8 Biggest Mix-Ups About Health Care Reform

How well do you know the Affordable Care Act?

Bankrate.com

The public remains sharply divided toward President Barack Obama's historic health care reform legislation, according to polls that show few are undecided. Most people think they know whether they like or dislike the law. But when it comes to knowing what's actually contained within this mammoth retooling of our health insurance system, most of us may not be smarter than a failing fifth grader.

A recent online quiz on the main provisions of health care reform by the Kaiser Family Foundation found that participants, on average, answered just 5 out of 10 questions correctly.

It's understandable. The ambitious law runs to 2,700 pages, some of its regulations have yet to be written, and the benefits that have already taken effect have been overshadowed by the recently resolved Supreme Court challenge. The barrage of political advertising surrounding November's presidential election has further clouded, rather than clarified, things.

Now that the Supreme Court has upheld the health care overhaul law, perhaps it's time to acquaint ourselves with the changes that have already occurred and those soon to come.

[Related: ObamaCare's new price tag: A guide]

Here are the facts to dispel eight fictions that have grown up around the Affordable Care Act.

1) Mandate muddle

Fiction:
Everyone must purchase health insurance beginning in 2014, no exceptions.

Fact: While most uninsured Americans will be required to buy health insurance or pay a penalty (or tax, if you like) beginning in 2014, several groups are exempt from the so-called individual mandate.

They include those whose income is so low, they don't file federal tax returns; anyone who would have to spend more than 8 percent of their income on health insurance; undocumented immigrants; people who are incarcerated; members of Native American tribes; and those who qualify for a religious exemption.

There's also one other large set of people who won't need to buy health insurance.

"Everybody who is eligible for Medicaid or Medicare does not have to purchase additional coverage," notes Deborah Chollet, a senior fellow at Mathematica Policy Research in Washington, D.C., who is helping states set up the new health exchanges where consumers will shop for insurance.

Private researchers have found that only a very small percentage of Americans will be subject to the individual mandate penalty, maintains Kathleen Stoll, director of health policy for the health care consumer group Families USA.

2) Misplaced worker apathy

Fiction:
If you're insured through your employer, health care reform won't affect you.

Fact: On the contrary, many new consumer protections under the Affordable Care Act are already benefiting people with job-based health insurance.

For example, the health care reform law bars insurers from placing lifetime limits on what they will pay for a worker's medical care, plus there are new restrictions on annual benefit limits, says Brian Chiglinsky, spokesman for the Centers for Medicare & Medicaid Services. "Insurers are no longer able to arbitrarily cancel your insurance policy when you get sick, except in cases of fraud," he adds.

Other new features for job-based policies include: no more copayments or deductibles for preventive health services, including cancer screenings; the right to see obstetricians and gynecologists without a referral; better access to out-of-network services in an emergency; protections against unfair administrative fees; and the right to keep dependents younger than 26 on your policy.

[Related: What health care ruling means for consumers]

3) New government insurance?

Fiction:
The Affordable Care Act creates a new government-run insurance plan.

Fact: The health care reform law includes no such provision.

Rather than centralize health insurance, health care reform accomplishes many of the goals of so-called universal coverage through its interwoven expansion of the existing Medicaid program, increased federal regulation of the health insurance industry and tax credits to make private insurance more affordable.

The law does call for the creation of new insurance plans, but the government won't run them, Chollet says. "The federal Office of Personnel Management is required to contract with at least two private insurance carriers, including at least one nonprofit, to offer coverage in every market nationwide," she explains. "They can contract with more than two, and some of these nonprofits are consumer-owned and operated health plans called co-ops."

4) Business befuddlement

Fiction:
All businesses will be required to provide employee health insurance.

Fact: The Affordable Care Act does not require employers to provide health coverage.

However, it does impose a penalty on larger employers that either do not offer a plan or offer unaffordable coverage.

"The law specifically exempts all firms that have fewer than 50 employees -- 96 percent of all firms in the United States, or 5.8 million out of 6 million total firms -- from any employer responsibility requirements," says Chiglinsky. "More than 96 percent of firms with 50 or more employees already offer health insurance to their workers. Less than 0.2 percent of all firms (about 10,000 out of 6 million) may face employer responsibility requirements."

The health care law features a variety of incentives meant to encourage small businesses to insure their employees, including tax credits and access to more affordable plans through new Small Business Health Options Programs, or SHOPs, that will be part of the state insurance exchanges.

The SHOPs will give small businesses "the clout that big businesses already enjoy when purchasing insurance," Chiglinsky adds.

5) Immigrant inaccuracy

Fiction:
Undocumented immigrants will receive federal aid to purchase health insurance.

Fact: Undocumented immigrants are excluded from health care reform.

And not only that, but they also are ineligible to receive Medicaid insurance for the poor or to purchase health insurance with their own money in the state exchanges when those open in 2014.

Legal immigrants who have resided in the United States for less than five years are similarly ineligible for federal assistance, though the states have the option of extending coverage to pregnant women and children while they await legal status.

"Undocumented immigrants are still in the same difficult situation they have always been in," says Chollet.

6) 'Death panels' notion lives on

Fiction:
Health reform creates a "death panel" to make decisions about end-of-life care for seniors.

Fact: Early drafts of health care reform would have allowed Medicare to reimburse physicians for time spent talking with older patients about advance care planning. But these provisions were eliminated in subsequent revisions.

"Given some political space, (the reimbursement) would have been something that families and their doctors would have appreciated having. But it became so politicized so fast that it just threatened to sink the entire bill, so it was struck," says Chollet.

Stoll says savvy Medicare-eligible consumers who want to have these discussions already have discovered a cost-free workaround provided by a previous president.

"In 2003, President George W. Bush signed into law the Medicare Modernization Act, which allows Medicare to cover advance care planning as part of the Welcome to Medicare physical exam," she explains. "Also, if you visit your doctor, for example, to check your diabetes and you also discuss your end-of-life care preferences during that visit, Medicare will cover the appointment."

7) Medicare scare

Fiction:
Health care reform will reduce Medicare benefits to all seniors.

Fact: Traditional Medicare benefits will be unaffected by the law, and some seniors will even enjoy better coverage.

"It improves prescription drug coverage for people with Medicare Part D by gradually closing the coverage gap, or 'doughnut hole,'" Stoll says. "Seniors with high drug costs who fall into the doughnut hole are now receiving 50 percent discounts on their brand-name drugs at the pharmacy and other discounts on generics. These discounts will increase each year until the gap is completely closed in 2020."

Health care reform does reduce payments to privately-administered Medicare Advantage plans and requires them to spend at least 85 percent of premiums directly on patient care in order to bring their costs more in line with the average cost of traditional Medicare. These plans may then charge higher premiums and reduce added benefits such as eye and dental care, but all plans will still be required to provide all benefits currently covered under traditional Medicare.

8) States on the sidelines?

Fiction: States that don't set up health exchanges will be exempt from the Affordable Care Act.

Fact: If states fail to establish a health exchange, the federal government will set up and run one for them.

"On Jan. 1, 2014, consumers in every single state will have access to private health insurance options on an Affordable Insurance Exchange, regardless of whether that exchange is run by the state, the federal government or a partnership between the two," says Chiglinsky.

But the Supreme Court's ruling on the Affordable Care Act said states may, in fact, opt out of another part of the health care reform law: its expansion of Medicaid, which is designed to make health insurance affordable for an additional 16 million Americans.

States that do decide to opt out would be turning down millions of dollars in Medicaid funding, because the federal government plans to foot the entire bill for expanding Medicaid in the first few years. After that, states will be expected to pick up 10 percent of the costs.

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