New Health Care Act titled the American Health Care Act

The House Republicans released the bill for a new Health Care Act titled the American Health Care Act on Monday night(March 6, 2017). The new health care law will repeal and replace major portions of the Affordable Care Act popularly known as Obamacare.

The bill repeals major portions of the Affordable Care Act which included individual mandate and most of the taxes that Obamacare imposed. The new legislation calls for providing refundable tax credits based on a person's age and income. But the new law did not repeal two popular features of Obamacare. One of them is that insurance companies need to insure people with pre-existing conditions, and another allowing young adults to remain on their parents’ insurance plans until they are 26 years old.

Unpopular Provision of the Affordable Care Act or ObamaCare

Perhaps the most unpopular provision of the Affordable Care Act popularly known as ObamaCare is the Individual Mandate. ObamaCare’s individual mandate requires that most Americans obtain and maintain health insurance, or an exemption, each month or pay a tax penalty. The mandate's purpose is to draw young and healthy Americans into healthcare market. Without this provision, they might be unwilling to buy any health plan, thinking that they do not need any health coverage. But their participation is very important to balance out the higher costs of older and sicker enrollees, whom insurers are required to cover under Obamacare.

The individual mandate went into effect at the beginning of January 2014 and continues each year. The penalty for not having coverage will be paid on your Federal Income Tax Returns for each full month you, or a family member doesn’t have health insurance or an exemption and is based on your Modified Adjusted Gross Income (MAGI).

Depending on your coverage, income, and family size, you will either pay a flat dollar amount or a percentage of income above the tax return filing threshold for your filing status. The fee is capped at the national average for a Bronze health plan available in the marketplace, and it is only paid for full months you or a family member went without coverage. The fee went up each year from 2014–2016 making it more important to look into coverage and exemptions options each year.

For the 2014 tax year, you'll pay the greater of these two numbers: A. 1 percent of your household income above $10,000, up to a maximum of $2,448 per person; or B. $95 per adult and $47.50 per child, up to a family maximum of $285. For 2015, the penalty for no health insurance is $325 per person or 2% of your annual household income – whichever is higher.

The annual fee for not having insurance in 2016 is $695 per adult and $347.50 per child (up to $2,085 for a family), or it’s 2.5% of your household income above the tax return filing threshold for your filing status – whichever is greater. You’ll pay 1/12 of the total fee for each full month in which a family member went without coverage or an exemption. The fee for 2017 hasn’t been published yet.

Indemnity Health Plan

Health insurance plans can be categorized into into larger division. One of them is  Indemnity plans or fee-for-service plan, and the other i s Managed care plans.

Indemnity plans are the types of health plans that primarily existed before the rise of (1) Health Maintenance Organizations (HMOs), (2) Preferred Provider Organizations (PPOs), and (3) Point of Service (POS) plans. Indemnity health insurance plans allow the subscriber to choose the doctor, healthcare professional, hospital or service provider of his choice and allow the greatest amount of flexibility and freedom in a health insurance plan.

Under an Indemnity plan, a subscriber may see whatever doctors or specialists he like, with no referrals required. Though he may choose to get the majority of his basic care from a single doctor, his insurance company will not require him to choose a primary care physician. An indemnity plan reimburses him for his medical expenses regardless of who provides the service, although in some cases his reimbursement amount may be limited.  An Indemnity plan may also require that the subscriber pay up front for services and then submit a claim to the insurance company for reimbursement.

The subscriber will have to pay the annual deductibles before the insurance company begins to pay on his claims. Once his deductible has been met, the insurance company will typically pay his claims at a set percentage of the "usual, customary and reasonable (UCR) rate" for the service. The UCR rate is the amount that healthcare providers in his area typically charge for any given service.

Indemnity health plans offer individuals the freedom to choose their health care professionals. An Indemnity plan may be right for a subscriber who is looking for the greatest level of freedom possible in choosing doctors or hospitals to visit . He does not want to designate primary care physicians or get referrals to get specialists. He wants to freely visit any physician he likes.

In general, managed care plans are better suited for the average individual because they end up being more cost effective in the long run. In contrast, indemnity/reimbursement plans usually hit the subscriber with more out-of-pocket charges (in the form of deductibles and co-payments) and often place caps on the amount of benefits he can receive over his lifetime. Indemnity plans do give him more freedom, however, than managed care plans in terms of using the healthcare provider of his choosing. So, as with anything else, the choice between managed care and indemnity plans ultimately depends on subscriber's personal circumstances and preferences. If his goal is to minimize costs, he is probably better off with a managed care plan. On the other hand, if his goal is maximum flexibility and cost is not a major factor, he should consider an indemnity/reimbursement plan.

Indemnity Health Plans VS Managed Care Health Plans

Coming soon ....