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Home » Health, Health Insurance

Obamacare Upheld by Supreme Court: What it Means for YOU

Last updated by on 13 Comments

You are probably aware that last week the Supreme Court upheld almost all of the Patient Protection and Affordable Care Act (PPACA), or “Obamacare” as many have affectionately or angrily dubbed the healthcare reform laws.

I originally wasn’t going to write about this for fear of excessive chirping, but then I realized I have a handy delete button on comments. Obamacare will impact us all – so I had to write about it.

The full PPACA reform document is 955 pages, so any efforts to summarize it in one blog post is somewhat futile (even if it took me longer to write than any post in the past few years). But, what the heck? We’ll both never read it in full, so might as well give the people what they want, right?

So, here we go…

obamacare upheld

If you are insured:

If you are employed, you can keep your same employer sponsored insurance (unless your employer is heartless and drops it). Or you could shop around for new insurance through your state’s health insurance exchange, once it becomes available (required by Jan 1, 2014).

If you have been purchasing your own insurance, it is possible that the cost of insurance could go down with new streamlined competition. And with subsidies I’ll mention later, it is possible you could get a similar plan as your employer offers for a lower price.

The reality? Nobody really knows how the exchanges will impact prices once they hit the market, so everything is speculation at this point.

If you are uninsured, under the age of 26, and your parents have health insurance:

You will be able to jump on your parents health insurance plan. The “slacker mandate” requires insurance companies to offer coverage to children (under age 26) to their parent policyholders. This is great news for students, recently unemployed grads… or slackers.

If you are uninsured, but employed:

Businesses with less than 25 employees will be offered tax credits to provide insurance to employees.

Businesses with more than 50 employees will be required to offer health insurance starting in 2014, or face a $2,000 penalty per worker.

If your employer takes the penalty, you’ll have to face the individual mandate.

Individuals who are unemployed or whose employers do not offer affordable health coverage, and whose household incomes are less than 400% of the federal poverty level, are eligible for subsidies toward health insurance exchange purchased plans.

If you are uninsured and self-employed, unemployed, or low income:

The individual mandate was upheld. This means that you must purchase health insurance in order to avoid a “tax penalty”. This was the most contentious piece of the legislation, as many felt forcing the purchase of health care is un-Constitutional. The Supreme Court ruled that it was Constitutional because the penalty was effectively a tax and Congress has the power to tax.

Factcheck.org highlighted how much tax one may pay: The minimum amount — per person — will be $695 once the tax is fully phased in. But it will be less to start. The minimum penalty per person will start at $95 in 2014, the first year that the law will require individuals to obtain coverage. And it will rise to $325 the following year.

Starting in 2017, the minimum tax per person will rise each year with inflation. And for children 18 and under, the minimum per-person tax is half of that for adults.

However, the minimum amount per family is capped at triple the per-person tax, no matter how many individuals are in the taxpayer’s household. So, for example, a couple with one child over 18 (or two children age 18 or under), and no coverage, would pay a minimum of $285 in 2014, $975 in 2015 and $2,085 in 2016. And that would be the minimum no matter how many uninsured dependents a taxpayer has.

The tax would be more for those with higher taxable incomes. When phased in, it will be 2.5% of household income that exceeds the income threshold for filing a tax return. For 2011, those thresholds were $9,500 for a single person under age 65, and $19,000 for a married person filing jointly with a spouse. So, to give a rough calculation, a couple with $100,000 of income might pay a tax of $2,025 if they choose to go without coverage.

Individuals who are unemployed or whose employers do not offer affordable health coverage, and whose household incomes are less than 400% of the federal poverty level, are eligible for subsidies toward policies.

Medicaid through expanded eligibility criteria, will cover people who earn up to 133% of the federal poverty level, or $10,890 for a single adult or $22,350 for a family of four.

The subsidies will cap the amount lower- and middle-income individuals and families will have to spend on health coverage, to 9.5% of household income for those at 400% of the federal poverty level and less for those at lower income levels.

