Find out everything you need to know about Obamacare! Money Girl outlines new rules and updates so you can comply with the healthcare law and make sure you and your family are covered.
If you thought the health care reform law (also known as Obamacare) was already confusing, there have been some recent changes that make it even more perplexing.
In this episode I’ll tell you what you need to know about the rules so you meet key deadlines and comply with the law..
What Is Obamacare?
Obamacare is a nickname for The Patient Protection and Affordable Care Act (ACA), which passed in 2010. It offers Americans new benefits, rights, and protections for healthcare.
Most notably, when you shop for health insurance, you may qualify for a subsidy that reduces the cost of coverage, depending on your income and family size. But the law also requires you to have insurance starting in 2014.
What Is the Obamacare Penalty?
Did you get that? If you don’t have health insurance you’re breaking the law, unless you qualify for a health care exemption.
The penalty for not having health coverage is $95 per adult and $47.50 per child, or 1% of your income, whichever is higher. However, individuals won’t be penalized on the first $10,000 of income and families won’t be penalized on the first $20,000.
Additionally, the Obamacare penalty does have a ceiling. It can’t be more than the average annual cost of the least expensive health plan, but we don’t know what that amount is yet.
Let’s say you’re a single person who earns $40,000. If you decide to opt for the penalty instead of buying health insurance, your penalty would be $300 ($40,000 - $10,000 = $30,000 x 1%) in 2014. While this may seem low, the penalty does increase substantially in 2015 and 2016.
When you file your income tax return, the penalty gets added to the amount of tax you owe. Or, if you overpaid tax throughout the year, the penalty will be subtracted from your refund.
Who Qualifies for Obamacare?
As I previously mentioned, the health care law requires every American to have health insurance, no matter if you’re employed, unemployed, underemployed, or self-employed.
If you lose your job-based health insurance, you have 2 options: COBRA coverage or an Obamacare plan. COBRA is a federal law that allows you to keep your plan for up to 18 months after your employment ends. It's typically much more expensive because you must pay the full monthly premium, including any amount that your employer had contributed before.
Here are 3 changes that have been made to Obamacare that you should know: