(MoneyWatch) With Americans free today to start signing up for health insurance under the Affordable Care Act, most of the 47 million people in the U.S. who lack such coverage are unaware that the program is set to launch, according to the Henry J. Kaiser Family Foundation.
Such confusion is perhaps understandable given the scope and complexity of the landmark health law, better known as Obamacare. Yet the program's success depends in part on quickly overcoming this knowledge gap. Here's what you need to know.
What is Obamacare?
After a long and fierce political fight that continues to play out in Congress, President Barack Obama on March 23, 2010, signed the Patient Protection and Affordable Care Act into law. Considered the biggest extension of federal health care benefits since Medicare and Medicaid were established in 1965, Obamacare will let people who currently lack insurance get various types of government-sponsored coverage.
Among its most important changes, the ACA also bars insurance companies from denying benefits because someone has a pre-existing medical condition, including pregnancy and a disability. Insurers also must justify any move to raise health plans premiums by 10 percent or more. If a plan purchased under Obamacare covers children, participants will be able to cover their kids under the policy until age 26.
The centerpiece of the law are the state health exchanges that the federal and state governments have set up around the U.S. where people can shop for and purchase coverage. (The federal government will run the exchange in 36 states, while other states and the District of Columbia have set up their own exchanges.)
Who is Obamacare for?
The new law is geared to the millions of Americans who do not have access to health benefits through a job, cannot afford private insurance or who are ineligible for public coverage. The law requires all Americans to have health care on Jan. 1, 2014, or face a financial penalty. It doesn't apply to the vast majority of working adults, who already receive insurance through their employers, and people who are satisfied with their existing coverage may keep it. To qualify participants also must live in the U.S., have citizenship or legal residence and may not be currently incarcerated.
As of today, people may start applying for coverage on the state health care exchanges set up under the law, with most plans taking effect Jan. 1, 2014. Open enrollment for the program ends March 31, 2014.
How do I get started?
To sign up for Obamacare, go to HealthCare.gov, the official federal site set up to enroll people. You will be asked to:
1. Create an account, including providing some basic information. 2. Apply for coverage. That will involve entering household income, size and additional information. 3. Select a health plan. You will be presented with all the health insurance plans you qualify for so that coverage types can be compared. 4. Enroll in a health plan. Coverage starts as soon as Jan. 1, 2014.
Anyone who needs help choosing a plan also may turn to so-called "navigators" in their state, who are available to answer questions and otherwise ease the process of signing up for Obamacare. People also may apply for coverage online, by mail or with the help of a navigator. That said, some states are farther ahead than others in hiring such personnel, and for now it remains unclear just how smoothly the process will run.
What health care services does Obamacare cover?
The program offers four categories of coverage: bronze, silver, gold and platinum. All of the plans in these tiers are required to offer the same basic benefits, including (but not limited to) hospitalization, prescription drugs, emergency care, ambulatory patient services, maternity and newborn care, laboratory services and pediatric care.
Where the plan types differ is in the monthly premium costs and what portion of the costs people pay for services. For instance, bronze plan participants are likely to pay a lower premium, but be responsible for a large share of costs when receiving care. By contrast, platinum plans will likely have the highest premiums but the lowest out-of-pocket costs.
How much will health care coverage cost under the program?
Prices for health plans offered under Obamacare are expected to be published today atHealthcare.gov. The federal government recently forecast that a basic health plan for a 40-year-old earning $50,000 per year will run $328 per month. Premiums will vary not only based the kind of health plan people choose, but also on their state of residence and even the city they live in. In New York for instance, that 40-year-old cited above would pay $416 a month for a mid-tier plan. But in upstate Ithaca, where fewer health insurers are available, the same coverage would cost $446 per month, a difference of $372 per year.
Most Obamacare enrollees are expected to qualify for financial subsidies to pay for the coverage, defraying the costs. One thing to remember: Private health insurers, not the government, will decide what plans to offer and set the rates.
What kind of financial aid is available for people to buy insurance under Obamacare?
Although health plan costs under Obamacare will vary by state, depending on their income and household size participants can lower their copayment, deductible and other out-of-pocket costs through a tax credit. Eligibility for these subsidies is determined when a person applies for coverage. The government has said that people who apply for coverage will qualify for some reduction in costs.
People also qualify for free or lower-cost coverage through Medicaid, with some states expanding eligibility for the government program next year, or the Children's Health Insurance Program.
What if I don't want to sign up for health insurance?
Beginning in January, all Americans are required under the law to have health insurance or face a fine. Next year, that penalty will be $95 per uninsured adult or 1 percent of taxable household income, whichever is greater. But the penalties climb every year. By 2016, fines for not having coverage would be $695 per adult, or 2.5 percent of income (again, whichever is greater and capped at $2,085 per household).
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