The new health care law helps some people, hurts others and confuses almost everyone. Hoping to simplify things a bit, The Associated Press asked its Twitter, Facebook and Google Plus followers for their real-life questions about the program and the problems they’re running into as the March 31 deadline approaches to sign up for coverage in new insurance markets.
Two of their questions and AP’s answers.
THE INTERNAL REVENUE SERVICE AND ME
Q: “Is it really true that the IRS can’t do anything to you if you refuse to get insurance and also refuse to pay the penalty?” – David Myer, 46, a consulting geophysicist in Encinitas, Calif.
A: You could say the IRS has one hand tied behind its back here. But that still leaves the other hand. The tax collectors don’t have nearly as many tools to go after insurance avoiders as it has to enforce tax laws. It can, however, dip into people’s tax refunds to collect the penalty for those who don’t get health insurance. Most filers qualify for a tax refund, so they would be exposed to that collection tactic. Beyond that, it can send insistent letters, and who wants to get those?
Elizabeth Maresca, a former IRS trial attorney, told the AP that an unfriendly letter about an outstanding health insurance penalty probably will have much the same effect as one about tax arrears. “Most people pay because they’re scared, and I don’t think that’s going to change,” she said.
That said, the IRS can’t seize bank accounts, dock wages, charge interest on unpaid penalties or apply criminal or civil sanctions to force people to obtain health coverage.
CAN I JOIN THE EXCHANGE?
Q: “Why are there limits as to who can sign up? If someone has an employer plan that they don’t like, they can’t switch the plan to one of the new ones.” – Duane E. Maddy, a graphic designer and digital artist in Dunbar, W.Va.
A: It’s true, the new system is set up so people who get health insurance at work stay on it. For better or worse, the law aims to preserve employer-based insurance, not give everyone an easy bailout to the new individual markets.
That said, you can shop for coverage in the new state exchanges even if you have insurance at work. But it may not make financial sense to switch. It depends on whether your work insurance is considered affordable. If it’s not, you may be able to get a subsidized plan on the exchange – and a better deal.
What’s unaffordable? The government defines it this way: If you are paying more than 9.5 percent of your income for your health insurance premiums at work, you’re paying too much. You can move to an exchange plan and possibly get subsidized premiums there.
So you’ll have to do some math and wade through fine print to see what your options might be. It’s also possible to switch to an exchange if your workplace plan fails to meet certain other conditions, although most job-based coverage is expected to meet that test. To be sure, the government doesn’t make any of this easy to understand.