This law requires most Americans to buy health insurance by 2014 - or pay a penalty for not buying it.

Health care reform will have a major impact on everyone but especially on the millions of Americans who purchase insurance on their own, and for those who are uninsured.

If you fall into either of those categories, there are certain things you should know about health care reform. Most important is to understand the "individual mandate" to buy health insurance, which begins in 2014.

Health care reform requires all people to buy health insurance if:

• The least affordable plan available to them costs no more than 8 percent of their monthly income, and
• Their income is above the federal poverty line.

Those who fall within this requirement and don't buy insurance will pay a penalty - which will eventually grow to a maximum of $695 a year per person (up to a maximum of $2,085 per family) or 2.5 percent of income, whichever is greater.

The insurance industry has long supported an individual mandate. For health insurance to work properly everyone must be in the system. This allows risk - and costs - to be spread across the sick and the healthy, the young and the old. The individual mandate is thought to be the easiest way for this to happen.

Our biggest concern is that this individual mandate isn't strong enough. Because the penalties are so much lower than the actual cost of buying insurance, we think millions of Americans will choose to pay the penalty instead of their premiums.

The government will offer payments to help offset the cost of insurance for some people and tax credits to some small businesses to help offset health insurance costs.

This program, which helps people with low incomes pay for medical care, will now accept more people.

The new health care reform law has many parts that come into effect over the next eight years. This section provides information on the most important parts of the new law that affect older adults and those who have Original Medicare, Medicare Part D and Medicare Advantage plans.

Those who have Medicare and buy prescription drugs using Medicare Part D may be eligible to receive a $250 rebate in 2010 to help by lessening the impact of the "doughnut hole" - the coverage gap in which beneficiaries pay the full cost of their prescriptions out-of-pocket. The rebate will be mailed automatically to those who are eligible.

The gap in Medicare Part D prescription coverage, which is addressed by the $250 rebate in 2010, will gradually narrow starting in 2011 when pharmaceutical companies begin discounting 50 percent of the cost of a Part D drug. Eventually, Part D members will be responsible for 25 percent of the cost of Part D medicines (generic and brand-name) when they are in the "doughnut hole."

The reform law eliminates out-of-pocket costs for most preventive services covered by Original Medicare. Starting in 2011, Original Medicare recipients will pay no deductible or copayment for services such as wellness visits and personalized prevention plans.

Starting in 2014, a Medicare Advantage plan must demonstrate that at least 85 percent of its revenues are going toward member benefits. If a plan does not meet this requirement, it must pay the government a penalty. Repeated annual violations of this requirement could lead to a new enrollment freeze or termination of the plan.

The federal government plans to reduce payments to Medicare Advantage plans starting in 2012, based on the assumption that they are currently over-funded. However, many plans offer richer benefits because of the current payment levels. Members of these plans may see premium increases and/or service reductions as a result.

The health care reform legislation requires enhanced enforcement and screening procedures for health care providers in an attempt to reduce waste, fraud and abuse in Medicare, Medicaid, and other sectors of the health care system. These efforts are intended to fight health care fraud and help reduce the overall costs of health care leading to lower premiums for all Americans.

No one will be excluded from coverage or have to wait for a pre-existing condition to be covered. Benefit plans will be allowed fewer coverage limitations. Young adults will be able to keep dependent coverage until age 26. There will be even tighter standards for canceling coverage based on the actions of an insured individual (such as fraud).

New state-run "health insurance exchanges" will give individuals and small groups a new way to compare plans and buy insurance from private companies.

The new law requires health insurance plans to cover 100% of the costs of certain preventive care and health screenings which are intended to help people stay healthy and avoid more serious and costly treatments later in life.

Certain Medicare beneficiaries who buy prescription drugs using Medicare Part D will receive additional money this year and reductions in out-of-pocket cost in future years to help narrow a gap that existed before health care reform: the so-called "doughnut hole."