Some of the Other Major Components Include:

  • Pre-Existing Conditions: Insurers will no longer be able to deny coverage based on pre-existing conditions. There are also premium multiplier maximums so these “risky” customers aren’t priced out of coverage entirely.
  • Sick Cannot be Dropped: Those with conditions cannot be dropped by insurance companies.
  • Limits are Eliminated: Lifetime insurance cap limits are no longer allowed.
  • Cadillac Insurance Tax: A 40% excise tax will be levied on high-priced “Cadillac” insurance plans beginning in 2018. The tax applies to individual coverage costs in excess of $10,200 and family costs above $27,500. The threshold is higher for individuals and families in high-risk professions.
  • Indoor Tanning Tax: The 10% tax on indoor tanning that took effect on July 1, 2010 is still in effect. Guess you’ll have to stick to the orange-Trump look, ladies.
  • Restaurant Caloric Transparency: Restaurants with more than 20 locations must list calorie counts on every menu item.
  • Breasts: Employers must provide private rooms and unpaid breaks for breastfeeding working mothers.

Thoughts on Obamacare:

I’m neither for nor against Obamacare, as a whole. There are some things I like. There are things I do not.

In particular, an insurance company denying coverage for pre-existing conditions or dropping a pricey customer is ethically wrong – and I am glad to see this practice become banned.

I am also optimistic (if not convinced) that health insurance exchanges will lower premiums for everyone.

But there are things I don’t like as well. My hope is that employers don’t drop coverage if premiums increase as a result of the Act, as has already been threatened by some. I also don’t like how little is done to focus on keeping health care costs lower.

Here’s the thing – U.S. health care expenses per capita greatly exceed all other developed countries (by almost double) as you can see in the below chart. Should the U.S. adopt a single payer and/or universal health model like other developed countries ALL do, as they have proven to keep costs under control? Nobody benefits from health care expenses twice the average of countries we are direct economic competitors with. The government loses. Businesses lose. Citizens lose.

us average healthcare expenses

Our current health care system is broken and we need change. Will the PPACA be enough change? I have my doubts. But our current political climate is not conducive to a game-changing move like a switch to single-payer and/or universal healthcare (did you know that in Canada, a consortium of businesses pay significant money to keep the image of single-payer health care in a positive light, ironically). Like it or not, Obamacare is a passive path to that end result.

Am I glad that attempts to reign in health care costs are being made? Absolutely. My hope is that if certain aspects of PPACA are detrimental, they will be changed or eliminated. You have to start somewhere, and the U.S. is in crisis mode with health care cost inflation.

On a pure self-interest level, I REALLY like my recent switch to my employer’s HDHP with their contributions to a complementing HSA. I would hope that I could keep a similar plan whether employed or self-employed. My ability to keep this good thing going at a low cost will definitely impact my like/dislike of Obamacare in the future.

The official PPACA website is healthcare.gov, if you’re interested in reading more about the upcoming changes.

Obamacare Discussion:

Keep your comments productive:

  • What is your overall take on the PPACA (Obamacare)?
  • What are you excited about? Nervous about?
  • Do you think Obamacare does enough? Or would you have liked to see a single payer/universal health model be adopted? Or something entirely different?
  • Do you think everyone in this country has a right to affordable health care?

About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 7,500+ others by getting FREE email updates. You'll also find every post by category & every post in order.


13 Comments »
  • Curtis says:

    Well put sir….it is nice to finally have someone summarize this Act in a non-biased format – something that the mainstream media has yet to accomplish. Like you, I’m neither completely for it or against. I am glad that people will not be denied coverage for being sick, or asked to pay astronomical premiums, but also slightly worried about what some companies will do to get around these regulations. Having grown up in Canada, but lived most of my adult life here in the US, I can appreciate both healthcare systems, although I know there are flaws in both also….

    Happy 4th!

  • Meghan says:

    I’m Canadian, not American, but this is certainly a step in the right direction for the American people. I can’t fathom having to pay for anything beyond doctor’s notes and prescriptions. My hope is that eventually Americans have a universal system like Canada does. We pay higher taxes, but I certainly sleep better at night knowing everyone who needs care has it.

  • Ryan says:

    I am like most people. The act had things I liked and things I had concerns about. I was glad the court clarified it as a tax. That was mostly for the lawyer in me.

