Affordable Care Act – “Obamacare”

Basics of the Affordable Care Act (aka “Obamacare”)

There are four critical components:

1) Insurance policy reform

A) Clear standards and information for coverage of policies
B) More government regulations, and stop the worst abuses

2) Cover more people (about 32 million; — but 12 million still uninsured):

A) Expand Medicaid (called “Medical Assistance” in Minnesota) to 133% of poverty
B) Federal subsidies to help people up to 400% of poverty to buy policies.

3) Individual mandate (get coverage, or else pay a fine)

4) Improvements to Medicare – more benefits

Here is more detail about each of the four components:

1) Insurance policy reform:

A) Clear standards and information for coverage of policies:
States set up information clearinghouse websites, called “insurance exchanges” in 2013.
People can start shopping in Oct., 2013 for policies that start Jan. 1, 2014. If a state does not set
one up, then the federal government will set it up for them. There will be telephone and
in-person help for people who need it and can’t use the website on their own.
On Minnesota’s insurance exchange website,, people can also start the
application process for Medical Assistance and MinnesotaCare.
There will be minimum standards for policies to be eligible to be sold on the exchange.
There will be apples-to-apples comparison of the coverage and prices.

B) More government regulations, and stop the worst abuses:
Regulation: Starting in 2011: The portion of insurance revenue that must be spent on medical
care is at least: 80% (small business and individual policies; and 85% for large business policies.
There will be improved review of policy rate hikes before approval.
Abuses: Starting in 2010: No pre-existing condition exclusion for kids. No lifetime limits. No
cancelling unduly because of illness. Children can stay on parents’ policy until age 26.
Starting in 2014: No pre-existing condition exclusion for adults. Older peoples’ premiums no
more than 3 times that for young people. And, no more limits on out of pocket expenses.
No co-pays or deductibles for preventive care. No more lifetime limit for insurance policy pay-outs.

C) In 2017, States can do something different: States can ask permission to do something
different than an insurance exchange, if it has at least the same coverage as the federal standard;
covers at least as many people; and doesn’t cost the federal government anything additional.

2) Cover more people (about 32 million; — but 12 million still uninsured):

A) Expand Medicaid (name in Minnesota is Medical Assistance) to 133% of poverty:
2011: Minnesota: This takes care of General Assistance Medical Care people, 55,000
MinnesotaCare people, and 12,000 others

2014: Other states: This kicks in for the states which choose to use the new, higher income
limit. For the states which refuse, the Medicaid eligibility remains the same as before..

B) Federal subsidies to help people at up to 400% of poverty to buy policies:

2011: Small businesses can get tax credits if they have 25 or fewer employees, up to 35% of the
cost of premiums cost. This goes up to 50% in 2014.

2014: Individuals and families start getting subsidies to help pay for policies that you buy on the
Insurance Exchange, for people above 133% poverty (2% of income max cost for your health
care) up to 400% of poverty (9.5% of your income)

3) Individual mandate, starting in 2014 (get coverage, or pay a penalty):

If you do not buy an insurance policy (or are covered by some other source), then you face a
federal penalty. In 2014, it is $95 per person or 1% of taxable income, whichever is greater. The
amount of this penalty goes up gradually after 2014.

Exemption: If your income too low to pay taxes, or insurance isn’t available that costs less than
8% of your household income, then you are exempt from the individual mandate and penalty.
There can additional exemptions for certain hardships.

4) Improvements to Medicare:

Medicare Part D (drug coverage) “donut hole:”
2010: $250 rebate if you’re in the donut hole.

2011: 50% off of brand name drugs in the donut hole; and extends the election period to change
Part D Plans – Changes and extends the annual enrollment period.
The new enrollment period is Oct. 15 through Dec. 7.
Significantly Lowers Cost for Struggling Seniors –Expands the Medicare Part D low-income
subsidy, which will dramatically help struggling seniors afford their health care costs.

2014 to 2020: Donut hole gap is gradually phased out by 2020.

Other Medicare improvements:
2011: No more co-pays for routine screening tests, including mammograms.

2014: Excessive, wasteful subsidies to Medicare Advantage start getting phased out. This is
Medicare money that was simply padding the profits of insurance companies.

Minnesota Citizens Federation – Northeast 218-727-0207