How ACHA Changes Health Insurance Coverage
Healthcare reform tends to be tricky and complex as it attempts to find a common ground that is beneficial for all people. Burdened by the political firestorms that surround it, the new healthcare bill approved by the House of Representatives will continue to change and adapt as it passes through the process of becoming law. Here are a few key components of the American Health Care Act (AHCA) in its current form that will likely affect you and your health insurance coverage.
The Affordable Care Act (ACA), or Obamacare, uses several factors in determining tax credits, including income above or below the poverty line, age, the cost of plans available in the area, and what percentage of income the individual would spend on insurance. Enrollees with incomes over $47,500 are not eligible for subsidies. People with lower incomes tend to receive higher tax credits to offset the costs of healthcare.
The replacement bill proposes refundable tax credits based solely on age and income. The credits begin to phase out after an income of $75,000 for individuals and at $115,000 for joint filers. Individuals on Medicare, Medicaid, or other public health programs will not be eligible. In general, lower income families will receive less in the form of tax credits while higher income families will receive more.
Under Obamacare, those who refuse to participate in the healthcare system or in the online marketplaces are penalized in the form of a tax penalty. This mandate from Obamacare will no longer exist. Regardless of income, individuals and families will not be forced to pay a tax penalty for not participating in the marketplace or in the healthcare system.
The online marketplaces set up by Obamacare will become non-existent. Without the tax penalties levied under the ACA, people will be encouraged to prohibit insurance companies from cutting them off. But, if healthcare is lost for a period of 63 days, insurance companies may charge up to a 30% penalty over a period of one year. Individuals and families will be required to seek out insurance on their own or through employers.
Pre-Existing Conditions and State Waivers
Much of the current debate over the AHCA has revolved around pre-existing conditions. Pre-existing conditions are those medical conditions that existed before the start of coverage. This includes health issues such as cancer, asthma, high blood pressure, surgeries, seizures, and acne as well as mental health issues such post-traumatic stress, postpartum depression, and behavioral disorders. Under Obamacare, people with pre-existing conditions could not be charged extra or be denied coverage. Everyone would receive the same coverage, regardless of these conditions. The AHCA seeks to keep that component with a notable change.
States may request waivers that allow insurance companies to opt out of all regulations and consumer protections that existed under Obamacare. This means that the elderly may be charged up to five times the amount of younger people who are covered. Essential health benefits (maternity care, mental health, prescriptions, etc.) will be no longer be required to be covered. Also, consumers may be charged more or denied coverage for pre-existing conditions.
In order to apply for the waiver, states must set up a pool for high-risk consumers up to $138 billion over ten years, but this amount would not be enough to provide full coverage for people with serious illnesses.
Under Obamacare, employers are allowed to choose whichever state’s definition of essential health benefits they wish to abide by. This provision became meaningless with the nation-wide standardization of what qualified as an essential health benefit.
With the AHCA, a large employer in any state may use the essential health benefits definition used by a state that has gained a waiver in order to cut costs. Provisions for such benefits as prescription medication or mental healthcare may be scrapped to reduce costs if any waivered state chooses a definition that does not include those benefits. Though it is unlikely that many employers reduce essential benefits for fear of losing employees, they have the ability to do so.
Obamacare permitted the expansion of Medicaid so that states may allow for coverage of single, nondisabled adults slightly above the poverty line. The Federal government pays most of the cost in the expansion. This allowed 10 million additional people to enroll under the new requirements. Single adults with an income below $15,800 are currently eligible for Medicaid benefits. Many people join or leave the program as their income fluctuates.
The AHCA proposes cuts to the program that will equal up to $880 million dollars for the Federal government. States will not receive reimbursement for individuals leaving the program, so as people fluctuate out due to income, the allotted resources will dwindle and less people will be eligible.
Medicaid will change from an entitlement program to a grant program, meaning states will have the option of providing a set amount of money to the individual or receiving a set amount of money for all recipients in the state. As federal reimbursements to the states fade, the available resources for Medicaid will decrease. Fewer people will be eligible and fewer health concerns will be covered.
Healthcare may be complicated, but it is important for everyone to understand their coverage. Political rhetoric often gets in the way of a basic understanding on what the individual or family is entitled to. Under the proposed healthcare plan, some restrictions on insurance companies will be loosened and less people will be covered. Middle class and higher income families will see greater tax benefits and decreased premiums, but lower class families and the elderly will see their insurance costs rise or become ineligible for coverage. There will be changes to this bill before it is approved, so some of what has been discussed may change. The key takeaway should be that both Obamacare and the AHCA will provide different benefits and coverage for different people. Ensure that you find the coverage that is best for you and your family.