Shots - Health Blog
3:26 pm
Fri July 6, 2012

More Answers To Your Questions About The Health Care Law

Originally published on Tue July 10, 2012 3:46 pm

Now that the Supreme Court has upheld almost all of the Affordable Care Act, many Americans are scrambling to remember — or learn for the first time – what's in the law and how it works.

We asked for questions from our audiences online and on air. Here's are some, edited for clarity and length, and the answers:

Q: Will the penalty for not having health insurance affect people at all income levels, or will low-income people be spared?

A: The short answer is no, if you can't afford insurance you don't have to buy it.

Here is the slightly longer answer.

For starters, if you don't earn enough to have to file a federal tax return, you're exempt. In 2010 that was $9,350 for an individual, or $18,700 for a married couple.

You're also exempt if you would have to pay more than 8 percent of your household's income for health insurance, after whatever help you might get from an employer or subsidies from the federal government.

Q: If someone is only insured for six or seven months a year, will there still be a fine?

A: Possibly, but it would be prorated for only the months you didn't have insurance.

There is one exception. There's no penalty in the law for a single gap of less than three months in a year. That's because many employers impose a waiting period. There's also a separate provision in the health law that forbids employers from imposing waiting periods of longer than three months. So no one will have to pay a penalty specifically because a new employer makes them wait to qualify for coverage.

Q: I understand that businesses above a certain size have to provide a health care insurance option, but do they have to pay for it? Does the law require a certain contribution from the employer, or can the employer make the employees just pay, say, 99 percent of the premiums?

A: This is where the law seems a little bit tricky. It doesn't stipulate how much of the premiums employers have to pay, but it does say that overall, employers with more than 50 workers have to provide a plan that covers 60 percent of the covered expenses for a typical population. And that plan can't cost more than 9.5 percent of family income.

Q: How does the law affect Medicare recipients? I heard it cuts billions of dollars from the program. Does it have other effects?

A: Let's take these one at a time. Yes, the law does reduce Medicare spending by roughly $500 billion less than it would have been without the law. That's over 10 years, by the way, and Medicare will cost a little under $500 billion this year. But none of that comes out of benefits guaranteed under the law.

The biggest single chunk comes from reducing what had been overpayments to private HMOs and other health plans that serve about 20 percent of Medicare patients.

The next biggest chunk comes from hospitals and other providers of health care that hope to get that money back because more people will have insurance.

As to other changes to Medicare, there are actually some new benefits. The doughnut hole, that gap in coverage for prescription drugs, is being gradually closed. And Medicare patients are now getting new preventive screenings, like mammograms, without having to pay a deductible.

Q: My son lives overseas, where he is covered by the national health insurance plan. As an American citizen, would he be required to pay the fee for not being covered under an American plan?

A: No, only residents of the U.S. and its territories are subject to the insurance requirements.

Q: I am a veteran getting my medical care from Veterans Affairs. Am I correct that this counts as having insurance, when it comes to the requirement that everyone be covered or pay a penalty?

A: Yes, the VA counts. So does TRICARE and other military health plans. In fact, just about all government health care program, including Medicare and Medicaid, count as well. That's why the Urban Institute estimates that come 2014, only about 7 million people out of the U.S. population of well over 300 million will have to either purchase insurance or be subject to paying the penalty.

Q: If my current insurance policy does not meet the minimum requirements in the Affordable Care Act, and my insurer must raise the standards of my policy, can my insurer raise the premiums I pay?

A: In a word, yes. That was part of the goal of the law, not just to get people without insurance to have it, but to get people with what was considered substandard insurance up to par. This is controversial, and it's the part that leads to claims that the government is interfering in the private insurance market, which in this case it is. But it's in the law because Congress heard about lots and lots and lots of cases where people who had insurance nevertheless ended up bankrupt because the insurance didn't cover what they thought it did. So will this make healthy people who have to spend more unhappy? Yes. But will it protect people better when they do get sick? Yes, it will do that, too. And will the arguments about it continue? Yes, undoubtedly.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MELISSA BLOCK, HOST:

And I'm Melissa Block. There's been a lot of confusion about how the health care law, the Affordable Care Act, will work. So, to cut through some of the confusion, we asked you to send us your questions about the law, and now we're going to turn to our health policy correspondent Julie Rovner for some answers. Julie, welcome.

JULIE ROVNER, BYLINE: Nice to be here.

BLOCK: And let's get right to our first question from a listener.

LAURA B. HENNA: My name is Laura B. Henna(ph) from Kalispell, Montana, and I'd like to know: Will the penalty for not having health insurance affect people at all income levels, or will low-income people be spared?

BLOCK: Julie, what can you tell Laura?

ROVNER: I think this is the question I get asked most often, and the short answer is no, if you can't afford health insurance, you will not be required to buy it. The slightly longer answer to who qualifies as not being able to afford it, for starters, if you don't earn enough to have to file a federal tax return, you are exempt. For 2010 that was $9,350 for an individual or twice that, $18,700, for a married couple.

You're also exempt if you would have to pay more than eight percent of your income for health insurance. And that's after whatever help you might get from an employer or subsidies from the federal government if you buy through one of these new health insurance marketplaces called a health insurance exchange.

BLOCK: And a side question about those exchanges, Julie. Are those set up purely for individuals, or would there also be companies who could go to an exchange and buy health insurance?

ROVNER: Initially they're just for individuals who don't have insurance and for small businesses. In later years, perhaps, they could be open to larger businesses but right now just individuals and small firms.

