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How Will The New Health Insurance Laws Affect You

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Last Sunday night Congress passed the Patient Protection and Affordable Health Care Act. This act reforms the existing health care industry and is expected to insure an additional 32 million people. This bill was passed with quite a bit of controversy surrounding it. Polls consistently showed that the majority of Americans were not satisfied with the bill as it was currently written, and several Democrats voted against it along with all Republicans in the House of Representatives. Having said that, the President has signed it into law, and the deal is done. You may be wondering, how do these new health insurance laws affect you? Let’s take a look at the major ways in which the new health insurance bill will affect you.

1. Everyone will have to purchase health insurance.
By 2014, all Americans will have to purchase health insurance. Individuals that currently have health insurance will be affected the least by the new health care laws. Low and moderate income individuals will receive assistance from the government in order to purchase insurance. Individuals that fail to purchase insurance will be subject to fines and penalties. The penalty would be roughly $95 in 2014 and rise to $695 in 2016. There will be a maximum cap on fines.

2. Employers will have to offer insurance.
Employers with 50 or more employees must provide health insurance or pay fines if any of their employees receive federal subsidies to buy health insurance. Businesses that fail to offer insurance will be subject to fines and penalties. Employers with less than 50 employees are exempt from this rule. Employers with less than 25 employees who choose to offer insurance would receive tax credits as long as employees average salary is $50,000 per year.

3. No caps on medical coverage.
Insurance companies can no longer place restrictive annual limits or lifetime caps on the amount that they spend for medical coverage. In the past, insurance companies could places limits on the amount that they would spend for your medical expenses. If an individual had a disease such as cancer, these limits would have affected how much your insurance company would pay towards your treatment.

4. People with pre-existing conditions will receive coverage.
Health care reform means that all children will have access to medical insurance including children with pre-existing conditions. Adults with pre-existing conditions will also be able to have insurance coverage through high-risk pools as well. These high-risk pools will be run by states and limit the amount of money that you have to personally pay for medical insurance.

5. Kids can stay on their parents’ plan longer.
Adults under the age of 26 can stay on their parents plan. Previously, adults 19 and over had to find their own insurance policy if they were not enrolled in college. Now, adult children that are financially dependent upon their parents can stay on their parents’ policy.

6. Individuals can not be dropped by their insurance company.
Insurance companies will no longer be able to deny coverage to people that get sick. Health insurance companies are famous for saving money by dropping health care coverage for individuals with diseases or severe illnesses.

7. High income individuals will pay higher taxes.
Households that earn over $250,000 per year will be on the hook for higher taxes. Beginning in 2018, high income earners will have increased Medicare payroll taxes and taxes on unearned income. Unearned income applies to capital gains, interest, and dividend income.

8. 95% of Americans will now have health insurance coverage.
The biggest beneficiaries of health insurance reform are low and moderate income individuals, adult dependents under the age of 26, people with pre-existing conditions, and children. Seniors will receive a 50% discount on brand name prescription drugs. This should close up the doughnut hole which made seniors responsible for the entire cost of prescription drugs once they surpassed the coverage limit. Government subsidies to Medicare Advantage will be cut, costing some seniors to lose extra benefits.

For other bloggers’ opinions on the new health insurance laws, check out the following posts:

What do you think of the changes to the insurance laws?

(Photo credit: Listener42)

Mark Riddix
Mark Riddix is the founder and president of an independent investment advisory firm that provides personalized investing and asset management consulting. Mark has written financial columns for Baltimore and Washington, D.C. area newspapers and is the author of the book, "Your Financial Playbook."

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