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What Obama’s New Healthcare Law Means For You


Today’s historic Supreme Court ruling upheld President Obama’s new healthcare laws (you know, “Obamacare”). This ruling included the polarizing individual mandate—the ability for the government to levy a tax on individuals who can afford health insurance but choose not to buy it, essentially requiring health insurance by law.

Health insurance is confusing enough already. Trying to make sense of health insurance terms like coinsurance, deductibles and copays will likely send you back to the doctor to beg for anxiety meds. And the new law has changed everything again. Very briefly, here’s what the new healthcare laws—now that they’re here to stay—mean for you. 

If you are uninsured:

The individual mandate begins in 2014. This means that you must carry health insurance or pay a tax penalty. In 2014, the individual mandate penalty will be $285 per family or one percent of your income, whichever is greater. In 2018, the penalty goes up to $2,085 per family or 2.5 percent of income.

There are some exceptions for low-income individuals and those for whom health care premiums would cost more than eight percent of gross income.

The good news is that the new state-run health insurance exchanges required by the law by 2014 should make buying individual insurance easier than it is now.

If you are insured:

If you are under 26 and gained health insurance as a result of the healthcare laws, you will be able to remain on your parent’s health insurance until age 26. This is a huge win for millions of young adults who are still in school or working one or more entry-level and/or part-time jobs that do not provide health insurance.

Beginning in 2014, the law makes it illegal to deny applicants health insurance or charge unrealistic premiums to people with a pre-existing condition.

If you utilize a Flexible Spending Accounts to save tax-free money for medical expenses, the annual pre-tax saving limit will be $2,500 in 2013.

Other parts of the law:

The new healthcare law has a lot of components with wide-ranging implications. Here are a few changes the law made that will remain in place:

  • Restaurants with more than 20 locations must list calorie counts on every menu item.
  • Doctors must disclose goodies they receive from medical supply sales reps.
  • Employers must provide rooms and breaks especially for breastfeeding where working mothers can express breast milk during the day.
  • There is a 10 percent federal tax on tanning services.

Has the healthcare law changed how you use or view health insurance for better or worse? Let us know in a comment.

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.

Comments

  1. Interesting additions, I thought breastfeeding rooms were already mandatory for larger companies. Like the idea of calorie disclosure and taxes on tanning beds.

  2. Melissa says:

    I’m trying to figure out: I’m a self-employed LLC who spends 95% of my time overseas. So I have health insurance from International SOS (which kicks in everywhere but 100 miles from the house I’m never at). So does this count for health insurance or not for the “individual mandate”?

  3. Michelle says:

    I am over 30 but have found your column interesting until now. I think that those of you under 30 are in for a rude awakening. The “stay on your parents ins. until 26″ seems lame. Why do you want your parents to pay for your health insurance? When I reduced my work hours do to internship obligations as a college student at the age of 25, I purchased insurance through the university. When I graduated and the insurance at my new job wouldn’t kick in for 90 days, I purchased a low cost ($69 a month) policy with a higher deductible ($10K). It’s a no-brainer called personal responsibility. I also worked my way through school (as did the majority of my friends) – full time until the last 15 months when the aforementioned internships were required and managed to graduate with no loans and money in the bank. A lot of what’s wrong with student loans these days are self inflicted. Students don’t want to go the community college route or work while attending college and choose to finance everything. I am not a “superwoman” but there is a decided entitlement mentality these days that has led to a boatload of fiscal problems in our country!

