everything you need to know about obama care

Everything You Need to Know About Obamacare

By Dan Caplinger and Ryan Katon

The Affordable Care Act has been one of the most controversial pieces of

legislation of the past several decades. Proponents point to the legislation, now

colloquially known as Obamacare, as a hallmark of support for a basic human

right for all Americans. Opponents see Obamacare as an unwelcome intrusion

into the private health insurance market and an abridgment of basic American

freedom. Those two groups have caused a huge debate over Obamacare, and

it's not likely to get resolved any time soon.

But one thing that everyone can agree on is that no matter what you think

about Obamacare, it's going to have a widespread impact on you in many

different ways. As a consumer of health care, you'll see the changes

Obamacare will make in the way you get the medical care you need, as well as

the way you get insurance coverage for your health care and how much you

pay for it. As a taxpayer, you'll face the challenge of coming up with your share

of the burden of paying for the overall cost of Obamacare. And as an investor,

you'll find that many stocks both inside and outside the health-care sector will

have their businesses transformed by the legislation.

In this special report, we'll focus on each of these three areas, giving you the

insight you need to deal with and even potentially profit from Obamacare. By

moving past the rhetoric and sticking with facts, you'll be in a better position to

make objective, unemotional decisions to put yourself in the best position to

use Obamacare to your advantage as thoroughly as possible. But first...

What does Obamacare mean for the health-care industry as a whole?

Let me (Ryan) share an example with you that should help you understand

Obamacare a little better:

Imagine you sold lemonade for $2 at a stand in your front yard.

of 9A Motley Fool Special Report

10/16/2013http://www.fool.com/free-report/stock-advisor/obamacare/page1?email=jdangjenn@gmai...

Let's say 100 people walk by your stand each day. And of those people, 50

choose to buy... 25 people don't... and 25 people would be interested but could

only afford a cup for $1.

Then, one day, the government passes a law that requires everyone to buy

lemonade. For your 50 existing customers, they'd continue to pay you the $2 a

cup they've always paid. In addition, though, you'd capture $2 a cup from the

25 people who didn't want lemonade but now have to buy it. And for the 25

who couldn't afford it, the government would pay you to offer lemonade at $1.

In other words, the government would be giving you more customers and

paying you at the same time. A pretty attractive deal when you consider that

your business would've grown its revenues 100% practically overnight. And

that a simple piece of legislation would've made you — and your investors — a

heap of cash.

Now to be fair, Obamacare doesn't really work like this. For one thing, the

government has high hopes that the program will lead to lower costs for health

insurance — to carry the lemonade analogy further, the law would set limits on

your ability to charge more than your actual expenses plus a reasonable profit

rather than letting you keep selling at $2. Moreover, while Obamacare's

individual mandate calls for everyone to have insurance, people still have the

alternative of not getting coverage and paying penalties instead.

Still, the likelihood is that many more people will buy insurance than before,

and that could lead to big gains both for the companies that provide that

insurance and the hospitals and other medical providers who serve newly

insured patients.

All that explains why we've already seen numerous health-care stocks return as

much as 71.0%, 124.3%, and even 130.0% since the bill passed. Not only are

they likely to benefit from huge numbers of new customers; they're also going

to reap profits from government subsidies as well — and that means a never-

before-seen profit opportunity for investors like you and me...

These landmark changes don't happen often. But when they do, you need to

be ready (and well informed!) if you want a piece of the profits. So stick with us

and pay close attention to what Dan has to say about Obamacare's

provisions... Then later, I'll be back to give you the inside track on Obamacare's

winning investment formula.



What Your Health Insurance Will Look Like Under Obamacare

Obamacare's provisions promise that everyone will have individual health

insurance, and the individual mandate within the legislation requires everyone

to have that coverage or face potential penalties. Yet millions of Americans are

worried about what their insurance policies will look like after Obamacare fully

takes effect and whether the coverage those policies will provide will be better

than what many of them already have.

Not all of the details have been fleshed out yet. But early signs point to a few

likely things you'll see from your health insurance when Obamacare's

provisions take full effect.

1. Those without employer-based group coverage

now will likely get better benefits.

TREND TRACKER: Is TV Dead?

Every year, growing numbers of

Americans are "cutting the cord" on the

cable TV providers... leaving a

vulnerable $2.2 trillion industry up for

grabs. As we speak, tech giants like

Apple and Google are battling for

control. But three surprise companies

may be the real victors in this behind

the scenes TV takeover. Find out who

they are before all the profits dry up!

Click here to watch!

One likely outcome of the Affordable Care Act is that the vast majority of

individual health insurance plans — as opposed to group plans that employers

provide — will have to provide more comprehensive coverage than they do

currently. A 2012 study from researchers at The University of Chicago found



that among the roughly 14 million Americans who have individual health

coverage rather than group coverage through an employer or other

organization, more than half of those plans didn't provide enough benefits to

qualify under Obamacare's standards.

