By Keith Speights
Next year will be the year. Although the Patient Protection and Affordable Care Act, commonly known as Obamacare, was passed back in 2010, the most significant parts of the major health-reform legislation don't become effective until 2014.
Just because major components don't kick into gear until then, though, doesn't mean you shouldn't understand as much as possible about Obamacare now. Here are some important things you need to know.
If you're employed by a relatively large organization
The letter of the law states that employers with more than 50 full-time employees (defined as working at least 30 hours per week) must offer health insurance to all those employees in "months beginning after December 31, 2013" or pay a $2,000-per-employee fine. However, the Obama administration decided to interpret the law as giving it latitude to push back this deadline until Jan. 1, 2015. If you're employed but your employer doesn't offer health insurance, you'll have to wait a while longer.
The letter of the law states that employers with more than 50 full-time employees (defined as working at least 30 hours per week) must offer health insurance to all those employees in "months beginning after December 31, 2013" or pay a $2,000-per-employee fine. However, the Obama administration decided to interpret the law as giving it latitude to push back this deadline until Jan. 1, 2015. If you're employed but your employer doesn't offer health insurance, you'll have to wait a while longer.
That wait could really be a long one for some workers. That's because, in some cases, employers could find it more cost-effective to pay the fine instead of offer health insurance. Some organizations could also opt to use higher numbers of part-time staff to reduce their costs of compliance with Obamacare.
If you're employed by a smaller organization or are unemployed
The threshold for qualifying for Medicaid will increase in states that choose to implement the Obamacare Medicaid expansion. Generally speaking, individuals or families with income up to 133% of the federal poverty line will qualify for Medicaid. However, some states will have more lenient thresholds.
The threshold for qualifying for Medicaid will increase in states that choose to implement the Obamacare Medicaid expansion. Generally speaking, individuals or families with income up to 133% of the federal poverty line will qualify for Medicaid. However, some states will have more lenient thresholds.
Anyone who doesn't qualify for Medicaid and is not covered by group health insurance by Jan. 1 will be required to get insurance or pay a penalty. This penalty will be the greater of $95 or 1% of income in the first year. The penalty escalates to the greater of $695 or 2.5% of income by 2016.
To avoid the penalty (again, assuming you're not covered by Medicaid), you'll need to purchase insurance through an online health insurance exchange. Some of these exchanges will be operated by states and others by the federal government. The exchanges are scheduled to become available on Oct. 1 of this year.
You could be eligible for federal tax credits to help you purchase insurance. The amount of the subsidy you're eligible for depends on your household income level. The less you make per year, the more financial assistance you get.
There's one other important thing to know if you're buying individual coverage: Insurance companies won't be able to charge higher rates because of gender or pre-existing medical conditions. That's good news for many, but it could increase the premiums for lots of Americans.
Regardless of employer size
There are some provisions that will apply for employed Americans beginning in 2014 regardless of employer size. For example, if you're relatively new to your job, your insurance plan can't impose an eligibility waiting period more than 90 days.
There are some provisions that will apply for employed Americans beginning in 2014 regardless of employer size. For example, if you're relatively new to your job, your insurance plan can't impose an eligibility waiting period more than 90 days.
Some Americans will get hit with more taxes. Individuals making more than $200,000 per year and married couples who file jointly that make more than $250,000 annually must pay an extra 0.9% tax. If you use a flexible spending account for health care, the maximum amount of pre-tax contributions you can make is $2,500. Also, the deduction for qualifying medical expenses jumps from 7.5% to 10% of adjusted gross income.
If you're an investor
Upcoming changes resulting from Obamacare are likely to help and hurt different industries. Many observers think the requirement that individuals obtain health insurance will help hospital chains. Hospital stocks have soared with the anticipated implementation of the individual mandate. Shares of Tenet Healthcare (NYSE: THC ) , for example, are up 137% in the past year.
Upcoming changes resulting from Obamacare are likely to help and hurt different industries. Many observers think the requirement that individuals obtain health insurance will help hospital chains. Hospital stocks have soared with the anticipated implementation of the individual mandate. Shares of Tenet Healthcare (NYSE: THC ) , for example, are up 137% in the past year.
However, research by Deloitte casts some doubt as to whether hospitals will really be helpedmuch by higher numbers of insured patients. Even if Deloitte is right, though, hospitals with better pricing power could still do well. This is the driving factor behind Tenet's recent purchase of Vanguard Health Systems.
HCA Holdings (NYSE: HCA ) might be the best choice when it comes to hospital stocks. It's the largest hospital chain in the nation. HCA shares haven't surged as much as most of its peers, and as a result, the stock appears to be more attractively valued than others right now. If Obamacare does help as much as some expect it to, HCA will benefit.
Turning to health-insurance companies, you might think the increased restrictions could hurt their profits. Think again. The companies will just increase premiums to make up for having to provide more benefits.
Obamacare's Medicaid expansion should particularly help several of the insurers. WellPoint(NYSE: WLP ) looks to be in good shape to benefit after its acquisition last year of Amerigroup. The combined company serves 4.5 million Medicaid beneficiaries in 20 states. With a trailing price-to-earnings multiple below 10 and projected annual earnings growth over the next several years of 11.5%, WellPoint seems to be a good pick to profit from Obamacare.
One company that just might emerge as one of the biggest winners from Obamacare iseHealth (NASDAQ: EHTH ) . The health insurance website operator scored a major victory last week with a contract that allows it to sell insurance plans participating in Obamacare exchanges. If millions of Americans purchase health insurance as intended, eHealth will profit significantly.
Clear as mud?
Do all of the coming Obamacare changes seem as clear as mud to you? Don't worry -- you're not alone. In fact, an April survey conducted by the Kaiser Family Foundation found that 40% of Americans didn't even know that Obamacare was still a law. At least you're now more knowledgeable than nearly half of your fellow citizens.
Do all of the coming Obamacare changes seem as clear as mud to you? Don't worry -- you're not alone. In fact, an April survey conducted by the Kaiser Family Foundation found that 40% of Americans didn't even know that Obamacare was still a law. At least you're now more knowledgeable than nearly half of your fellow citizens.
Editor's note: A previous version of this article incorrectly stated that an annual maximum deductible of $2,000 for an individual or $4,000 for a family is applicable for employers of any size. This deductible limitation applies only to smaller employers. The Fool regrets the error.
If you're still wondering about the details on how Obamacare might affect you and your portfolio, we can help clear things up. The Motley Fool's free special report, "Everything You Need to Know About Obamacare," takes a 360-degree look at how the law may impact your taxes, health insurance, and investments. Click here to grab your free copy today. You'll be glad you did.
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