    • Michael says:

      Michelle,

      The problem I see with your point of view is a lack of understanding through no fault of your own. I am 26 and my generation was raised with the expectation of what you call “entitlements.” We were promised that if we worked hard in school, we would make it to the 4 year college of our dreams (I went where I could most afford to go). We were also told that once we get a degree, we were guaranteed a great paying job and would live out the rest of our days in comfort. Then 2008 happened. Although I had scholarships galore, I still needed to take out a few loans. My parents even helped out with food and rent for awhile. When I turned 23, I was involuntarily kicked off my parents health insurance (Tricare). I too purchased a cheap as possible temp health insurance plan and then purchased a plan at the start of graduate school. The only way I was able to pay for it was out of my emergency fund. I was lucky/smart enough to have one at the time. Luckily in my second semester I was able to snag a graduate assistantship which covered 75% of my insurance costs. At graduation, I was eager to rejoin my parents plan…which was no extra cost to them, but Tricare wasn’t following the new healthcare law. Apparently they have an exception w/ the government where they don’t have to follow the rules. I was able to get a paid 2 month internship with no benefits. I elected not to get health insurance at that time because I wasn’t sure how long it would take me to find a job after the internship. I needed every dollar I had because it was an unpredictable time. I luckily was able to get a grant funded job with a state university, but it wasn’t until 3 months later of constant job applications and interviews. At this time I decided to pay off all most non-student loan living expenses that had accrued over those job less months which depleted my emergency fund in its entirety.

      After 7 months I found a permanent position in another department at this university. Neither position pays very much and the new one is less, but I took it because it is permanent and is in my field of study. I am still living paycheck to pay check and fortunately have a life partner to share expenses with. Slowly but surely I will be contributing to my savings and retirement.

      I one of the lucky few who only pays $50 a month for health insurance, but it is still a higher percentage of my pay.

      I don’t understand the concern with the penalty tax. It only affects those that can actually afford health insurance.

    • Michelle,
      You are being a tad close-minded, in my opinion. I am not here to make this a platform to brag about how financially independent I have been, so I will admit that I was happy that my father offered to keep me on his health insurance for as long as he was able. When I turned 22, I was kicked off of his plan because, at that point in time and for that particular provider, 22 was the age you were no longer eligible to be covered by a parent’s insurance. No problem, right? I was ready to fork over the cash from my meager paycheck to try to obtain my own. WRONG. Came to find out that the bout of pancreatitis I was hospitalized a few days for back when I was 21 was defined as a pre-existing condition. EMERGENCY medical insurance was gonna run me $350+ a month, which wasn’t even going to cover the stuff that I regularly used health insurance for, like birth control pills! (Which jumped from a $10 copay to $55 a month.) I worked as a personal assistant for an attorney at that time and was not offered health insurance. I suppose you would suggest I should have quit that job and found full-time work with health insurance benefits elsewhere, but school was always my main priority. This attorney offered me full time hours (albeit, crappy hourly pay) and was flexible with my school schedule, so I just couldn’t bring myself to give that up. So, I lived without health insurance for two years, until I graduated and was able to obtain a full-time job at a place that offered me health insurance. I just could not find a way to afford it.
      I think it is unfair to assume that college students are being lazy and “leaching” off of their parents’ health insurance rather than just taking advantage of it at a point when their lives may be more volatile, financially unstable, and without the flexibility to maintain a schedule that allows them the freedom to gain full-time employment at a company that offers health insurance.

  4. I’m on your page Michelle. Good for you and others like you.
    I realize that this article was intended to not be polarizing and be rather factual. Neglected from this article however, are the implications for businesses and individuals as a result of this law. As you said, “The good news is that the new state-run health insurance exchanges required by the law by 2014 should make buying individual insurance more affordable.” Since insurance companies love Obamacare (so they’re not losing out) who loses? If this was a win-win, there wouldn’t be over 60% of the population opposing parts/all of this law.

    • Ed,
      Insurance companies are actually getting screwed somewhat (for once–which in my opinion might be a good thing). By not being able to turn away people that have a new diagnosis of cancer, etc., they will have to pay the more expensive bills they used to be able to avoid. It won’t be as easy for them to use “pre-existing” as a word to deny standard care or create lapses in coverage. Sure they might be getting new clients, but the healthy young people will probably not have to pay as much (since their wages in general are lower) and they are getting much sicker clients who previously were denied coverage.

