MPR News Primer: Federal health care law

Bigfork Valley
A patient room at Bigfork Valley hospital, in a file photo from June, 2011.
MPR Photo/Jennifer Vogel

Updated May 16, 2013

The federal health care overhaul is here to stay after surviving an epic legal battle at the United States Supreme Court and the contentious 2012 elections. But that does not mean the massive law will remain intact, as enacted.

Congress may be tempted to raid some of the Affordable Care Act's funding as part of a deal to avert the collection of automatic tax hikes and spending cuts known as the "fiscal cliff."

The court battles are hardly over; legal challenges involving issues the Supreme Court did not address when it upheld the law in June, 2012, are already underway. But for the most part, key provisions, such as the individual mandate requiring most Americans to obtain health insurance, will take effect January 1, 2014.

Minnesota took a big step in mid-March toward that goal when lawmakers approved legislation authorizing the state to run a statewide health insurance exchange called MNsure where people can buy coverage, find out if they're eligible for federal subsidies that would reduce the cost of coverage, or enroll in Medicaid.

Here's what this landmark legislation means for you:

What if I have insurance through a large employer?

Not as much for people who buy insurance as an individual or part of a small group. Still, there could be changes depending on the benefits offered in your current plan, including a new $2,500 cap on how much you can contribute to a flexible spending account.

These accounts allow individuals to set aside wages on a pre-tax basis to spend on qualified medical expenses. The ACA eliminated over-the-counter medicines without a prescription from the list of qualified expenses back in January, 2011.

What if I buy insurance as an individual or as part of a small group?

It depends. See below.

What if I don't have health insurance at the start of 2014?

Most Americans must obtain health insurance or pay a financial penalty. The penalty amount depends on your income and increases over time. For some, the penalty may be less expensive than buying insurance in the first year. But it's difficult to forecast beyond that because it's unclear how insurance rates and federal subsidies for health coverage will change in the future.

"Most" Americans? Does that mean some people are exempt from the mandate to obtain insurance?

Yes. Several groups are exempt, including members of religious groups who oppose accepting benefits from health insurance policies; members of American Indian tribes; and individuals whose insurance costs would exceed 8 percent of their income.

What if I don't qualify for an exemption and don't obtain health insurance? What's the financial penalty?

That depends on your income and increases over time. That said, the Congressional Budget Office reported in September 2012 that the majority of Americans will not be subject to the penalty tax because they'll either have coverage or fall under one of exemptions for hardship, or religious beliefs, among other categories.

What assistance is available to help me buy individual health insurance beginning in 2014?

You can receive federal tax credits based on a sliding scale keyed to your income. Those credits are available for annual incomes up to about $92,000 for a family of four.

If your income is less than about $30,000 for a family of four, you will be eligible for free or low-cost government programs such as Medicaid, which expands to include more people who weren't eligible in the past.

What if I own a small business, how will the law affect me?

That depends on how many employees you have. If you have fewer than 50 full-time or full-time equivalent employees, you are exempt from the requirement to provide insurance for your employees. If you do provide coverage, you may be eligible for tax credits depending on the number of employees and their average wages.

If you have 50 or more full-time equivalent employees, you may have to pay a penalty if you don't provide insurance coverage for your employees.

Workers whose small business employer buys health insurance on MNsure -- Minnesota's new online marketplace -- will have access to features that will be delayed in many other states. The federal health care law calls for a system that allows small businesses to offer employees a choice of health plans from several insurers via a state health exchange--much as large employers can. The Obama administration, which is scrambling to put together exchanges to operate in more than 30 states, said that capability won't be available next year as planned. But MNsure's executive director, April Todd-Malmlov, said the exchange Minnesota is developing will offer small business employees a range of choices on its first day of operation.

Are the law's subsidies for small businesses enough of a carrot for them to start offering health insurance if they wouldn't otherwise?

If history is any indicator, not for most small businesses. The tax credits began in 2010 and according to the Government Accountability Office, small businesses found them too small and too complicated to claim. The Congressional Budget Office said in mid-May small businesses continue to be slow in taking advantage of those credits. The size of the credits increases slightly beginning in 2014.

If my employer chooses to offer health insurance, what can I expect?

The Affordable Care Act doesn't require employers to pay a certain percentage of an employee's premium but they must provide what's considered "minimum essential coverage." This means an employer must provide a health plan that covers 60 percent of health care costs on average; the employee is on the hook for at least 40 percent, through deductibles, coinsurance, co-pays, etc. But there is a provision designed to protect workers' finances. Employers must also ensure that the employee's portion of the premium does not exceed 9.5% of the employee's income.

If my employer doesn't offer me affordable health insurance, where can I buy it?

You can comparison shop for commercial insurance or if your income qualifies, enroll in Medicaid through MNsure, Minnesota's online marketplace. Starting October 1, 2013, Minnesotans will be able use MNsure to obtain insurance for coverage that begins Jan. 1, 2014. Officials say consumers will be able to conduct apples to apples comparisons of coverage and cost options. While shopping, consumers will also find out whether they're eligible for federal subsidies or public health plans such as Medicaid.

Minnesota is moving ahead with building its own exchange. State lawmakers in mid-March passed a bill creating a new online marketplace for more than 1 million Minnesotans to obtain health insurance starting in October. Among them will be an estimated 300,000 people who lack health insurance now.

Exchanges must be financially self-sustaining without federal operating subsidies in 2015.

For states such as Wisconsin, which decided against running its own exchange, individuals and small groups will buy health insurance through a federally-run insurance exchange.

What if I don't have access to the Internet or need help buying insurance on the exchange in 2014.

The law requires states to provide so-called "Navigators" -- humans who will help you enroll, whether in a government program such as Medicaid or in one of the commercial health plans.

What if I'm enrolled in Medicare?

People enrolled in Medicare already have health insurance, but the ACA expands prescription drug benefits, and reduces the annual coverage gap known as the "doughnut hole". The ACA started shrinking the doughnut hole in 2010, the year it passed, and will continue to expand coverage of brand-name and generic drugs over the next few years until the gap closes completely in 2020.

You will qualify for preventive services at no out-of-pocket cost for annual wellness visits, mammograms, and other screenings for cancer and diabetes. There may be a catch. If a doctor finds a problem and treats the condition during the screening-- removing a precancerous growth, for example-- the procedure may no longer be considered a "screening," and the patient may get a bill for the "treatment."

Will my taxes go up?

For some higher earners, yes. Beginning in 2013, you may be liable for an additional Medicare tax on income above $200,000 for single filers, or $250,000 for married couples filing jointly.

Also in 2013, starting at those same income thresholds, a 3.8 percent tax on net investment income takes effect.

The IRS provides answers to a variety of tax-related questions concerning the Affordable Care Act here.