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The Color of Money: 4 scenarios in the new health-care law

By Michelle Singletary
Washington Post Staff Writer
Sunday, March 28, 2010; G01

With the most significant changes to the nation's health-care policy in decades having finally come to fruition, the question I have, as I'm sure so many others do as well, is how the new law will affect me.

It's unlikely that most people will read through the 906 pages of the Patient Protection and Affordable Care Act. But if you are inclined to do so, you can find a link to the text at http://thomas.loc.gov. Search for HR 3590.

If you're not eager to slog through the hair-pulling legislative language, where can you go to get a review of what this reform means for you, whether you have coverage or not?

I searched for a number of online tools that allow people to plug in their information and get back a personalized summary of how the new legislation affects their lives. The Kaiser Family Foundation, a nonprofit focusing on major health-care issues, has an interactive calculator that can help determine if you are eligible for subsidies to buy coverage through an exchange because you don't have insurance through an employer or through Medicare or Medicaid. At http://www.kff.org, you can also get a summary of the major provisions of the new law.

One of the easiest interactive tools to determine how the law will affect you can be found at http://www.washingtonpost.com/healthcaretool. It is built to include the law that passed Sunday, plus the reconciliation fixes that the Senate approved Thursday. All you have to do is answer four simple questions. The tool takes into account current coverage, household size, marital status and adjusted gross income (AGI), which is a number used to determine your federal income tax.

Using the online tool, let me take you through a few scenarios (all salary figures represent AGI).

Situation No. 1: You are married and have insurance through your employer. There are five people in your household. Your annual household income is $70,000.

Starting in 2014, if you pay more than 9.5 percent of your income in health insurance premiums, you will have the option of receiving tax credits to help cover the cost of those premiums in the new exchanges. You will also get assistance with health-care deductibles and co-payments. According to your income and family size, the tax credits will ensure you do not spend more than $5,635 to $6,650 on premiums. Your maximum out-of-pocket costs for deductibles and co-payments would be capped at 30 percent of the total cost.

To make sure that health care is affordable, tax credits will assist people with incomes up to 400 percent of the federal poverty level (up to $43,000 for individuals, or $88,000 for a family of four). The credit is phased out for higher-income families.

Situation No. 2: You're single and unemployed. You have coverage because of the Consolidated Omnibus Budget Reconciliation Act, commonly referred to as COBRA. Under COBRA, people can continue to get coverage at their former employer's group rates. But they have to pay the full premium, including the share that the employer used to pay, plus a 2 percent administrative fee.

For now, you're stuck with COBRA. However, once the exchange and subsidies are set up in 2014, they will effectively replace COBRA. So if you leave or lose your job after this provision kicks in, you'll be able to buy coverage on the exchange with the help of government subsidies. Additionally, there will be a ban on denying coverage for preexisting conditions.

Situation No. 3: You are 22 and earn about $11,000 a year in part-time income. You graduated from college in 2009 but still can't find a full-time job. You don't make enough to afford health-care coverage.

In September, you can go back on your parents' plan.

The law requires that people get some minimum coverage starting in 2014. Penalties for not having coverage begin in 2014 at $95 per uninsured dependent and rise by 2016 to $695 a person (up to a maximum of $2,085 per family or 2.5 percent of household income, whichever is higher).

Situation No. 4: You have coverage through your employer. You have a family of four and a household income of $300,000.

There will be no change to your insurance coverage.

But your Medicare payroll tax rates will increase starting in 2013 from 1.45 percent to 2.35 percent on earnings of more than $200,000 for individual taxpayers and $250,000 for married couples filing jointly. There will also be a 3.8 percent tax on investment income for high-income taxpayers.

These are just some scenarios. Like it or not, health-care reform is here.

Readers can write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

Comments and questions are welcome, but because of the volume of mail, personal responses are not always possible. Please note that comments or questions may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.

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