Obama Care Explained in Plain English

The US President, Barack Obama and the Congresss, signed an agreement in the year 2010 to bring Obamacare into practice. This is a health insurance scheme initiated by the President, so that all the US citizens are covered. The medical costs are on an uptrend in the recent years and average medical expenses run into thousands of dollars. In a bid to reduce these costs and make the citizens feel covered in case of medical emergencies, the Obamacare plan was launched.

Once a family is covered with the general health insurance, then it need not worry about the shooting medical expenses in case of hospital visits, as a majority of the expenses are covered under this scheme. The patient only needs to pay a very nominal amount during the first visit to the hospital. This is called co-payment. Most of the employees provide this scheme to their employees in return for a reasonable monthly premium payment.

However Obamacare gives additional benefits to families who already have this scheme and it also provides coverage for people who are so poor that they cannot afford even the minimum premium payments. There are lots of daily wage workers in the US, whose employers do not offer any health insurance schemes to cover them. Obamacare is a panacea for all.

Changes that are reflected already

People who have health insurance get additional benefits from Obamacare in various ways. Parents can get additional coverage for their kids, till the kids turn 26 years of age. This plan does not drop patients midway or remove the coverage if somebody in the family falls ill suddenly. Insurance companies, under Obamacare policy, can never refuse to cover for families that have a chronically sick member. The co-payment option is taken off from this system and most of the general check and pregnancy tests can be done free of cost.

Insurance companies cannot act fraudulently and can raise premiums during the term of the policy, only if the increase rates are allowed by the state government. According to this policy, the insurance companies should use 80% of the premiums they receive, for settling claims of the insured people. However, if they fail to do it and instead spend on advertising expenses, they have to send a check to the insured for the excess amount used up. Families that do not have any insurance can use Obamacare to get temporary insurance cover till the year 2014.

Important changes in future

Obamacare will make health insurance compulsory in the year 2013. Failure to take insurance  will attract a fine of 2.5% of the annual income to be paid to the government. Insurance schemes can be easily purchased online. Small business employers will have to mandatorily buy health insurance, failing which, they have to cough up a fine of $2000 per employee, except for the first set of 30 employees who joined the company.

President Obama has been a boon for entrepreneurs and small businesses.

The health care plan issued by President Obama has been a boon for entrepreneurs and small businesses. This Affordable Care Act gives these small businesses lot of support and help for buying health insurance. Venture capitalists see this as a massive opportunity and they have been giving away lots of cash benefits for starting up health care centers across the US.

The investments made in health care setups grew at a whopping 64% in the first quarter of 2013 which is way higher than investments last year.  Brad Weinberg, a partner at Blueprint Health  and a venture capitalists for new health care setups suggests that this is the best time for entrepreneurs for setting up health centers as all infrastructure is available like the interest, support and capital.  Blueprint has been helping around 30 companies with $20,000 each for setting up health care centers for a stake of 6% in equity.

Health care was never the most sought after industry in the US as technology was the booming sector. Even the IT companies were more focused on social networking or game centers. However the Affordable Care Act turned everybody’s focus on the health care industry, due to the huge financial incentives that it provided. There are more opportunities to set up newer units and speedily resolve many health problems.

Attractive financial incentives accompany the Affordable Care act. These are offered to health care providers to upgrade their medical equipments to newer models and the patients are encouraged to stay healthy always. People who work with the new start ups have stated out of their experience, that the hospitals and insurance companies always look up to entrepreneurs for their innovative technologies. New start ups are given huge aids to come up with new and cheap techniques to make healthcare a booming industry.

David Whitlinger, executive director of the New York eHealth Collaborative announced recently that the list of venture capitalists and health care providers that have registered with them, are more than what they can deal with.  Whitlinger runs a digital health accelerator program that had graduated its initial set of startups recently.  This initiative selects a list of startups that have the potential to help New York’s medical program that find dozens and dozens of venture capitals who are interested in investing in these set ups.

