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Tuesday, November 27, 2012

Some Clarity After Supreme Court Ruling on the Affordable Care Act


On June 28th, 2012, the Supreme Court upheld the Affordable Care Act by a 5 to 4 vote, saying that the Act’s requirement that American’s obtain insurance or pay a penalty was authorized by Congress’s power to levy taxes. The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax,” Chief Justice Roberts wrote in the majority opinion. “Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.

After months of uncertainty about the law’s fate, the court’s ruling provides some clarity — and perhaps an alert — to states, insurers, employers and consumers about what they are required to do by 2014, when much of the law comes into force. 

Some of the key provisions of the Affordable Care Act are:

  • Young adults can remain on their parents’ health plans until they are 26 years old
  • Kids with pre-existing conditions may not be denied health coverage by insurance companies.
  • Employers with fewer than 25 workers may receive help in funding the cost of providing health insurance. Some small businesses are taking advantage of new tax credits which makes the purchasing of health insurance for employees more affordable. Small businesses are eligible if they provide health care for their employees, have no more than 25 full-time workers, and pay an average yearly salary of less than $50,000. Starting in 2014, the tax credit will be 50% for small businesses and 35% for non-profit ones
  • Adults who have been denied coverage because of an existing precondition and have been uninsured for 6+ months may now get insurance
  • Essential health benefits and coverage will be guaranteed for almost all Americans. As from January, 2014, policies will be required to offer a set of basic benefits which will be available on state-based marketplaces (exchanges). All exchanges will list the health plans on offer, so that people can make comparisons and shop around for the best plans. By 2014, all Medicaid state plans must offer at least
  • The majority of Americans who do not already have health insurance or health coverage will have to make sure they do in 2014. Financial assistance will be available for those who cannot afford it. Individuals who decide not to be covered will have to pay a fee - many call this a form of taxation (in fact, in a Supreme Court ruling yesterday, they allowed the introduction of the word “tax” when referring to this part of the Act). Individuals who pay over 8% of their monthly income to buy health insurance will be exempt
  • Exchanges will be created in 2014, state-based marketplaces where Americans without insurance will be able to buy health insurance. The aim is to increase competition between insurers in a state and allow people to compare and shop around for health plans that suit their circumstances and pockets.

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