take effect at the beginning of 2014.
Tax hikes. Whatever the outcome of current budget negotiations, taxes on the wealthy are certain to rise in at least one area. To help pay for the Affordable Care Act's expansion of coverage, the tax on wages for Medicare Part A (hospital insurance) will rise by just under 1 percent for individuals who make more than $200,000 and for married couples who earn more than $250,000.
The increase will put this payroll tax at 2.35 percent for folks in those income levels. It's scheduled to take effect on Jan. 1, 2013.
The Affordable Care Act also mandates a new 2.3 percent tax on "medical devices," set to begin on the same date. The Internal Revenue Service hasn't yet issued final regulations setting the boundaries for what this levy will hit, however. Among the issues here is whether things often sold to consumers as well as health-care professionals, such as latex gloves, will be subject to the new tax.
Insurance mandate. The US government doesn't require you to have health insurance – yet. But that day is coming. That day is Jan. 1, 2014, to be precise, when the Affordable Care Act's individual mandate takes effect.
Starting then, adults who don't have health coverage will have to pay a fine (or tax, as the US Supreme Court ruled) of $95 per year, or as much as 1 percent of income – whichever is greater. This is scheduled to rise year by year, topping out in 2016 at $695 per adult or 2.5 percent of income.
For families, the fine goes from a maximum of $285 or 1 percent of household income to $2,085 or 2.5 percent of income, over the same period.
The fine can be waived for a limited number of reasons, including financial hardship. And it goes hand in hand with government subsidies intended to help make coverage affordable.
For instance, Obamacare calls for an expansion of Medicaid, the big federal-state health insurance program for poor and disadvantaged people. The Affordable Care Act provides a big influx of federal dollars to try to cajole states to expand Medicaid so that it includes everybody who makes less than 133 percent of the poverty level.
The US Supreme Court has said states don't have to participate in this, though, and some Republican governors have said they'll decline the expansion.
For Americans who earn a bit more, Obamacare also has provisions. Uncle Sam will provide subsidies on a sliding scale for people making up to 400 percent of the poverty level.