    My only concern is how the health care exchanges will pay for services. Currently Medicare only pays abt 75% of actual bills, Tricare only about 85%. Most private insurers pay 110 to 125% of the bill. I worry that if too many join the exchanges, and the exchanges pay like medicare, we will need to bail out the medical co. This happened just after the healthcare bill was passed and is often called the medicare gap.

    Personally, I think employers should be out of the equation altogether. the bill changed how premiums were calculated, to a local pool vs a work pool. This is how auto insurance is calculated. Let them create min stds of care plans and make them compete. For those who cant afford coverage, we have health exchanges.

  • David Hunter says:

    You say… “In particular, an insurance company denying coverage for pre-existing conditions or dropping a pricey customer is ethically wrong – and I am glad to see this practice become banned.”

    Look at it this way… That person decides they don’t want to pay for health insurance because they feel they’ll never need it. All of a sudden they get a disease and expect the insurance company to honor them, but they never put money into the system. They took a gamble and should pay for it.

    Instead, what if we were talking about car insurance? I wouldn’t pay for car insurance, but as soon as I get into an accident I’d expect the insurance company to pay for the damages because they can’t deny pre-existing accidents (conditions).

    Some food for thought.

  • Warren says:

    An insurance company denying coverage for pre-existing conditions or dropping a pricey customer are two completely different things. Insurance and medical plans are two differnt things, although the term insurance is used. Insurance is the sharing of risk amoung a group. So if everyone pays premiums, then there is a pool of money to pay for medical claims.

    A pre-existing condition is seen as someone who didn’t pay into the pool and share the responsability for others wanting to take money from the pool.

    On the other hand, kicking someonbe out of the pool when they get sick is a case of the holder of the pool keeping the funds for themselves that should have been distributed to the the sick person.

  • Tim says:

    All I know is that the Individual Mandate “tax” is utter bull crap. Considering I’m already getting double taxed being self employed, I now have to pay for insurance that I don’t want or get penalized for /not/ doing something (dam college student budget lol). With the way this year is going, I dunno if I’m going to have the extra money on top of taxes to pay this stupid penalty :(.

    EDIT: though, I was thinking it was going to be closer to the $700 dollar mark.. but the article says it’ll be $95 this year?

    This just seems so stupid and illogical to force everyone to have insurance or else. What about people that don’t want it? Being young and healthy, I’d rather slowly build up a health saving account or something rather than giving my money to some greedy insurance guys whether I need to go to the doctor or not. It just worries me that the penalties are only going to go up, and I’m being penalized for not getting it – it’s my life so shouldn’t I get the final say??

    They may as well charge me for not littering and for parking tickets even though I don’t drive while they are at it ;(.

    I will concede that insurance companies not being able to turn any people with pre-existing conditions for those that need/want insurance is a good thing, though.

    Sigh… that’s my rant and worrying over..heh

  • Steve says:

    I agree with David about the pre-existing conditions and with his analogy about the car insurance. But lucky for us most state gov’s have already mandated years ago that we have private car insurance or we will be penalized. The only difference is that the car insurance is to protect others, not ourselves.

    My opinion is that if you want health care, either you buy your own private health insurance to cover yourself, or you pay out of pocket for the health care that you receive. This shouldn’t be government controlled. If you aren’t willing to purchase insurance, or can’t afford out of pocket healthcare, then good luck, that is a freedom you should have. Health care costs and premiums would drastically drop if the health care providers such as hospitals didn’t have to eat so much costs every year from people they treat that can’t pay. Its a double edge sword. If everyone paid their own costs or insurance and otherwise would not be treated, then premiums and coverage would drastically reduce making it affordable to everyone.

  • mdenis39 says:

    I do believe that our health system needs fixing, but to suggest that our current system is broken is hyperbolic. Despite its faults, the US health system currently offers some of the best care in the world with survival rates for cancer and heart attack among the best. And moving to a single payer system (like Canada or UK) is not a panacea. In Canada, it takes 9 weeks to see a specialist after visiting a GP and 19 weeks for surgery on an “elective” procedure (who defines what’s elective?).

    And our health cost per capita chart is interesting, but what are the causes? Is it because of malpractice insurance & claims? Greedy insurance companies? Lack of price sensitivity by the end user (Insurance company pays the claim, Employer pays most of the premiums).

