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FAQ: What is Obamacare?

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Many people still have questions regarding the Affordable Care Act, or Obamacare, that is taking effect soon. (Source: MGN Online) Many people still have questions regarding the Affordable Care Act, or Obamacare, that is taking effect soon. (Source: MGN Online)

(RNN) - If you haven't already been hearing a lot about the federal health reform lately, chances are you will soon.

Several major provisions of the Affordable Care Act, commonly known as Obamacare, are taking effect in the coming months. Some within days, such as the exchange websites launching Oct. 1.

Here are details on what's happening, how it works, and what it means for you.

Q: What is Obamacare?

A: In 2010, President Barack Obama enacted a law called the Patient Protection and Affordable Care Act. The stated purpose is to "increase the number of Americans covered by health insurance and decrease the cost of health care."

Q: Will coverage change if I'm insured already?

A: If you have private group insurance, chances are it won't change. If you buy your own insurance and it meets the minimum requirements, you likely won't see change either. If it doesn't meet requirements, you may have to pick a new plan.

Q: Do all the plans have to cover certain things?

A: Yes, all plans sold on and off the Obamacare Health Care Exchange must include the following to be considered a Qualifying Health Plan:

  • Ambulatory patient services.
  • Emergency services.
  • Hospitalization.
  • Maternity and newborn care.
  • Mental health and treatment of substance abuse disorders, including behavioral health treatment.
  • Prescription drugs.
  • Rehabilitative and habilitative services and devices.
  • Laboratory services.
  • Preventive and wellness services and chronic disease management.
  • Pediatric services, including oral and vision care.

Q: What is the Obamacare Health Insurance Exchange?

A: The health insurance marketplaces (also known as exchanges) are estimated to provide up to 29 million people with affordable health insurance by 2019. Open enrollment for Obamacare's health insurance marketplace began on Oct. 1, 2013, and runs to March 31, 2014.

Q: What type of plans are available on the Exchange?

A: In the state-run health insurance marketplaces, the government-approved health insurance plans are divided into four tiers.

They range from lower quality, but more affordable "Bronze plans," to "Silver plans" to a more expensive plan with better coverage called a "Gold plan." There is also a "Platinum plan," the highest quality and cost plan.

Lower premium plans will have higher deductibles, fewer benefits and larger out of pocket costs.

Q: How big are the penalties if I don't purchase insurance as required?

A: For 2014, the yearly penalty is $95 for an adult, $47.50 per child, and up to $285 per family, or one percent of family income, whichever is greater. That will rise in coming years.

Q: Which individuals are exempt from paying a penalty?

A: You can get exemptions in certain cases:

The Congressional Budget Office estimated in March 2012 that the ACA would newly insure 30 to 33 million people, leaving 26 to 27 million uninsured in 2016.

You can be exempt if the lowest priced coverage available to you would cost more than 8 percent of your household income. Those who do not file a tax return because of low income ($10,000 for an individual, $20,000 for a family in 2013), or those who are uninsured for fewer than three months of the year are also exempt.

A few other reasons for exemption include, being an undocumented immigrant, an incarcerated individual, a member of an Indian tribe, and those who belong to a religion opposed to acceptance of benefits from a health insurance policy.

Q: How can I save money by reducing healthcare costs?

A: There are several ways:

  • Subsidies or tax credits are available for people who make up to 400 percent (or four times) of the poverty level when enrolled in a private health insurance plan through the exchange.
  • You may qualify for lower out-of-pocket costs for co-payments, coinsurance, and deductibles.
  • You or your child may get free or low-cost coverage through Medicaid or the Children's Health Insurance Program (CHIP).

All of them depend on your income and family size.

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