  5. Jeremy E. Laughery says:

    Well, the ruling has me thinking for sure if I am really ready for starting that new information security business here in the United States. There are a lot of ramifications to the new ruling. However, the new ruling may have been influenced by the welfare of those that can not afford insurance. Logically, citizens that pay for health insurance and never get sick are the ones that may not suffer from this ruling. Citizens that suffer the most are the ones that never get sick and do not want health insurance for alternative reasons. The new ruling is ushering in social health care. We are already under a socialist system of old age retirement and heathcare for the retired. The problem is that there is not enough flexability in the law that provides waivers. Waivers can be granted for those that do not have health insurance but can afford it but do not get it. Here is an example that illustrates my point. In my county, we have healthcare providers that charge a flat $30 fee for a visit if one has no insurance coverage. That is affordable health care, I would say. I used those services several times with great benefits.

    Another question: If I make 100,000 a year and do not buy insurance, do I pay 1000 in a penaly? If I make 1,000,000 a year and do not buy insurance, do I pay 10,000 in a penalty? Is this penalty capped? Do I get benefits after I pay that penalty? Is there a just compensation for penalizing me?

    The future of this law, as I see it, will be gutted by next year. There are too many variables and the people never had a chance to vote on this Federal mandate.

    Are we not free to vote on laws anymore?

    The power to vote is the power of freedom and is within a free and conscious People.

    • “the people never had a chance to vote on this Federal mandate.
      Are we not free to vote on laws anymore?”

      Are you serious? You see, the way it works is: we vote for representatives in congress and they vote on things for us. This is how the system (democratic republic) works.

      “Do I get benefits after I pay that penalty? Is there a just compensation for penalizing me?”

      That’s the incentive to get insurance, so you won’t be charged the extra tax for not doing so. $30 a visit for a checkup is one thing but suppose you become very ill or have an emergency. Hospital visits and emergency room visits by those without insurance – that’s what is the more expensive issue and not only does it put sick individuals and their families in debt, but weighs on the taxpayers. With everyone having access to affordable long-term care we ideally prevent those situations.

      • Well, I have to support my view on this point you are trying to make. “Hospital visits and emergency room visits by those without insurance – that’s what is the more expensive issue and not only does it put sick individuals and their families in debt, but weighs on the taxpayers.” How does this weigh on taxpayers? Can you support your claim with evidence? Taxpayers filing their income tax should have been asked to INDIVIDUALLY input their vote for the new system, which would leave no room for confusion and debate. Is this a taxpayer issues or is this a healthcare issue? I think there is a solution to the emergency room visit issue. Local taxes can be raised to pay for emergency care facilities. However, those are only to be used for emergency puposes. Yes, it is a demcratic solution and should be welcomed by Citizens all over the several states. This should cover the costs of those that do not have insurance but need to have emergency care. This local tax will take some burden off the IRS in many regards. My view is that the States should have stepped in before this became a Federal issue. The States do not like it, then the States need to step up and organize their perspective counties to implement their local emergency healthcare tax. As a matter of fact, I will write my governor tonight and tell him to pass this tax legislation.

  6. I’m self-employed. I think that there is a personal responsibility factor here – people need to make healthier choices so our costs aren’t so astronomical. If people knew what the cost was beyond their $35 copay they’d be a lot more inclined to question the charges. The problem with healthcare is that it has never been part of the free-market system. We don’t have the ability to “shop around”, we don’t know the true costs, and the rates on my individual insurance go up about 20% per year and have for 7 years, with no change in my health. It can’t be compared to cell phone or cable service or even something more complex like a mortgage. I don’t know if this bill solves everything, I’m sure it doesn’t, but I have yet to hear anything from the Republican side that offers a solution to those of us who are self-insured.

  7. I’m worried about what this means for employees, like me, who have so-called “Cadillac” health insurance from my company. The way I see this going down is that it will backfire. The plan calls on taxing “Cadillac” health care programs to help pay for the public program. On top of that, the law makes insurance compaines take on high risk people, which will shift even more cost to us. That in turn makes my insurance cost more, both to my company and to me since I have to pay a percentage. The cost will keep rising as the public exchanges become larger or underfunded. Eventually my employer realizes that thye can cut all insurance benefits for employees (excluding executives of course) and dump us on the public program, instantly increasing profits. In turn, I lose my excellent health insurance and the government loses a significant source of revenue to pay for the public system.