    Do we think price controls are going to bring down these costs? Good luck with that. Two things will happen with price controls: 1) shortage of medical professionals, especially doctors. The prices for PPACA are based on prices paid for Medicare & Drs are already denying care to new Medicare patients. 2) Healthcare rationing. Many have said there is already healthcare rationing by Insurance companies – big difference, I can take my business to another health insurance company. Rationing from the govt is the last thing we need.

    Lastly, I would prefer that the fed govt not be in the business of telling me what minimum or maximum coverage I need to buy. If I were self-insured, I would take out a catastrophic policy on me & my family with a $10k deductible. As it is, insurance now (and more so in the future) is like taking a policy on your auto where all routine maintenance is covered, no matter the cost. Think of what your auto premiums would be if that were the case.

  • mdenis39 says:

    My prediction is that in the future because of this legislation, there will be two levels of care in the US – those on the govt-run plan with their own hospitals, etc. And those that can afford to pay their Doctors out of pocket and catastrophic insurance for those that don’t wish to wait in the govt cue. Perhaps even separate care facilities for those that pay out of pocket or through private insurance. Unless of course the fed govt outlaws it, like Canada did many years ago.

  • Dan S says:

    It’s hard to predict the consequences. As you mentioned, it’s very possible that some employers will drop coverage if they can’t afford the premiums. Obviously nobody wants to see that happen, but individuals need to start thinking about such possibilities and how they will ensure adequate coverage for themselves.

  • Warren says:

    People will blame all kinds of things on Obamacare that has nothing to do with Obamacare.

    Employers will drop insurance coverage. Employers have been doing that for years.

    There will be different levels of medical coverage. Having 7 jobs in the last 25 years, I’ve bounced back & forth between great medical plans to lousy plans. I’ve also looked at the statements from the insurance companies when I had something covered and found that the cost to the insurance company could range from about 20% to 75% of what someone paying cash for the same services would pay. The first job I ever had with a really large employer had over a half dozen options for medical plans from several companies. The absolute cheapest was where the plan owned two facilities (in a metropolitan area of over 1 million people). Except for emergencies, people in the plan went to one of these two facilities. People would take the whole day off from work for their annual exam. Some people with certain medical conditions would use up their whole year’s vacation time just for the doctor’s visits. The most expensive plan included almost every doctor and facility in the area with minimal deductable.

    People who are not covered end up getting medical anyway. Hospital emergency rooms get lots of patients that have no insurance and are not able to pay the bill. If they have mandated insurance they will go to the emergency room, present their card, and then get medical care and not pay any bill afterwards.

    People will use the medical more than necessary or in uneconomical ways. As it is now, uninsured people use the emergency room when all the less expensive medical options would be more reasonable. There are people who already demand lots of tests and prescriptions well beyond what is necessary.

  • Anoldman says:

    I know this is an older article, but some of the comments really concerned me and I felt the need to respond.

    Some used the analogy of car insurance to make a point that insurance is an option that some might choose to avoid until after an accident/sickness. Perhaps there are many people doing just that, but my case is different, and I’ll bet there are a lot of people out there like me too.

    You see, I am a diabetic. I did nothing to cause this other than having a family history of it. I have it under control and suffer no problems from it other than the stigma that I constantly face in searching for affordable insurance coverage. Almost every application has a check box for chronic ailments, and once checked any chance for coverage dies. Look for insurance that includes pre-existing conditions and you’ll see exorbitant premiums and pitiful coverage. This is not just for medical coverage either – it also applies to life insurance. Even a small business will not hire me because their premiums will go up with me on their payroll. I am most definitely blackballed because of diabetes.

    I believe a more accurate comparison would be race based. Black people have greater high blood pressure problems than whites, but if an insurance company refused coverage because of race they’d face ridicule and even legal consequences. I can no more choose my diabetic condition than I can change my skin color, so why must I face prejudice? Aren’t we beyond those times now?

  • Osiris says:

    unemployed and less than 1000 dollars income on some stocks, age 28 in 2014, do I have to pay for obamacare or pay the tax penalty?

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