When the calendar flips Wednesday, it will also flip an on switch for much of Obamacare.
Coverage begins on Jan. 1 for people who selected plans through new federal and state exchanges before the Dec. 24 deadline. Others have until March 31 to sign up. Many Americans can receive federal subsidies to help pay for insurance. Several million low-income people also qualified for Medicaid, which 26 states are expanding under the health law that President Barack Obama signed nearly four years ago.
But there’s a ton of fine print taking effect, too, nitty-gritty details that are critical to making the health law work as intended. Here’s a look at some of the other Obamacare elements taking effect Jan. 1.
Pre-existing condition coverage
In 2014, health insurers no longer will be able to shut out people with pre-existing conditions or jack up their premiums. Annual and lifetime benefit limits are also prohibited.
The individual mandate
To help offset the cost of adding millions of older, sicker people to the insurance rolls, Obamacare requires that most Americans – including young, healthy ones – obtain coverage or pay a fine. Numerous groups are exempted, from undocumented immigrants to Native Americans to members of certain religious sects. And a broader “hardship” exemption is available to people deemed unable to afford any available insurance options or dealing with other life challenges, from foreclosure to domestic violence to unemployment. The White House recently gave people whose health plans were canceled the option of having a hardship exemption, essentially waiving the mandate in their case for one year.
Those who are subject to the mandate could be fined if they lack coverage for more than three months in a single calendar year. The penalty is relatively light in 2014, topping out at either $95 or 1 percent of an uninsured person’s income, whichever is greater. It’ll be deducted when those individuals file taxes in 2015, so its impact won’t be felt for a while.
This mandate remains the most unpopular part of the health law. Although advocates say it’s a necessary lever to keep costs down, it’s at the heart of nearly every Republican attack on Obamacare.
The health insurance tax
Another source of funds to support the law comes from a tax on health insurance premiums. Insurers have fought hard against the health insurance tax, but it’s expected to raise $116 billion through 2023 and so is not likely to go away anytime soon. It applies to plans offered by insurers through employers and through the exchanges but not to the self-insured plans of large companies.
While getting rid of the tax would add hugely to the deficit over a decade, insurers have tried to make the case that the tax will force them to increase premiums. Bills in Congress would either repeal or delay HIT for two years, but the Senate isn’t likely to take them up. The tax will be 2 percent to 2.5 percent of premiums to which it applies, according to nonpartisan federal experts. The Joint Committee on Taxation has estimated that would equal about $360 for a family plan by 2016.
Minimum insurance standards
Not only must people get insurance in the new year, their plans have to meet basic requirements outlined in the health law. That means coverage for basic preventive care and a range of health services laid out in regulations. Many of the people who received cancellation notices in 2013 did so because their health plan didn’t meet new requirements.