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How Health Care Reform Will Affect Your Family

While the biggest changes from Obama's bill don't go into effect until 2014, it's not too soon to learn what they really mean for you and your family. Here you'll find an insider's guide to the rules and the critical facts, plus answers to big questions about your family's coverage.

By Linda Marsa

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Eva Tatcheva

Your Situation: I'm covered through my job.

Your health plan will likely remain the same, although costs may increase. Most of the changes in coverage won't affect anyone who currently has decent insurance. "The new law should provide the peace of mind that if you're laid off or become too sick to work, it'll be easier to remain insured," says Karyn Schwartz, a senior policy analyst with the Kaiser Family Foundation in Washington, D.C. Also, there will be no more denials or sky-high premiums if you have a preexisting medical condition, and no more worrying about your coverage being revoked if you get sick and rack up big bills. If you or a family member has a serious illness, the fees you'll need to pony up out of your own pocket are capped so you won't have to choose between losing your home and forgoing life-saving care.

The tax on so-called "Cadillac" medical coverage, employer-sponsored plans with premium costs of more than $10,200 a year for individuals or $27,500 for families, won't roll out until 2018. "And if in the future you or your employer wants to switch coverage, it will be easier to comparison shop and find plans that offer comprehensive benefits through the insurance exchanges [online financial marketplaces in each state where individuals and people employed in small businesses pool their purchasing power to shop for the best plans]," says Cheryl Fish-Parcham, deputy director of health policy at Families USA.

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Eva Tatcheva

Your Situation: I'm uninsured.

As you've probably heard, the legislation guarantees that at least 94% of Americans not covered by Medicare will have adequate, affordable health care. High-risk pools—group insurance programs for people with more serious illnesses—were set up immediately to provide coverage for Americans who haven't been able to get insurance because of preexisting conditions. Up until now only 34 states offered some type of high-risk pool, and the ones that did typically had long waiting lists, and coverage was skimpy.

If you've been without insurance for six months or more, you can now buy a policy at the prevailing rate. And your annual out-of-pocket medical costs—in addition to monthly premiums—will be capped at $5,950 for individuals and $11,900 for families.

In cases in which cost is still an issue, there won't be relief right away—Medicaid will be expanded to cover more of the uninsured in 2014. If you make too much to qualify for Medicaid (individuals who earn more than $14,404; more than $29,327 for a family of four), you could get help buying private insurance in the insurance exchanges. The new law will provide billions of dollars in subsidies based on a sliding scale once premiums exceed a certain percentage of annual income. The subsidies end at four times the poverty level, which is $88,200 for a family of four or about $44,000 for an individual.

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Eva Tatcheva

Your Situation: I've been laid off.*

If you've been laid off, you have the option to continue your employer-based coverage through COBRA, just as you did before health reform passed. This is your best bet for maintaining quality coverage, although it can be pricey. The American Recovery and Reinvestment Act ("ARRA," or the "Stimulus Package") included subsidies to help people afford COBRA coverage, but Congress failed to pass legislation to extend those subsidies and they are no longer available for people laid off after May 31, 2010.

To see a complete picture of all your options, you can visit a new consumer-focused website, www.healthcare.gov, which displays coverage and care options by zip code. This website is commonly referred to as the Department of Health and Human Services' "Web Portal" and was created by the health reform law.

Starting in 2014, people who are laid off will still be able to opt for COBRA coverage, but they will also have the option of shopping for a health plan in the new health insurance exchanges. In the exchanges, plans will be standardized, covering specific benefits and meeting certain quality standards so that consumers know what they are getting. People who earn 400% of the federal poverty level ($88,200 for a family of four in 2010) or less will be able to receive help paying their premiums for coverage through the exchanges. And, they may also qualify for assistance paying for cost-sharing like deductibles and copayments, making coverage and care more affordable for families struggling with unemployment.

Finally, Medicaid, the public coverage program for low-income Americans, will have expanded eligibility starting by 2014. By 2014, if your family earns up to 133% of the federal poverty level ($29,327 for a family of four or $14,404 for an individual in 2010), you will be able to qualify for this program. Currently, most states have lower Medicaid eligibility levels for adults. With this broadened eligibility, health care services will be accessible and affordable for all low-income Americans.

*This information was updated in August 2010 by Families USA.

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Eva Tatcheva

Your Situation: My kid has a chronic condition.