Under Obamacare, those substandard plans will be replaced by newer

coverage. Some preliminary figures from state health insurance exchanges

show that in many states, that new coverage is coming with higher premiums,

especially for those plans that provided much more limited benefits than will

be required under the new law. Whether better benefits will provide enough of

an offset to result in lower overall costs will vary from person to person and

across different policies. People who have minimal health expenses will likely

end up paying more overall, while those who use their health benefits more

often could see cost savings under Obamacare plans.

2. Those covered under employer-provided plans

already have generally strong coverage.

The same study also examined people covered under group plans, typically

through their employer. The differences in quality were staggering. The study

authors divided different insurance policies into tiers based on how much of a

patient's medical bills each policy would cover. In group plans, almost two-

thirds of members had policies that covered 80% or more of their costs,

compared to just 2% of those who had to get their coverage individually.

Moreover, thanks to employer contributions, those in group plans paid less

than half what individual-plan members paid in out-of-pocket costs.

As a result, most people covered by their employers would probably prefer to

keep their existing coverage. But many workers are afraid that employers

might choose to discontinue offering health insurance of their own, deciding

instead to let Obamacare's other provisions take care of their workers.

3. Whether employers will continue providing

coverage will depend greatly on how health

insurance exchanges look.

Despite fears of widespread employer abandonment of group health-

insurance coverage, the 2012 National Survey of Employer-Sponsored Health

Plans from HR consulting firm Mercer found that very few employers plan to

cancel their health insurance benefits after Obamacare takes full effect. But

smaller employers were much more likely to say they would cut coverage —

with 16% of employers with fewer than 500 employees planning health plan

cuts compared to just 6% of employers with 500 or more workers.



For many, the decision may well hinge on what the individual and small-

business health insurance exchanges under Obamacare end up looking like.

States have the choice to run their own exchanges, but if they don't, the federal

government will have exchanges to cover their residents. Many states have

already released some details about their exchanges, although others are still

pending. With open enrollment in the exchanges still scheduled for Oct. 1,

2013, it should be much clearer soon whether it will make sense for employers

to drop coverage even in the face of penalties for some businesses that drop

their plans, as well as the loss of tax credits that some eligible businesses will

get for providing coverage.

Waiting for the details

Unfortunately, there's still a lot up in the air about how Obamacare will work,

especially as some states are still figuring out what they will offer their citizens

under the law. Clearly, some people will get far better health insurance

coverage under Obamacare than they do now. But some people will also end

up paying more than they do now for coverage they'd be just as happy to keep

if they could.

How Obamacare Changed Your Taxes

As much as Obamacare will affect your medical care and your health insurance

coverage, the effects don't stop there. The legislation also made major changes

to the tax laws — with ramifications not just for this year but extending well

into the future.

Lawmakers embedded several different tax provisions into the broader

Obamacare legislation. Those changes will have an impact on taxpayers at all

income levels.

Perhaps the biggest change in the law expanded the tax that workers currently

pay for Medicare to cover both higher amounts and different types of income.

Until this year, workers paid 1.45% of their wages in Medicare withholding

taxes, with employers paying another 1.45% out of their own pockets. Self-

employed individuals paid the combined 2.9% on their own. Although the

amount of wages subject to Medicare tax used to be limited in the same way

as Social Security withholding, that changed in 1991, and by 1994, the limits on

wages subject to Medicare taxation were removed entirely.

Going forward, though, Obamacare imposes additional Medicare taxes on

certain individuals. In particular, two groups will be affected:



• Joint filers with wages or other work-related earnings greater than

$250,000 and singles earning more than $200,000 will have to pay an

additional 0.9 percentage points in Medicare tax, bringing their total to

2.35% for employees or 3.8% for self-employed workers. Employers are

supposed to handle this requirement in their withholding, but for two-

earner couples, that may prove impossible, as your employer will have no

knowledge of what your spouse earns.

• Those with total adjusted gross incomes of more than $250,000 for joint

filers or $200,000 for singles will have Medicare taxes imposed on their

investment income as well. On whatever amount of investments exceeds

the $250,000 gross-income level, you'll have to pay the full 3.8% surtax

yourself.

The net effect on high-income earners will be to bring total top tax brackets to

43.4% — the 39.6% regular tax amount plus the 3.8% Medicare tax.

Hitting lower-income workers

TREND TRACKER: The End of Oil?

It’s cheaper and more abundant... yet,

for years, America lacked the

technology to convert valuable natural

gas into a usable energy source. That is,

until one little-known company created

a winning formula. And now it's poised

to handsomely reward a small group of

savvy investors. Click below to discover

this explosive stock inside an exclusive

investor presentation from The Motley

Fool!


Those who earn less than these $200,000 and $250,000 thresholds shouldn't

assume that their taxes will be unaffected by Obamacare. New limitations on

flexible spending arrangements have hit taxpayers of all income levels, limiting

the amount you can set aside tax-free in a flex plan to $2,500 per year.

