Q. I can't afford afford health insurance now, so how am I expected to afford it in two years when, because of health-care reform, we will have to buy it? Is it government-subsidized or what?
Good question! In the aftermath of yesterday's Supreme Court decision upholding the constitutionality of the law, I've seen a lot of questions from people who are upset that they might be forced to buy coverage they can't afford. No wonder the mandate is so unpopular.
Please let me put your mind at ease. First of all, if you can't afford health insurance you won't have to pay a fine, ever.
But even more important, you guessed right about premiums being subsidized. Come 2014, households with an income of less than 400 percent of the federal poverty level, which in 2012 works out to $44,680 for a single person and $92,200 for a family of four, will be eligible for a subsidy in the form of a refundable tax credit. That means you get it even if you don't owe federal income tax. The subsidies get larger the lower your income.
Depending on your income level, you might also get a subsidy that caps your out-of-pocket costs on expenses such as deductibles and copays.
The Kaiser Family Foundation has an online calculator that will give you an idea of the subsidy you might have coming to you. For instance, a 50-year-old single person with an income of $30,000 will get subsidies that bring down the cost of a mid-priced plan from $582 a month to only $209 a month. What's more, the most that person will have to pay in out-of-pocket costs in a calendar year is $3,125. After that, the health plan will pick up 100 percent of everything. That's an important protection for people facing catastrophically expensive illnesses or injuries.
It's important to note that you can only get a subsidy if you buy your insurance on your state's health exchange, which should come online in late 2013. An exchange is basically a marketplace of private insurance plans available in your area. Anyone with an income of above 100 percent of the poverty level who doesn't have coverage available through a job is eligible to buy through these exchanges. If you're curious what an exchange looks like, here's one in Massachusetts, which already did the same kind of reform that the rest of the country will have in 2014.
Learn more about the Affordable Care Act.
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