Health Care for Dummies: What You Need to Know

Democratic leaders have gone behind closed doors to hash out the final details of their health care reform proposals. No matter how they resolve the differences between the House and Senate versions, the final bil will, if passed, affect nearly every American to some degree, depending on how much money you make and how you currently get your health insurance.

The bill aspires to insure nearly every American. But citizens will have to buy insurance themselves.

The average health insurance plan for a family of four cost more than $13,000 in 2009 for a family, according to the Kaiser Family Foundation.

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The foundation has also created a handy calculator, taking into account age and income to determine what that a person's government subsidy would be. You can find it HERE.

Here is a guide to how the reform bills might affect you, your pocketbook and your health coverage.

The basic tenet of both the House and Senate plans is that every American should have health insurance, whether provided by their employer, bought on the open market, or subsidized by the federal government. If not, they'll have to pay a fine on their tax bill. In most cases, the fine would be far less expensive than buying health insurance on the open market.

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In order to find out how much insurance under the bill will cost you, answer the following simple questions:

How old are you?

If you are over 65 you've probably got Medicare. And that's not going to change. But if you have a bundled Medicare Advantage plan -- essentially a privately-administered Medicare HMO -- you might lose some of the additional perks you get. These can range from dental and vision coverage to gym memberships. Taxpayers pay up to 14 percent more per person for these bundled plans. Both the House and Senate health reform bills use this overpayment as one way to help fund coverage for people who currently don't have it.

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Republicans have repeatedly raised concerns that the Democrats' health bills seek to cut Medicare future spending without affecting the services provided. Whether the cuts are possible without affecting the quality of Medicare remains to be seen.

Health Care Reform For Dummies

With monthly premiums between $96 and $110 for most people, Medicare is still the most affordable and heavily subsidized health coverage available.

For those too young for Medicare and who don't have their insurance through an employer, age will play a factor too. Under both pieces of legislation, insurance companies can charge more to insure older people than younger. But both bills impose new restrictions on exactly how much more insurance companies can charge for premiums based on age and other factors.

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How do you get health insurance now?

Most Americans get health insurance through their employers -- more than 60 percent, according to census figures.

If this is you, in the short term at least, it is unlikely anything will change for you. Both bills seek to maintain the role of employers in providing health benefits by penalizing those employers who choose not to provide it. But the penalties are cheaper than providing insurance. In years to come it is possible that some employers would choose to pay the fine rather than continue to provide insurance.

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I don't have health insurance now. What about me?

Health care reform is aimed primarily at you if you do not currently have health insurance, or buy it for yourself on the open market. Beginning in 2013 or 2014, depending on what the final bill says, insurance companies will have tough new rules to insure better access to coverage, mandatory baselines for what insurance coverage will include, and assurances that it will be more difficult for companies to drop people from insurance coverage.

Insurance plans for people who do not get it through their employers will be sold on web portals administered either at the national (House bill) or regional/state (Senate bill) levels. But all this will come at a cost. The insurance companies will have to cover more sick people than they currently do. But many more healthy Americans will be forced to buy coverage, offsetting those costs and theoretically driving prices down for everyone. Theoretically.

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How much money do you make?

If you don't have Medicare and don't have insurance through your employer, how much the government helps you buy insurance depends on how much money you make in relation to the federal poverty level. Each state has its own Medicare program and some are more generous than others. Find out about your state at the Department of Health and Human Services Web site.

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Senate Democrats would expand Medicaid eligibility to 133 percent of the poverty level -- just under $30,000 for a family of four. The House bill would expand Medicaid to 150 percent of the poverty level. After that, for people buying health insurance on the new exchanges, the government, starting in 2013 or 2014, would give financial help to everyone up to 400 percent of the poverty level -- just over $40,000 for an individual and $88,000 for a family of four.

Refer back to the Kaiser Family Foundation calculator for more specific scenarios.

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At the highest income level, under the Senate plan, a family of four would be responsible for paying $8,600 per year -- about 9.8 percent of their income -- in premiums. The government would pick up the rest -- just over $1,500 for a health plan that cost $10,000 per year.

In the House, the income cap for people at $88,000 is 12 percent. So there would be no subsidy. If the family made $75,000, the subsidy would be around $2,000. At an income of $50,000 for a family of four, the government would kick in $6,900 for health insurance after the family paid close to $3,500.

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What if I don't want health insurance?

For Americans who think the subsidy sounds like a bad deal, they can ignore the government requirement to buy health insurance and pay a fine. The max the government could charge, under the Senate plan, is $750 per person and $2,250 per family -- less for people who make less money. The House plan's fine would be worked out by the HHS Secretary.