    I recall seeing a video from 2005ish where then Senator Obama was talking about how to force Americans onto a single payer system. He said that Americans would never go for it, so you have to take a round-about way to force them. You set up a public system, tax private insurance to the point that it become unaffordable, and force everyone on to the single payer system. Starting sound a little eerie to me…

    • It is not a public system, it is a public “exchange” where people can buy insurance from private providers. Your comment also fails to mention that, along with the high risk people, private insurers are “forced” to take on young, healthy individuals who will undoubtedly be paying for insurance that they won’t need. The whole point is that, the larger the base of insurance is, the more the cost is spread amongst those that comprise the base and the less cost there is on the public having to fund hospitals, clinics, etc. for those receiving services without insurance and without the means to pay for it.

  8. It’s one more way we are being taxed. Folks go check out the 8 page summary of the 2700 page Obamacare report at the Journal of American Physicians and Surgeons website. Dr. Jane Orient took 2 weeks to read it and then summarize it for us. In the grand scheme of things, the tens of millions that this will help, will be off set by the other hundreds of millions of U.S. citizens by more taxes and harsher regulations if we don’t comply. The math seems simple. The working class citizen is going to take the biggest hit whereas, if you are on welfare you will benefit more. I urge you to do some due diligence. Gather some more information. Read the PDF and I hope you make an informed decision come voting time!

    • “more taxes and harsher regulations if we don’t comply”

      Why not comply then?

      I’d advise you not to blindly take the work of anyone who may have an interest in the outcome of the debate. Not to mention, I doubt this Dr. even understands the law that she is reading, considering she is a doctor and not a lawyer. I think it would be more prudent for you to encourage people to do their own investigation and make their own decisions, instead of being forcefed the opinions of someone else.

  9. Its abominable that people who call themselves Christians do not give a hoot that 48 million people, included children,who have no health insurance. Being Chiristian is not professing to be so, going to church and tithing. Being a Christian is caring for others. I read all these unchristian comments and they are all about me, me, me. What kind of society are we creating? One where greed and self-benefit are the guiding principles? It is a shame that a country that prides itself of its greatness cannot even provide health protection that countries much less powerful and rich manage to provide.
    Some even call the initiative “socialist”. Labelling is the recourse of the ignorant. Was Teddy Roosevelt a “socialist” when he went after the Robber Barons? Calling ourselves “liberal” or “conservative” only curtails our freedom of choice. There are times and issues where the proper approach is conservative and other times liberal, Labelling ourself as one is a self-lobotomy.
    Socialism, Capitalism, Feudalism and all the other isms are mere tools men invent to deal with their contemporay situation. They are not ideologies but tools. Our ideology is one based on Justice, Fairness, Well Being, Opportunity.
    We cannot conitnue to ignore the plight of 48 million people. With this legislation no one will have to pay what they cannot afford and everyone’s participation will do away with a seriour social and moral problem.
    If providing health care to all means that I will not buy the lates iphone, that is a very little price to pay for the well-being of our children.

    • Gimme a break. If you’re so generous then why don’t we give all our money to third world countries.. they’re even worse off. Adding 48 million people to a system that is already collapsing in on it’s own weight is a terrible idea. This money goes to fill the pockets of our colossal government.. poor people will not see it.

  10. This is completely socialistic. there is a reason people from socialistic countries come to the US. Since obama is clearly trying to screw over the US this makes sence. Honestly, I don’t buy the crap that people with lower incomes cant afford things. Working in a hospital, i can tell you that there are programs that cater to them, alongside the clinics that they are able to go to. Obamacare is just another way for Obama to screw over the US. There is nothing in the bible that says chrisitians are suppose to be socialists. It says to be wise in all your actions and use your discretion. and tithing is to be done back to the church which is to God, back to his foundation which again is the church, a community of people that are there to worship Him. People, please do your research.

