How U.S. Health Insurance Works

In 2019, there were over 12 million people enrolled in some type of health insurance plan, which means that we’re talking about a large number of people who have different types of plans. According to our research at CMS, approximately 84% of individuals who choose to receive health coverage through their employer will continue to do so after they hit the age of 26. This fact is a huge reason why it's important for employers to make sure they have health insurance policies and understand what type of insurance that works best with them. In this article, I’ll be looking at the three main types of health insurance and how they work. We're going to look at the Affordable Care Act (ACA) and Medicaid. Lastly, I'll describe the role that individual mandate, federal penalty payments and other taxes play in determining health insurance premiums. Affordable Care Act (ACA) The Affordable Care Act (also known as Obamacare) was signed into law on March 23, 2010 and took effect on July 1, 2014. It provides health insurance subsidies of $0.75 per week for those that earn less than $75,000 annually or dependents. If you and your eligible dependent fall under one of those categories, you's eligible for a subsidy of $0.50 per week ($0.75 if qualifying). In addition to these subsidy benefits, individuals qualify for tax credits, money that goes towards reducing premiums based on medical history. The Individual Mandate Protection Program offers an extra $2 a month based on a taxpayer's income. Employers also have to cover certain expenses like healthcare deductibles when employees can't afford to pay. However, some costs will vary depending on your state and your earnings. There are two tiers of affordable health insurance; The Individual Qualified Medical Plan and a National Coverage Arrangement, also known as NCA, both of which offer health insurance of between $200-$300 per month in combined cost. If working in a Tier 2 area such as Texas or Georgia, your employer will pay the full amount of your monthly premium, regardless of whether or not you choose to purchase a higher tier or individual plan. Obamacare does not extend insurance beyond the year 2015. This means that your insurance will run out before that date and you're no longer required to buy any additional plans. When an individual fileates a claim for health care services or benefits, the government will pay the remaining amount of the deductible and any co-pays that the patient would have had to pay. Individuals that have not been able to afford insurance for a period of time don't have to pay out of pocket anymore. Therefore, for most Americans, the ACA does not have a significant impact on their healthcare needs. However, in more rural states where people pay a high price, insurance may still vary, but it does bring down the cost compared to what someone might receive from private plans. States with low-income populations that tend to prefer Medicaid-style coverage may see lower premiums. These changes may be temporary and may be subject to change in future years. Medicaid For All or Caring For America While Medicaid is the same as Obamacare, there are some differences that allow Medicaid to provide financial help to uninsured American citizens. While Medicaid continues paying for the first 20% of covered individuals, the remainder will be paid by the federal government that has a set cap. Some factors that influence the amount each beneficiary receives include health status, disability, unemployment, education level, marital status, poverty, homelessness, and age. Medicaid is based on a formula that takes into account factors such as community size, poverty rates, and medical costs that include drug costs, hospital fees, prescription medications, doctor visits, and other services. Depending on what is available to the government through its various programs, the program covers beneficiaries at a rate of up to 85% of their incomes. This helps those who need it the most. Most people who qualify for Medicaid have an annual income of $12,000 or below. There is an added caveat, however, that if an individual doesn’t meet those criteria, then the benefit is limited to only one family and it's not possible for a single person to receive aid, even though every member of the family is eligible and eligible for medical treatment. There are certain eligibility tiers that come with Medicaid. They are Part A, B, D, E, F, G, H-1B, J-1A, M-1A, PDP, SDP, WSP, and XDP. This means that many individuals have multiple tiers. As a result, it is recommended that individuals apply for Medicaid coverage through their employers. The idea behind Medicaid is that while everyone receives healthcare, the burden falls on certain groups of individuals that have access to better healthcare. One particular group of people that receive Medicaid funding is seniors, which includes children and other vulnerable adults. These individuals may need care to stay alive until they are 18 and unable to care for themselves. However, because of the way health benefits are provided, older individuals cannot access all those benefits, instead receiving minimal amounts. Thus, Medicaid requires employers to take care of hiring qualified workers to carry out job duties that allow for the elderly to earn some form of healthcare. Since employers do not cover healthcare for all their workforce and employees, employee-based assistance can make life better for people. But why should we think about supporting people based on something like age? Why do we feel obligated to create programs that cater to specific age brackets? Isn't that a slippery slope? Shouldn't all Americans have equal rights? Let your employee help the company? Or do you find ways to encourage employees to take responsibility for their own actions instead of just allowing them to rely on others? Do we really want to deny people benefits based on age? Wouldn't it be much better for us all to focus on doing what is right for the average member of a society instead of making decisions based on social norms? Federal Taxing & Federal Penalty Payments Federal taxation refers to the process of collecting and applying income taxes. Taxes levied by the federal government include Social Security taxes, personal property taxes, national and local tips based, sales taxation, inheritance taxes, and federal transfer taxes. Each type of taxation has a different basis that determines the actual charges being taken away from members of the public. A good example of federal taxation would be the use of a national tip. The federal taxes associated with tipped income can range anywhere from $4.37 to $4.38 per dollar earned. That means every income earned over $10,000 means a $4.37 tip for the IRS. The largest portion of this money comes on taxes on Social Security and other retirement-based pensions. Other federal taxes can be deducted like charitable contributions. The difference is that charitable contributions are taxable by the deduction available. And since they aren't taxed, these contributions go into the stock market instead. So, a charitable contribution is taxable, but not taxable in the stock market. And this all shows why Americans have struggled against our federal system. In order to fix our broken federal system, we need to get rid of all types of taxes and give each of us a tax break that puts less strain on our economy. This means reforming welfare and education systems, giving millions of undocumented immigrants legal status, and ending the absurdly long application backlog for student loans. The individual mandate The individual mandate allows all Americans to keep track of their health information. It allows everyone to choose how they want to live the rest of their lives, and the options are only limited by a person's income. Also referred to as the "individual mandate," the requirement for enrollment in Medicaid comes from either a doctor's prescription or from your own choice. However, under the constitution of the United States, Congress is responsible for deciding how many people must enroll in their respective states to avail healthcare options such as Medicaid, subsidized insurance plans, or free clinics, etc.