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By AP Photo/Pat Sullivan
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BY RICARDO ALONSO-ZALDIVAR Associated Press
WASHINGTON -- Having health insurance used to hinge on where you worked and what your medical history said. Soon that won't matter, with open-access markets for subsidized coverage coming Oct. 1 under President Barack Obama's overhaul.
But there's a new wild card, something that didn't seem so critical when Congress passed the Affordable Care Act back in 2010: where you live.
WHAT DOES THAT MEAN?
Major new laws come with their own jargon, and President Barack Obama's health care overhaul is no exception. With the first open enrollment season kicking off for the uninsured, here are some terms consumers might want to get familiar with:
Affordable Care Act -- The most common formal name for the health care law. Its full title is the Patient Protection and Affordable Care Act. Opponents still deride the law as "Obamacare," but Obama himself has embraced that term, saying it shows he cares.
Employer mandate -- A federal requirement that companies with 50 or more workers pay a penalty to the government if one of their workers obtains taxpayer subsidized coverage through the law. Delayed one year to Jan. 1, 2015. Intended to keep companies from "dumping" employees into public coverage.
Individual mandate -- A federal requirement that virtually everyone in the United States has health insurance, either through an employer, a government program or by buying his own plan. Effective Jan. 1, 2014. Exemptions for financial hardship and religious objections. Does not apply to immigrants living in the U.S. illegally. People who ignore the mandate will face fines from Internal Revenue Service.
Essential health benefits -- Basic health benefits that most health insurance plans will have to cover starting in 2014. They include office visits, emergency services, hospitalization, rehab care, mental health and substance abuse treatment, prescriptions, lab tests, prevention, maternal and newborn care, and pediatric care.
Marketplaces -- Online health insurance markets in each state where consumers can get private health insurance, subsidized by the government. They used to be called "exchanges," but the feds decided that was too confusing and started calling them "marketplaces." Still, some states stuck with the original name. Open enrollment starts Oct. 1, and the coverage takes effect Jan. 1, 2014. Fifteen states and Washington, D.C., are running their own marketplaces, according to a tally by The Associated Press. The Obama administration is taking the lead in 35 states, in some cases partnering with the state government. All the marketplaces can be accessed online through healthcare.gov. Small businesses will have their own marketplaces.
Medicaid expansion -- The health care law also expands the federal-state safety-net program to cover more low-income people. Medicaid is expected to account for about half the 25 million uninsured people who, the Congressional Budget Office estimates, eventually will gain coverage through the law. The federal government will pay the full cost of the new coverage from 2014-2016, then phase down to 90 percent. Twenty-four states plus Washington, D.C., have accepted the expansion, according to AP's count. Eight states are still considering it. And 18 have rejected it, including Texas and Florida, which have many uninsured residents. Many adults below the poverty level will remain uninsured in the refusing states. A state can change its decision at any time, but the full federal payment for the expansion is only available through 2016.
Metal levels -- The four levels of coverage available through exchange plans, called bronze, silver, gold, and platinum. Bronze plans feature the lowest monthly premiums, but cover only 60 percent of average costs. Platinum plans have higher premiums and cover 90 percent of expected costs.
Pre-existing condition -- An ongoing or past health problem. Currently insurers can use pre-existing conditions to deny or restrict coverage, or charge more. Those practices will be barred by federal law starting Jan. 1, 2014, and insurers will have to accept all applicants.
Tax credits -- Government health insurance subsidies for individuals will come in the form of tax credits. The money will be paid directly to the consumer's health plan, to help cover premiums. The subsidies are on a sliding scale based on income. Each year, people will have to "true up" with the IRS to make sure they got the right amount. People who receive too generous a tax credit may owe money back to the government.
Tax penalty -- The fine levied on individuals who disregard the individual insurance mandate. It starts small and gets bigger in subsequent years. In 2014 it's $95 or 1 percent of taxable income. By 2016, it's $695 or 2.5 percent of taxable income, whichever is greater. Thereafter it's adjusted for inflation.
-- The Associated Press
Entrenched political divisions over "Obamacare" have driven most Republican-led states to turn their backs on the biggest expansion of the social safety net in a half century. If you're uninsured in a state that's opposed, you may not get much help picking the right private health plan for your budget and your family's needs.
The differences will be more glaring if you're poor and your state rejected the law's Medicaid expansion. Unless leaders reverse course, odds are you'll remain uninsured. That's because people below the poverty line do not qualify for subsidies to buy coverage in the markets.
"We are going to have a new environment where consumers may be victims of geography," said Sam Karp of the California HealthCare Foundation, a nonprofit helping states tackle practical problems of implementation. "If I'm a low-wage earner in California, I may qualify for Medicaid. With the exact same income in Texas, I may not qualify."
The health care law is finally leaving the drawing boards to become a real program with citizens participating. But in many parts of the country, the decisions of Republicans opposed to the law will trump the plans of Democrats who wrote it.
Still, there is a new bottom line. Health insurance marketplaces in every state will provide options for millions of people who don't have job-based coverage, who can't afford their own plan or have a health problem that would get them turned down. The feds will run the markets in states that refused to do so.