BLOCK: Julie we had several questions about how the new rules that require everybody to have health insurance will apply to individuals and employers, and here's a question from Mark Dwyer(ph) of Eugene, Oregon.

MARK DWYER: Will someone who is only insured for six or seven months out of the year still have to pay the fine?

BLOCK: So, hypothetically, Julie, it might be somebody who has switched jobs or lost their job and lost health insurance along with that transition. What happens?

ROVNER: You could be subject to a fine if you're only insured for part of the year. It would be prorated, just to cover the months you weren't - you didn't have insurance. Now, there is one exception to that. If you a single gap of no more than three months, you will not be subject to the fine.

A lot of people, when they get a new job, have a waiting period before their insurance takes effect. Interestingly, there is another provision in the law that says employers cannot make you wait more than three months to qualify for health insurance. So that's to make sure the people don't get penalized because they're waiting to qualify for health insurance.

BLOCK: A question here about employer obligations, Julie, and this one comes from Jim Moorer(ph) of Panacea, Florida. He writes this: I understand that businesses above a certain size have to provide a health care insurance option, but do they have to pay for it? Does the law require a certain contribution from the employer, or can the employer make the employees just pay, say, 99 percent of the premium?

ROVNER: Well, this is where the law seems a little bit tricky. It does not stipulate how much of the premiums employers have to pay, but it does say that overall, larger employers - these are employers with more than 50 workers - have to provide a plan that covers 60 percent of the covered expenses. And there limits to how much employers can require workers to pay.

BLOCK: We had several questions about how the Affordable Care Act will impact Medicare, and here's one from Evelyn Kierson(ph) of Boca Raton, Florida. She writes that she's heard the law will take $500 billion from Medicare to encourage young people to buy insurance. So, Julie, first, is that true? And if so, she wants to know what other effects the law has on Medicare.

ROVNER: Well, yes, the law does reduce Medicare spending by roughly $500 billion less than it would have been without the law, and that's over 10 years, by the way, and to put that into some kind of context, Medicare will cost a little under $500 billion this year. But none of that comes out of benefits that are guaranteed to Medicare beneficiaries under the law.

The biggest chunk of it comes from reducing what had been overpayments to private HMOs and other health plans that serve Medicare patients. The next biggest chunk comes from hospitals and other health care providers. They hope that they'll see that money come back because there will be more paying customers because more people will have insurance.

As to other changes to Medicare, there are actually some new benefits. The doughnut hole, that gap in coverage that a lot of seniors have had for their prescription drugs, is being gradually closed. And Medicare patients are now getting new preventive screenings like mammograms without having to pay a deductible.

BLOCK: Julie, here's another question about what coverage is required and the possible penalty.

HOWARD WALLACH: My name is Howard Wallach(ph). I'm from Brooklyn, New York. I have an adult son living overseas. He's covered by national health insurance in that country. Would he be subject to a fee for not being covered by an American health plan?

BLOCK: And Julie, we got this question from a number of listeners. What's the answer?

ROVNER: The answer is no, and it turns out there was quite a bit of lobbying from Americans living overseas to make sure that they would not be affected by this fee. But if you are not living in the U.S. or one of its territories, you are not subject to the insurance requirement.

BLOCK: We had several veterans write in, Julie, about their health insurance coverage, including David Hope Lane(ph) of North Fork, California. He says he gets his medical care from the Veterans Administration, and he asks this: Am I correct that this counts as having insurance when it comes to the requirement that everyone be covered or pay a penalty?

ROVNER: Yes, the VA counts. So does TRICARE and other military health plans. In fact, just about every government health care program, including Medicare and Medicaid, count as well. That's why the Urban Institute estimates that come 2014, when the requirement takes effect, only about seven million people out of the U.S. population of well over 300 million will have to either purchase insurance or be subject to paying the penalty.

BLOCK: And Julie, the verification mechanism here, how do we reveal whether we do or do not have health insurance to the federal government?

ROVNER: There will be a line on your federal tax return where you're going to say, and you're going to sign it and pledge to it the same way you pledge that everything else on your tax return is true.

BLOCK: Our last question now, and this one is about health insurance companies.

DAVID JACKSON: I'm David Jackson(ph) from Pauwela, Hawaii, and I'd like to know this: If my current insurance policy does not meet the minimum requirements in the Affordable Care Act and my insurer must raise the standards of my policy, can my insurer raise the premiums I pay?

BLOCK: What can you tell Mr. Jackson, Julie?

ROVNER: Well, in a word, yes. This was part of the goal of the law, not just to get people without insurance to have health insurance but to get people with what was considered substandard insurance up to par. Now, this is perhaps one of the controversial parts, and it's the part that legitimately leads to claims that the government is interfering in the private insurance market, which in this case it clearly is.

But it's in the law because Congress also heard about lots and lots and lots of cases where people who had insurance nevertheless ended up bankrupt because the insurance didn't cover what those people thought it did. So will this make healthy people who have to spend a little bit more unhappy? Yes, I'm sure it will. But will it protect people better when they do get sick? Yes, it will do that, too.

And I'm sure hear many more arguments about this as this law goes forward.

BLOCK: So they may have a beefed-up policy, they may also have to pay more for it.

ROVNER: That's correct.

BLOCK: NPR's health policy correspondent Julie Rovner. Julie, thank you so much.

ROVNER: My pleasure. Transcript provided by NPR, Copyright NPR.