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With President Obama in the White House for another four years and the Supreme Court upholding the Affordable Care Act, Americans will continue to see changes in coverage and fees for healthcare.
Passed in 2010, we've already seen incremental changes: If you have a pre-existing medical condition that made it impossible for you to qualify for medical coverage before, you can no longer be denied coverage. Young adults can stay on their parents’ insurance plans up until age 26, and as of August 2012 there’s no more copay for your birth control pills or gynecological well-woman visits.
This year the linchpin of the plan begins to roll-out: State health insurance exchanges that will provide coverage to more people than ever before. Here’s what that means for you, as well as some other changes you can expect this year.
State health insurance exchanges will open in October
Starting on October 1, you’ll have a brand-new marketplace to shop around for health coverage. And it's on a sliding scale. If you earn up to 400 percent of the poverty level ($44,680 or less for a single person, $60,520 or less for a couple and $92,200 or less for a family of four) you will qualify for a subsidy to help you pay for coverage. (As your income goes up, the smaller the discount).
“The exchange really is an important step forward to making coverage accessible to people who would really never be able to access a private insurance policy,” says Claire McAndrew, senior health policy analyst with Families USA. “People on their own pay much more for insurance than they do if they get their insurance through an employer. The subsidies that would be eligible through the exchange will help address that problem.”
While the exchange is tailored toward those who don’t have insurance coverage through their employers, if your company does provide coverage that costs you more than 9.5 percent of your income, you'll be eligible to use the exchange. For example, if you earn $50,000 annually and spend more than $4,750 per year (roughly $183 per biweekly paycheck) you're eligible to shop the exchange.
The exchanges aim to give employees flexibility to change jobs or start their own businesses, says Dee Mahan, director of Medicaid Policy for Families USA. “If you've ever thought, ‘I'm locked into this job, because I can't lose the really good health insurance I've got,’ starting in October, that goes away. They're going to be able to make life choices that really allow them to flourish more professionally and personally.” As of January 1, 2014, you’ll be required to purchase health coverage (on the exchange or through your employer) or you'll be charged a penalty come tax time.
Bigger tax deductions
Did you pay out-of-pocket for that root canal? Spend half your savings for in vitro fertilization? Buy a new pair of eyeglasses? Now you can deduct 10 percent of those costs from your taxes, instead of the 7.5 percent the government used to allow.
Smaller FSA accounts
If you have a flexible savings account (FSA) through your employer, you might notice a change in the amount of tax-free earnings you can have diverted from your paycheck into this fund. Starting this year, contributions will be capped at $2,500 annually. Previously, there was no limit, although employers could set a ceiling if they desired. So if you use your FSA to pay for your tween’s orthodontist visits or prescription copays, you might not be able to contribute as much as you had in the past.
Higher taxes on certain medical gear
Contact lenses, hearing aids and the CPAP machine your husband uses for his snoring will all come with an additional 2.3 percent excise tax.
Closing the Medicare Donut Hole
Are your parents over 65? Federal help is coming to help pay for costly brand-name medications in a continuing effort to fill the so-called “Donut Hole” in Medicare's prescription drug coverage benefit (Medicare Part D). Currently, seniors have to wrangle with a pretty complicated system of deductibles and discounts that first put them in the donut hole and then another set to get them out of it. Starting this year, however, there will be bigger discounts and lower out-of-pocket fees on prescription drugs for seniors using Medicare Part D. Check out this chart for a simple explanation of this year's changes.
Ahead in 2014
Most people who are uninsured and opt out of coverage through the exchange will have to start paying a penalty in 2014. The amount will slowly increase over three years until it reaches $695 per adult and $2,085 per family (or 2.5 percent of income, whichever is greater). Also, Medicaid will expand to cover more people at the lowest income levels. The Supreme Court ruled that states can opt out of this expansion, which could mean that whether you qualify for Medicaid would depend on which state you live in. States will finalize their decisions on the issue this year.