The Patient Protection and Affordable Care Act’s (aka ObamaCare) purpose is to ensure every American has access to affordable, quality health care and to reduce the growth in health care spending.
The Affordable Care Act (ACA) has been controversial since it was initially proposed. It continues to be controversial after being: passed into law (March 23, 2010), upheld by the Supreme Court (June 28, 2012) and after the beginning of the initial enrollment period (October 1, 2013). The facts included in this article are quite narrow by design. There are many other significant provisions of ACA which are not discussed herein.
What does President Obama’s signature legislation mean to Baby Boomers and Retirees?In order to understand the impact on Baby Boomers it is important to understand some of the changes the Affordable Care Act (ACA) has brought about and how health care insurance is currently being provided.
The ACA requires insurers to design plans that:
Include essential health benefits, as defined.
Limit out of pocket maximums for individuals and families.
Enable parents to keep their children on their health insurance until the children turn 26.
Other elements of the Affordable Care Act include:
An “individual mandate” which means many individuals living in the United States will be required to have health insurance or pay a penalty. Under the Affordable Care Act, if you do not obtain health care coverage or an exemption by January 1, 2014 you must pay a per month fee on your federal income tax return for every month you are without health insurance. The 2014 fee is $95 per adult ($47.50 per child) or 1% of income, as defined, whichever is higher. These penalties are scheduled to increase annually.
A provision that insurers can no longer charge more or deny coverage to anyone based upon preexisting conditions or gender.
Subsidies to assist with the cost of insurance for those who qualify. Subsidies include the advanced premium tax credit (which lowers the monthly health insurance premium) and the cost sharing subsidy (which limits out-of–pocket costs). Subsidies would apply for incomes, as defined, up to $45,960 for individuals and $94,200 for a family of four.
The Health Insurance Marketplace (Marketplace). The Marketplace is a new way to find health care insurance coverage.
Prior to the effective date of the ACA
Historically, prior to the Affordable Care Act, Baby Boomers and Retirees obtained healthcare through Medicare (typically over 65 years of age), Medicaid (for low income individuals and families), employer sponsored plans and individually purchased private health insurance. Alternatively, some Baby Boomers and retirees had no health insurance at all. Twenty percent of the 50 to 64 demographic went without health insurance for at least part of 2012.
Since the Baby Boomer generation spans many years (1946-1964), we have Baby Boomers in all stages of their personal life and working careers including Baby Boomers who are:
- Self-employed and have purchased health insurance.
Self-employed and have not purchased health insurance.
These individuals may purchase health insurance directly through an insurer or through the marketplace.
- Working for someone else who provides a health insurance plan.
Working for someone else who does not provide health insurance.
If the employer continues to provide a health insurance plan these individuals may access health insurance through their employer. If the employer stops providing a health insurance plan these individuals may access insurance directly through an insurer or through the marketplace.
Not working, are under age 65, and have no health insurance.
These individuals may purchase health insurance through an insurer or the marketplace. Low income uninsured individuals may purchase Medicaid subsidized plans or subsidized plans through the marketplace.
- Not working and have passed their 65th birthday.
These individuals do not access insurance through the marketplace but instead use the Medicare website or their existing health insurer.
Workplace Flexibility and Early Retirement
My daughter is dating a young man from the United Kingdom. They were having a discussion about a relative that has an auto immune deficiency and therefore going without health care is not an option for her. My relative, although unhappy with her job, would not leave it because of her pre-existing condition and the need for health insurance. Why would you stay at a job you were unhappy with just because of health insurance? That situation may no longer exist in the United States since individuals can purchase their own health insurance from the marketplace. Will the ACA enable more workplace flexibility?
Prior to the ACA many pre 65 seniors who wished to retire continued to work at their job to ensure they had health insurance. This too may change with the ability of individuals to purchase insurance through the marketplace. Will the ACA accelerate retirement for Baby Boomers?
What have your experiences been with the marketplace? How will you obtain health care insurance? What other aspects of the ACA would you like to see discussed on Boomerbaggage?