By Burton Speakman
and Jamison Cocklin
At more than 2,000 pages long, the Patient Protection and Affordable Care Act, signed into law March 23, 2010, by President Barack Obama, has generated confusion and a wealth of rumors.
The law, commonly referred to as Obamacare, is considered a legislative cornerstone of the president’s first two years in office even after a year of fierce partisan divide and decades of failed attempts to overhaul the nation’s health care system.
It will require nearly all Americans to purchase health insurance or pay a fine beginning in 2014. The so-called individual mandate is expected to provide coverage to more than 30 million uninsured Americans.
Under the reforms, the law will extend Medicaid, a joint federal and state health care program for the poor, to those earning less than 133 percent of the federal poverty level, which is $14,860 for individuals and $30,660 for a family of four.
For individuals earning less than $44,680 and families earning less than $92,200, the law will provide for subsidies if employers fail to provide affordable coverage. It is considered unaffordable when an employer requires a contribution of more than 9.5 percent of income.
The law is complex, and it will require continued explanation as the country phases in its benefits. Here are some aspects of the law that already have generated confusion:
i will have to purchase health insurance or PAY A PENALTY
Fact: At the moment, consumers are not required to purchase health insurance. Starting in 2014, though, most people will have to have insurance in one form or another. Without it, individuals will pay a penalty of $95 a year, or up to 1 percent of income. The fee will go up to either $695, or 2.5 percent of income by 2016. A penalty will be assessed and administered by the Internal Revenue Service, initially payable on an individual’s tax return. Those who fail to pay cannot be criminally prosecuted under the law and will be notified in writing by the IRS. Minimum essential coverage will be required, defined as coverage provided through a public insurance plan, an employer-sponsored plan, a plan purchased in the individual market or a plan established before March 23, 2010. There also are a number of exceptions to the individual mandate.
everyone will have to pay an extra 3.8 percent in tax when they sell their home
Fiction. The reality is that beginning Jan. 1, there will be a 3.8 percent tax on some investment income, which will impact some real-estate transactions. The tax on real estate can be levied upon individuals with an adjusted gross income above $200,000 and couples filing a joint return with more than $250,000 in adjusted gross income.
The sale price impacts only income made on the home, said John Donchess, principal at Packer-Thomas in Canfield.
employee contributions to health care that will appear on w-2 forms are taxable income
Fiction. The law requires that, starting in 2013, companies begin putting the employer contribution to health care costs on the W-2 form, but it is completely untrue that those funds will now be classified as taxable income, said Tom Finneran, employee benefits consultant from the Penn-Ohio Regional Health Care Alliance.
I WILL pay more for health care as a result of the law
Unknown. Though the law is crafted to discourage higher premiums and bring costs down by adding more Americans to insurance pools, whether costs will be higher is anyone’s guess for now.
New taxes and fees, as well as higher administrative costs for businesses and hospitals, could find consumers paying more for health care until the law begins to generate savings.
Health Care reform will undermine medicare and cut certain benefits
Unknown. The law explicitly states that benefits guaranteed under Medicare will not be cut as a result of health care reform. If anything, the law has expanded Medicare to include a discount on prescription drug costs, more preventative services and additional wellness visits.
But the overhaul also takes aim at cost inefficiencies in the entitlement program, which has drawn fire from critics. For example, government payments to Medicare Advantage plans were cut. Those plans are provided by private insurers as an alternative to traditional Medicare. If certain doctors refuse to take Medicare patients because of changes, the net result could negatively impact the Medicare system.
For more information visit www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions, www.healthcare.gov or http://healthreform.kff.org/