  11. Jennifer says:

    I’m disappointed to see not *direct* misinformation, but rather a HUGE sin of omission. The “Individual Mandate” was the deal maker/breaker proposed by the very same Republicans who immediately began attacking it after they signed the Affordable Healthcare Act–which happens to resemble “Romneycare.” I’m tired of the ignorance being fostered around this issue AND that somehow the government is going to run insurance companies. Please, people, get your facts. One last thing: I agree with Jay. If you’re going to call yourself Christian, BE Christian, not selectively Christian.

  12. Working in a hospital my dear Emily should by now know that hospital programs for the poor provide them with some degree of care AFTER not having health insurance put them there. This is not a matter that pertains only to the poor, Many of them are already covered by Medicare. This pertains to people in Florida like my neighbor who can afford insurance but are denied it because they have Diabetes 2. This pertains to millions of middle income families who, not having insurance, go to very costly emergency services in Emily’s hospital and disappear into the night when tendered the bill. Families whose children an parents receive no preventive services that would help them avoid going to Emily’s hospital.
    My dear Emily. I do not know what Bible you are reading but mine tells of Christ helping folks who people like you would leave by the sideroad. People rejected by others because they were blind or lacerated by leprosy and even those who had already died. The Christ that gave away food on the Mount. The Christ you are talking about lives in Wall Street.
    I repeat, With this legislation no one will have to pay what they cannot afford and everyone’s participation will do away with a serious social and moral problem.
    And, as Jennifer said, the “socialistic” individual mandate was proposed by the same people who later questioned it in court.

  13. Rebekah says:

    I had not heard that Flex Spending Accounts were going to be capped at $2,500 in this bill… what is the reason for that? Can anyone explain why this would be part of the legislation?
    David, can you offer any insight?

    • Rebekah says:

      And does the cap only apply to tax-deductibility? Does it mean I could still choose to have a $3,500 Flex Spending Account, but only the first $2,500 of it will decrease my tax liability? Or does it mean that the largest Flex Spending Account anyone can have is $2,500, period?

      • Jeremy E. Laughery says:

        This is a rob Peter to pay Paul legislation. If your taxable earnings go up by at least $1000, this amounts to huge income to the government. This is an instant gain of taxable income that the government will tax you on.

  14. This all sounds great, but that’s because the author failed to mention the negatives that come with ObamaCare. Not only does ObamaCare allow our government to be more intrusive, but it will lead to an explosion of higher deficit. Less employers are likely to hire because of ObamaCare, which will lead to a higher unemployment percentage. Their are people who have lost their healthcare providers, and in turn their doctors, due to ObamaCare.

    Some may make a comment connecting republicans with wealth, but I am a 25-year old female who works hard and lives slightly under middle class, and I do not believe ObamaCare is the best solution for our country. We literally cannot afford to be in more debt. To tax the middle class more will cause more heartache for this country.

    • Stephanie says:

      Yes! The problem is that this law wants to tax people who can afford health care but don’t have it(like me). Most of the people who fall into this category are probably having a hard enough time paying bills and making rent. To put an added tax on this group could just put people deeper into debt. Many of these people are hourly employees and independent contractors who are not offered benefits. Why not tax the companies who do not offer benefits to employees working 35 hours or more a week?

  15. Jessica says:

    David – I hand it to you for taking the initiative to post this article…Although it comes with controversy, it is good for all of us to know how this change will impact us. I appreciate you taking the time to try and explain the changes in a simple and precise fashion. It is sad this country has become so divided on the basis of political party lines. Although I identify as a Democrat and Liberal for that matter, I also see the value in all of us working together towards a greater good. It is concerning when we begin to make decisions on the basis of ideologies and religion rather than taking into account the needs and future of our country. At the end of the day, we all are Americans and love our country, which is why we tend to be so passionate when change is implemented and reform is needed. In addition, I also believe religion should NEVER be brought into the conversation when discussing politics and the future of our country. There is a reason why there is supposed to be a separation of church and state.