Insurance leaders, medical centers and medical shops have gone on record to offer huge discounts and financial assistances for health start ups that solve their problems. This has encouraged these small businesses and entrepreneurs to come out with new models and help the people in reducing their hospital visits. These entrepreneurs have found the able support of venture capitalists, who offer them the much needed capital and support to set up their establishment. This is a mutually beneficial plan of the Affordable Care Act where the venture capitalists get a stake of equity of the fresh start ups and these new businesses get the backing of established venture capitalists and enough capital to start working.


New York Times gets so- called “Cadillac Tax” wrong

Healthcare-Now! is an online portal that specializes on the health schemes of US and helps the people to understand the schemes better and ways to access the same. Recently it clarified a mistake that was done by New York Times about the coverage and purpose of the Cadillac Tax. Healthcare-Now! explained the right concepts and insisted that the article by New York Times was clearly misleading to the general public.

They insisted that thought the publication was right about the perils of this tax, it had gone wrong about who can use this tax and how the employers are looking out for ways to evade the same.  The tax was incorrectly said to punish the employers who provided high end health welfare plans to their workers. However, in reality, the tax actually punishes plans that have huge premium charges. ($10,200 for individuals and $27,500 for families).

It was also found out that the coverage of the insurance plans had no relation to their premium amounts, which means that plan with high premiums do not necessarily offer a wide coverage and plans with low premium do not necessarily offer a small coverage. Recent studies reveal that only 3.7% of the entire premium differences could be related to the difference in coverage. This tax would not give any impact for people, who already have a good coverage, but this could affect older patients who might be required to pay up to three times the premium amounts of what the younger patients pay and it could also mean more premiums to pay for people who live in states that have expensive health care.

The Times had explained that this tax would encourage the employers to lower their employees’ premium cost through various health and wellness centers to monitor the employees’ health. However lots of research was done on this subject lately and it was found out these health centers only act as a tool through which the employers transfer costs onto workers with lifelong illnesses. These employees are either exorbitant rates of premium or their benefits are withheld.

Healthcare-Now insists that a single payer tax system  is a better way to reduce healthcare costs  as it would take off the burden of huge costs from the employer’s shoulders and ensures that all employees get reasonable coverage for their premiums. A publication as reputed as the New York Times should act more socially responsible and stop publishing wrong information about the Cadillac Tax as millions of people get misled due to this.

Hence, this portal requests and encourages the readers to submit a short 150 page letter to the editor of the New York Times explaining about any recent article and requesting them to change their stand on the Cadillac Tax. People who are interested and write to the editor must mention their names, addresses and phone numbers so that it is easy for tracing. A huge collective effort like this would surely stop people from misinterpreting the properties of the Cadillac tax.

Obama's Health Care Plan and Tax Deductions

As many of you may know that starting 2014 Obama’s healthcare plan will kick in that may allow low income families to enroll in qualified health care plan and claim the insurance premium as tax credit.  However, some of us are still wondering what if qualified health plan offered by the Obma’s health care plan is cheaper than the one offered by our employer.    Can we switch to different plan?  If we make the switch, can we still deduct premium?

Answers to these questions are equally important to the employers.   Employers would like to predict their exposure to the employer responsibility excise imposed should if they offer the healthcare that does not provide minimum value (What is the minimum value?), or is unaffordable.   After all, employers want to know if they should continue with their health plans or not?

“Have IRS not finalized the rules?” you may ask.  You can read T.D. 9590 published by the IRS and Treasury Department.  You will find many rules to determine eligibility for and calculation of the tax Code section 36B refundable health insurance premium tax credit added by the Patient Protection and Affordable Care Act, as amended.   These rules address many matter e.g treatment of required waiting periods, or relief from erroneous automatic enrollment in an employer-sponsored plan.  But at the same time they leave many issues for future guidance and public interpretation.

For example, Employers can find out when employer plan coverage is affordable for the employee by using a simply formula (i.e., the employee’s contribution is no more than 9.5% of household income) but do not address whether coverage is affordable for related individuals who can enroll in the employer plan.

Many groups are working closely with IRS and Obama’s administration to finalize the rules and calculation methods to determine how much premium should be deductable.  Tax payers are also being invited by the IRS to comment on these matters.

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