Previously, there was no technical upper limit, although most employers



imposed a $5,000 maximum. But for those who have high levels of predictable

medical expenses, the forced reduction in flex-plan use could cost you

hundreds of dollars in extra income, Social Security withholding, and Medicare

withholding taxes.

Moreover, those who rely on deducting medical expenses won't be able to get

as big a tax benefit from them. Obamacare raised the floor on itemized

medical expenses from 7.5% of gross income to 10%. That may not sound like

much, but it could reduce your deduction by thousands of dollars and thereby

increase your tax bill substantially.

Will you get any benefit?

The question, of course, is whether Obamacare's benefit will exceed the extra

taxes you'll pay. The jury's still out on that question, but some have watched

the way that health insurance and hospital stocks have reacted to Obamacare

and have concluded that much of the benefit will go to industry players rather

than to individuals. For newly covered individuals, the fact that they'll have

coverage at all may be the only benefit they'll get from Obamacare, with higher

taxes simply being part of the price we all pay for it.

Regardless, as you consider your taxes this year, don't forget about the new

Obamacare provisions. Planning for them now could save you from a big

headache down the road.

Obamacare's Impact on Your Portfolio

Beyond the effects that the Affordable Care Act will have on your personal

finances, Obamacare has already had a big impact on companies throughout

the health-care industry. Let's take a look at the winners and losers in this

space... and how you can leverage the new legislation for your own personal

gain!

An uncertain future for Big Pharma

Obamacare is a mixed bag for pharmaceutical companies. The law requires

companies to provide larger rebates to Medicaid, which could cost as much as

$20 billion over the next decade. In addition, excise taxes and coverage for the

portion of drug costs that Medicare previously didn't cover -- known

colloquially as the "doughnut hole" — will cost the industry tens of billions of

dollars in the next 10 years.



Still, the news isn't all bad for drug companies. So far, they've retained most of

their pricing power for their drugs and avoided what could have been costly

measures like allowing importation of drugs from lower-cost countries.

Moreover, if greater numbers of covered Americans lead to more

pharmaceutical use, the profits could offset the costs.

Big losers: Medical-device makers

TREND TRACKER: 3x Gains in 2012!

One tech phenomenon seems to be on

tip of every investor's tongue... And

now, YOU can unlock the incredible

profit power of the 3D Printing

revolution. All the details are inside an

eye-opening video report that will

introduce you to the world of "additive

manufacturing" and the three big

players behind it. In fact, just last year,

this advice would've TRIPLED your

money. So don't delay!


Medical-device makers will take the biggest hit from Obamacare, thanks to the

2.3% excise tax on their device sales. Given that the tax is imposed on revenue

rather than profits, the provision will act as a barrier to entry to new players in

the industry, even as big players pay the bulk of the tax.

Industry giants Medtronic and Stryker have already seen the impact of

Obamacare and will continue to deal with headwinds to their business. But the

worst hit will come from currently unprofitable companies like MAKO Surgical,

which can hardly afford to deal with bigger losses stemming from the tax.

Health-services companies

Obamacare will have collateral impacts on many other industries with ties to

health care. Pharmacy benefit manager Express Scripts and its peers should

gain from the need for health insurance exchanges and private insurers to

control costs. Companies that focus on electronic health records, including



Cerner and Quality Systems, should also get a lot more business as it

becomes increasingly important for various parties to be able to exchange

information efficiently.

Will health-care providers and insurers win big?

On one level, it seems like common sense: If health care is required by the

government, the companies that provide the service will benefit the most. Yet

because Obamacare limits insurers' profits and requires them to spend 80% of

premium revenue on health-care services, it could squeeze potential margins.

Moreover, the policies that they'll be required to offer are in many cases of

higher quality than their current offerings, and it's uncertain whether they'll be

able to charge enough in premiums to offset the added costs from those

better policies. Similarly, hospitals could see more patients covered by

insurance, avoiding the big losses they incur when they're required to provide

medical care for the uninsured.

That’s true, of course, but it’s leaving out one crucial piece of the puzzle... and I

(Dan) want to let Ryan explain his view of the true Obamacare opportunity and

share a unique way for you to profit from it...

The Medicaid money pile

I (Ryan) think a key motivator for this bill’s passage was its impact on low-

income individuals... specifically, those who don't currently qualify for Medicaid

programs... and make up one of the largest segments of uninsured Americans.

Under Obamacare, many states will expand their Medicaid eligibility, allowing

these low-income individuals to enroll at a price they can afford.

This presents a huge opportunity for certain health-care companies that have a

big presence in the Medicaid insurance segment. These insurers will have

pricing power and leverage with government regulators in establishing

important provisions like reimbursement rates for Medicare and Medicaid.

Just like the lemonade stand example I discussed earlier, these companies

already have an existing customer base. But if they receive government-funded

Medicaid contracts, they would gain potentially massive numbers of new

customers that could grow their businesses substantially.



everything you need to know about obama care

Documents