FAQ’s

HEALTHCARE REFORM FACT AND FICTION!

Obamacare has just concluded its second Open Enrollment season but there are still m any misunderstandings and misconceptions about what the law does and does not do.   Here are some frequently asked questions on the new requirements. 

Fact or Fiction: Obamacare drove up premiums.

Fact – and fiction! The requirement that insurance companies cover pre-existing conditions and eliminate lifetime maximum benefits did drive up prices, but not for everyone. Some people actually experienced a rate decrease because they had been in a in a high risk group prior to the law taking effect.

Fact or Fiction: Deductibles are much higher and the new plans don’t cover as much.

Fiction! The law limits deductibles to a maximum of $6600/year. Previously, there was no limit on deductibles and plans with deductibles as high as $10,000 were readily available. Also the benefits under the new plans do not contain annual or lifetime dollar limits. These requirements, however, did help to push premium costs higher.

Fact or Fiction: Customers whose income is 100% – 400% of the Federal Poverty Level can be eligible for a subsidy on the Exchange.

Fact! Individuals and families whose income falls between 100% – 400% of the Federal Poverty Level, and don’t have access to affordable health insurance, will be eligible for a Federal Premium Assistance Tax Credit toward an Exchange plan. However, if an employer provides “affordable” group insurance for employees, employees’ dependents can’t apply for a subsidy.

Fact or Fiction: If a customer changes their mind and wants to switch to another plan or carrier after the open enrollment period, they are permitted to do so.

Fiction! Once a plan is selected, a person cannot change or move to a different carrier outside of an open enrollment period. If a person has a life changing event, then there are exceptions to enroll or change.

Fact or Fiction: If you like your health insurance you can keep it.

Fact – sort of ! Anyone who has a health insurance policy that was in force before March 23, 2010 can keep it – as long as no changes are made to the policy. (This also applies to group insurance.) Health insurance policies issued after that date however, must be exchanged for policies that must fully comply with Obamacare by December 31, 2015. Some insurance companies elected to swap policies earlier.

Fact or Fiction: Muslims are exempt from the law.

Fiction! Despite oft circulated internet rumors there is no specific exemption in the law for Muslims. The law does contain an exemption for groups described in IRC 1402(g)(f) which existed prior to Obamacare and governs exemptions from the payment of Social Security and Medicare taxes on self-employment income. This includes groups like the Amish and Mennonites.

Obamacare subsidies are taxable income.

Fiction! The subsidies – or more correctly the tax credits – are not taxable income but if a taxpayer claimed too much tax credit, it will have to be repaid when that taxpayer files his or her tax return. (Conversely, if they claimed too little, the IRS will add the difference to the taxpayer’s refund for the year. The IRS will know because everyone who got a tax credit will have to complete a form 8962 with their tax return.)

Obamacare reduced Medicare benefits

Fiction (sort of): Obamacare made two major changes to Medicare: it gradually closes the infamous “donut hole” or coverage gap in drug plans; and it forced insurance companies to spend at least 85% of taxpayer money they receive for Medicare Advantage plans on benefits. The latter change did force insurance companies to reduce benefits on Advantage plans.

Obamacare will make filing your taxes a nightmare.

Ficton (pretty much): a taxpayer who had qualifying health insurance and did not claim any subsidy will only have to check a box saying they had qualifying health insurance. A taxpayer who claimed a credit will have to complete form 8962, which is two pages, but most of the information can be copied from the form 1095A supplied by their insurance company. But a taxpayer who did not have qualifying health insurance for all or part of 2014 will have to complete form 8965 which is only a page long but comes with 12 pages of instructions.