The coverage won't be free, even after sliding-scale subsidies keyed to your income.
That's significant because starting next year most Americans will also have a legal obligation to get covered or face fines. Some people who now purchase bare-bones individual plans will complain the new ones cost too much. Others, in good health, may resent the government telling them to purchase insurance they don't think they need.
Nonetheless, the number of uninsured people is expected to drop markedly, bringing the United States closer to other economically advanced countries that guarantee coverage.
The combination of subsidized private insurance through the new markets, plus expanded Medicaid in states accepting it, could reduce the number of uninsured by one-fourth or more next year. Current estimates of the uninsured range from around 49 million to well over 50 million.
As Americans get more familiar with the law -- and if more states accept the Medicaid expansion -- millions more should gain coverage. Many of the remaining uninsured will be people living in the country illegally. They are not entitled to benefits.
In Texas, Republican Gov. Rick Perry has vowed not to facilitate "Obamacare." But Cecilia Fontenot of Houston is looking forward to the opening of that state's federally run insurance market.
A part-time accountant in her early 60s, Fontenot is uninsured and trying to stay healthy while coping with diabetes, high blood pressure and high cholesterol. She walks twice a day, early in the morning before it gets hot, and in the evenings.
Also on her mind is a breast lump detected about a year ago. Her doctor recommended a digital mammogram, but she has not been able to afford the more involved test.
"I try not to worry and just pray on it," said Fontenot.
Because of her pre-existing conditions, Fontenot would have a tough time finding affordable individual coverage today. But starting Jan. 1, insurers will no longer be able to turn away people with health problems or charge them more.
And the government will provide sliding-scale tax credits that can make premiums more affordable for households earning between 100 percent and 400 percent of the federal poverty line. That's $11,490 to $45,960 for an individual, $23,550 to $94,200 for a family of four.
People on the low end of the income scale get more help, as will older people, whose premiums are higher.
With an annual income of about $23,000, Fontenot makes too much to qualify for Medicaid. And her state decided not to expand the program, an option the Supreme Court granted last year as it upheld the rest of Obama's law.
But she would qualify for subsidized private coverage in the federally run Texas marketplace. She could apply online, through a call center, by mail or in person.
After the government verifies her identity, legal residence and income, Fontenot would be able to take her tax credit and use it to pick an insurance plan. Coverage takes effect Jan. 1.
She'd have up to four levels of coverage to choose from: bronze, silver, gold and platinum. All cover the same benefits, but platinum has the highest premiums and lowest out-of-pocket costs, while bronze has the lowest premiums and highest out-of-pocket costs.
Fontenot's share of premiums would be capped at 6.3 percent of her income, or $1,450 a year for a benchmark silver plan. She'd have to squeeze about $120 a month out of her budget, and that doesn't include her annual deductible and copayments.
"If I want to stay alive, I'm going to have to budget that in," said Fontenot.
With insurance, she'd switch to a brand-name diabetes drug that does a better job of controlling her blood sugars -- and get that mammogram.
"I am not asking for free stuff," she added. "I am willing to do my part."
Like Fontenot, many of the people who'll access the markets Oct 1 will have health problems. It's where the greatest need is.
But two other groups are critical to the program's success: Healthy uninsured people, many of them in their 20s and 30s, and insured people who will switch over from existing individual policies.
Healthy individuals are needed to help pay for the sick.
And with instant feedback via social media, reviews by people switching from existing individual plans could define early consumer sentiment.
Some of those transitioning will be looking for better deals. Others will be there because their insurers canceled policies that didn't meet the law's minimum standards, and they may be upset.
Consumers don't have to decide on Oct. 1. You have until Dec. 15 to sign up if you want coverage by Jan. 1. And you have until next March 31 if you want to avoid penalties for 2014. Fines start as low as $95 the first year but escalate thereafter.
Procrastinate beyond March 31 and you'll have to wait until the next open enrollment period in October 2014, unless you have a life-changing event like job loss, divorce or the birth of a child.
Former Medicare chief Mark McClellan, who oversaw the rollout of seniors' prescription drug benefits for Republican President George W. Bush, says his advice is not to sign up right away, but not to wait too long either. In other words, check things out. Buying health insurance is not as simple as shopping on Amazon.
"This is a milestone along the path but by no means the end of the road," said McClellan. "There's a lot more of a journey to see if it can really succeed."
Three key things to watch for are premiums, choice and the consumer shopping experience.
Premiums so far are averaging lower than what government experts estimated when Congress was debating the law. That's important for policy types, but it may not mean much to consumers. Current low-cost individual market policies are difficult to compare with the new plans, which offer better financial protection and broader benefits.
Plan choices seem adequate, but networks of hospitals and doctors may be tightly restricted to keep premiums low.
The biggest unknown is how consumers will feel about the whole experience. Many will be unfamiliar with health insurance basics, and applying for subsidies may feel like plodding through tax forms.
Still, after years of polemic debate and a Supreme Court decision -- and even as congressional Republicans keep trying to repeal it -- "Obamacare" will finally be in the hands of American consumers.