3 Things Everyone Should Know About Obamacare

The Affordable Care Act, better known as Obamacare, has been the subject of much information and even more misinformation. Because the law itself is more than 1000 pages long, many people just don't know enough about the law. You will never understand the entirety of the law, and that is perfectly alright. There are some things, though, that will have an impact on your daily life. You should know about the state insurance exchanges, the low-income family tax subsidies, and the pre-existing conditon rules that have either gone into effect or will go into effect over the next couple of years.

Buying insurance through the state exchanges

Obamacare mandates a new system by which people will have to purchase their health insurance. Rather than doing your shopping in the traditional way, you will have to buy insurance through state-run exchanges. The law gives each individual state the ability to set up its own exchange, and if the state refuses to do so, the federal government will run the exchange for that state. This will essentially be a marketplace where you can compare various policies from different insurance providers. There will still be different types of plans, and each insurance company will provide varying levels of coverage to suit the needs of individual consumers.

Understanding low-income tax subsidies

The new law requires every person to either purchase insurance through the exchange or pay a penalty for choosing not to purchase insurance in that way. This would have a detrimental effect on low-income families if not for the tax credit system. People who are unable to afford insurance will receive refundable tax credits to cover a significant portion of the cost. How much you receive depends upon your income level as compared to the federal poverty line. The federal poverty line for a family of four is just less than $20,000. Under the new law, people earning up to 400-percent of the federal poverty line will receive varying amounts of credit to make the insurance more affordable.

How Obamacare handles pre-existing conditions

One of the major changes to the healthcare system is that insurance providers are no longer allowed to discriminate against applicants on the basis of pre-existing conditions. In the past, insurance providers were under no obligation to cover illnesses or conditions that you had prior to taking a new insurance plan. This was very bad news for people who lost their jobs, as their new insurance plans would not cover the things that the old insurance might have covered. Under the new law, an insurance company is prohibited from denying coverage to a person on the basis of these conditions. What this means in theory is that you will be able to receive much more coverage for a wide range of potential issues that might have been dinged by providers in the past.

For further reading: http://www.fool.com/retirement/general/2013/05/25/obamacare-3-things-you-should-know.aspx

Information on Obamacare's state-run exchange system: http://www.fool.com/investing/general/2013/06/04/everything-you-ever-wanted-to-know-about-obamacare.aspx

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