  16. Stephanie says:

    I find it very interesting and hypocritical that so many people are accusing opposers of this law of being bad and/or lazy people. I am 27 years old and I have not had health insurance since I graduated college. I am not lazy and I do not think of myself as a bad person, but I do NOT want to be told that I have to purchase health insurance. I have had many jobs and none of them paid benefits. It is not because I am lazy and I don’t work, it is because many companies want full-time employees who are “independent contractors.” My friend was recently offered starting salary with benefits at a marketing agency that she has been working at full-time for 3 years. I used to manage an award winning restaurant in Manhattan and received an hourly rate with no benefits. Many industries are built on contractors and hourly employees such as hospitality, restaurants, film, marketing and promotions, and retail.
    I am really tired of people talking about personal responsibility and sick children. Yes I care about all these things and I consider myself a responsible adult. But unfortunately, my parents went broke when the economy crashed. I live at home so that I can give my parents money to help pay the mortgage and pay off their debts. While the government might argue that I can afford health insurance based on my income, I would argue that I cannot through no fault of my own. I am not trying to cry that life isn’t fair, but I certainly don’t need to be taxed anymore than I already am.

  17. Stephanie:
    If you are on an hourly wage in the restautant business I cannot see how taxes would be such a burden on you because 48% of working people do not pay any Federal Taxes. If you do, you are not filling your 1040 right and may not be claiming your earned income credit so your argument against the law would not be valid. I advise you to visit a tax consultant. Maybe you qualify to file an ammended tax return (1040X) for the last three years and receive a reimbursement as earned income credit can go as high as $5700.

    You cannot bank on having good health today and not having health insurance because no one can predcit what will happen tomorrow. That is precisely why everyone must be included as Romney argued when he ws Governor of Massacussets, Because people who are healthy today most probably will not be so in the future and then become a burden on a system they did not contirbute to.

  18. I heard that when a company has 50 employees that Obamacare requirements kick in. The talk is that companies will not hire over 50 people because of this rule. It’s because they do not have the revenue to fund the Obamacare requirements.
    They could just start a new company and get around this rule.

  19. Do you know how the tax on “Cadillac” healthcare plans will work? For example if your employer pays for 100% of your health insurance will they be responsible for 100% of the 40% tax? What if the employer pays for 50% of your health insurance. Will each party have to pay the 40% tax on there part of the contributions? Any elaboration that you can provide on this would be great as I have not been able to find much info on this part of the health care online and I feel it is extremely important part of this law that seems to be completely overlooked.

  20. Honestly, Obamacare is another TAX, plain and simple. How many “adults under age 26″ are on their parents plans? We are pay for those additional premiums. Our employers pays higher rates, we pay higher rates even if we don’t have any “kids” in that category.
    Have any of your thought about who pays the bills? So far I personally know of three parents that are being held liable for the hospital bills of their adult children since these “kids” signed into the hospitals using the parents insurance. Of course, Obama never told anyone of the cost to the parents if the kids didnt pay the bills. Shame of this government for taking advantage its people.
    The government will take and pay out of our tax dollars for every illegal when they come into this country to have a child, but god forbid if our American citizens need help, they have no interest in hleping us.
    Shame of the Supreme Court for allowing this bad policy to take place.
    I am tired of taking care of illegals, adult kids.

  21. i don’t understand why the cab on the flex plan can anyone explain what the purpose of that is? Our insurance company lady said it was because we were hiding money from the government?! I don’t understand how they can accuse us of that when that was what it was put in place for was a way for us to have a tax cut. I use it to be able to affored my my perscreiptions and $1,000 deductible when we have to have something major done. With out being able to put that money aside and make monthly payments we would not be able to come up with the deductible when something came up unexpected. It seems the lower class working guy always ends up getting the raw end of everything when they put this stuff together.