When parents have coverage, kids can't be excluded if they have a health issue like asthma or diabetes. The new $10,000 limit on a family's out-of-pocket costs may help too, by cushioning the financial burden of your child's medical care if he requires frequent hospitalizations or pricey medications. In addition, insurers can't impose annual maximums on medical expenses or lifetime maximums on costly drugs. While most people rarely reach lifetime caps—plans typically max out at around $2 million—this new regulation is vital for people who have a serious or chronic illness or a child who has one.

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Eva Tatcheva

Your Situation: I worry about being diagnosed with something serious, like breast cancer.

With the new law, you can't be kicked out of an insurance plan just because you get sick. Furthermore, as previously mentioned, out-of-pocket expenses—for copayments on doctor visits, prescription drugs, hospital stays, and surgical procedures—are now capped for individuals and families.

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Eva Tatcheva

Your Situation: I work for a small business.

The health insurance tax credit of up to 35% of premium costs for small businesses with average wages of less than $50,000 kicks in right away. The hope is that the tax advantage will encourage more small business owners to start offering insurance. Beginning in 2014, small firms that sign up with one of the health exchanges will receive a credit of up to 50% of their costs.

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Eva Tatcheva

Will I have to pay for preventive care?

There will no longer be copays for preventive services, including childhood vaccines, well baby visits, annual physicals, and cancer screenings (Pap smears, routine mammography, colonoscopy).

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Eva Tatcheva

My son isn't going to college. Will he still be covered?

Young adults can now remain on their parents' insurance policies until the age of 26, whether or not they are students.

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Eva Tatcheva

There are no lifetime maximums but are there annual maximums on benefits or dollar amounts?

Beginning in September there is a ban on lifetime caps. In 2014 there will also be a prohibition on annual caps. Until then, plans may only impose annual limits that the secretary of Health and Human Services determines are reasonable.

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Eva Tatcheva

Medicare is already suffering financially. And now, are more financial cuts going to be made?

The health reform law is actually expected to strengthen Medicare financially. It will do so by reducing the growth in Medicare payments to health insurers and health care providers over time and by increasing payroll tax contributions to Medicare from the salaries of high income earners (over $200,000 for individuals and $250,000 for couples filing jointly).

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Eva Tatcheva

I'm afraid my employer will contribute less to my health coverage due to new taxes they have to pay the government and then my contribution will increase. Is this true?

There are no new blanket taxes on employers. Beginning in 2014, employers won't have to pay a fine unless they have more than 50 employees and a worker receives subsidies through the exchange because the cost of the coverage is more than 9.5% of the worker's income or the plan pays less than 60% of benefit costs. Therefore, employers have an incentive to keep costs below 9.5% of an employee's income. Plus, small business will start getting tax credits right way as incentives to offer coverage.

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Eva Tatcheva

Is it true that health care will be more affordable for families and small businesses because of new tax credits, subsidies, and other assistance—which will be paid for mostly by taxing insurance companies, drug companies, and people in the top income tax bracket?

That's the setup of the new system. When all the pieces are in place in 2014, individuals and families will be able to get insurance: 1) from an employer; 2) from expanded public program options (like Medicaid), or 3) through the exchanges, with the majority of consumers getting subsidies from the government to buy in to this new highly regulated marketplace. These costs will be financed by reducing costs in Medicare, levying penalties for individuals who don't have a minimum level of coverage and for employers not offering coverage, an increase in the Medicare tax for high-wage earners, annuals fees for drug and health insurance companies, and a tax on high premium plans (beginning in 2018).

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Eva Tatcheva

How is health reform supposed to help people when they will fine us if we don't have it because we still can't afford it?

Individuals will be exempt from the insurance mandate's tax penalty in cases of financial hardship or in cases where the lowest cost plan available exceeds 8% of an individual's income. Those whose income is below 133% of federal poverty levels (individuals under $14,404; below $29,327 for a family of four) will be covered by Medicaid. Federal subsidies to purchase coverage in the exchange will be available for any household making up to $88,000 per year for a family of four. If a family still cannot afford coverage under any of these options, they can file for a hardship exemption and waive the penalty.

health care
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Eva Tatcheva

We have always had health insurance through my husband's employers, but because of deductible, limits, etc., we have still been stuck with huge bills. Will some of these issues be addressed?

There are several provisions in the health reform bill that may potentially help someone with high out-of-pocket costs for employer-sponsored insurance. Starting in 2014, the coverage offered in the exchanges will limit out-of-pocket costs ($5,950 for an individual and $11,900 for a family). Individuals with employer-sponsored coverage can purchase coverage through the exchange and that coverage will qualify for government subsidies if the employer-sponsored plan does not cover 60% of health costs or if the employee share of the premium exceeds 9.5% of income.

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