A big change in America’s health care system is coming at the beginning of next year.
The Affordable Care Act, also known as Obamacare, will go into full effect in 2014, giving millions of uninsured Americans access to health care.
However, there are still misconceptions about the law.
In today’s Just Explain It, we’ll tell you five things you might not know about Obamacare.
Number one… Contrary to what 42 percent of Americans think, Obamacare really is happening. In fact, people can start signing up for state-run health insurance on October 1st. That’s when states and the federal government will open marketplaces, called exchanges, to offer subsidized benefits to the nation’s 50 million uninsured.
Number two… Another survey found that a majority of Americans think the law cuts Medicare benefits and covers undocumented immigrants. It doesn’t.
Actually, the government expects the average Medicare recipient to save approximately $3,500 over the next ten years.
Number three… Tax credits. Next year, health insurance for eligible individuals or families will be subsidized.
For example, someone making just under $23,000 a year wouldn’t have to spend more than 6.3 percent of their annual income on health insurance. Based on a $3,030 plan, their contribution would be $1,450. Under Obamacare, they’d receive a tax credit of $1,580 to put towards their coverage.
[Related: Affordable Care Act Rate Shock?]
Number four… The 80/20 rule. Insurers are now required to spend at least 80 percent of premium dollars on providing healthcare. The other 20 percent can be used on overhead expenses like excessive administrative costs and profits. In 2012, this provision saved Americans over two billion dollars.
If insurers don’t comply, they’re required to provide customers with a rebate. In 2011, over 13 million consumers received $1.1 billion in rebates – that’s around $150 per customer.
And finally… taxes. No matter what you’ve heard, your health benefits under Obamacare will not be taxed. The law does require that employers report the value of your annual coverage on your W-2, but the government says that's just for workers' information.
In the end, the Affordable Care Act is incredibly complex piece of legislation. It enacts sweeping reforms that involve every state and millions of Americans. Do you think it will work for you?
Let us know what you think. Do you have a topic you’d like explained? Give us your feedback in the comments below or on Twitter using #JustExplainIt.