Are you unsure what the Affordable Care Act and Health Care Reform really means and more importantly, how it may affect you and your family? Below are some quick facts to help answer your questions, and get you on the path of making a decision on how to manage your health insurance and budget in the new year.
What is Health Care Reform?
The Health Reform Law or Health Care Reform (HCR) was adopted as part of the Patient Protection and Affordable Care Act (PPACA). Under health care reform law, all people must have minimum essential coverage beginning January 1, 2014.
What is minimum essential coverage?
People have “minimum essential coverage” if they have a:
- Government-sponsored plan
- Employer-sponsored plan
- Individual plan
When will the Health Care Reform law take effect?
Though the law requiring that everyone have health insurance coverage will not take effect until Jan. 1, 2014 some provisions have already been set in place, such as:
- Insurance companies cannot cancel coverage without an appeals process
- No cost sharing or co-pay for most preventative services
- Coverage of dependent children up to age 26
- Children up to age 19 cannot be denied coverage due to pre-existing conditions
Why does the law require me to purchase health insurance coverage?
The goal of the health care reform law is to ensure that nobody can be denied coverage – whether healthy or currently managing an illness, considered a pre-existing condition. Requiring people to purchase at least minimum coverage prevents inflated health insurance premiums and creates a larger pool of both sick and healthy individuals.
Where can I purchase health insurance coverage?
The Health Insurance Marketplace, sometimes called the Exchange, has been set up so that affordable coverage can be easily purchased for individuals or families online. It should be able to tell you which level of coverage you qualify for, and estimate your amount of coverage.
How soon may I purchase coverage on the Health Insurance Marketplace?
The Health Insurance Marketplace opened for business October 1, 2013 for coverage starting January 2014. To be eligible for the January 1 start date, you must sign up no later than December 23, 2013. The open enrollment period will end on March 31, 2014.
What are my options if I decide to purchase through the Marketplace?
The Health Insurance Marketplace offers four plans or “Metal Tiers” that you can choose from. Each “Metal Tier” indicates the plan’s portion of coverage vs your out-of-pocket costs.
Platinum: 90% coverage / 10% out-of-pocket
Silver: 80% coverage / 20% out-of-pocket
Gold: 70% coverage / 30% out-of-pocket
Bronze: 60% coverage / 40% out-of-pocket
How can I determine what it will cost me?
That can only be determined by visiting the Health Insurance Marketplace or Exchange. Costs depend on a number of factors:
- Purchasing as an individual or for your family
- Number of dependents
- Household income
- If you or anyone in your family smokes cigarettes
If you buy a plan on an exchange, your annual out-of-pocket costs cannot exceed $6,350 for individuals and $12,700 for a family of two or more in 2014
What health services do the Exchange plans cover?
All Exchange plans will meet a basic level of coverage as outlined by the Affordable Care Act. All exchange policies are required to cover:
- Ambulatory services (outpatient care)
- Emergency services
- Maternity and newborn care
- Mental health and substance abuse therapy
- Prescription drugs
- Rehabilitative services and devices
- Laboratory services
- Preventative and wellness services
- Chronic disease management services
- Pediatric services
I still don't see the need. Can I continue to decline health insurance coverage for myself?
You can if you like, but be prepared to:
- Pay increasing Government fines for every year not covered
- Pay for all of your medical costs if you become ill or injured
- Pay for BOTH, Government fines and all of your medical costs
What if I don't purchase or receive insurance coverage by March 31, 2014?
Those that are uninsured and do not have coverage of any kind after the enrollment period ends may receive increasing fines from the Government via a tax bill. Fines set in place are:
- 2014 = 1% your house hold income or $95 per adult, whichever is greater
- 2015 = 2% of your house hold income or $325 per adult, whichever is greater
- 2016 = 2.5% of your house hold income or $695 per adult, whichever is greater
- 2014 = $47.50* per uninsured child with cap set at $285 per family
- 2015 = $162.50* per uninsured child, cap set at $975 per family
- 2016 = $347.50* per uninsured child with cap set at $2,085 per family
* flat fines for uninsured children are set at half the amount applied to uninsured adults
Fines for families include penalties for each uninsured adult, plus each uninsured child.
If I already have health insurance coverage, will me and my family be affected?
For those that already have health insurance through either an employer or self-purchased plan the only changes that you will experience are:
- Coverage of people with pre-existing conditions
- Covers dependents that are young adults up to age 26
- Free preventative care for adults, women and children with no copayment upon visit
- Insurance companies held accountable for rate increases
- Prevents health insurance companies from dropping you just because you get sick
- Guarantees your right to appeal if you are dropped from your insurance provider
- Protection from abuse of your funds paid to insurance companies
If I already have health insurance through my employer should I consider purchasing insurance through the Marketplace?
If you are insured through your employer but would like to consider Marketplace plans, you should first consider:
- You are considered covered – you will not receive uninsured fines by the Government so there is no need to purchase coverage from the Marketplace
- Depending on your income, you may not qualify for Marketplace plans with lower costs for monthly premiums or out-of-pocket costs
- If your employer plan is considered affordable and meets minimum essential coverage you may not be eligible for a Marketplace plan
- Most employers pay a portion of your insurance premiums – with a Marketplace plan they will not have to contribute to any health care costs.
I am single, healthy, have no children and earn less than $10,000 per year. What are my options?
Beginning in 2014, provisions will be made for single adults earning between $10,830 and $14,400 per year. These include:
Medicaid - State coverage is available for young adults with very low income, that cannot afford the lowest level Marketplace plan (Bronze 40% out-of-pocket)
Federal subsidy - low-income adults that are able to purchase a Marketplace plan could qualify for federal assistance to help pay for the plan
Catastrophic plan - healthy adults under the age of 30 may qualify if the cost of the lower level Marketplace plan (Bronze 40% out-of-pocket) costs more than 8% of your income. Catastrophic plan members must be willing to pay all medical costs up to a certain amount
Can I still have a Health Savings Account (HSA)?
Yes! The minimum level of coverage required to meet the Individual Mandate or health reform requirements was specifically designed to allow for the purchase of a qualified high deductible plan that would complement the HSA.
How can I control costs of healthcare?
You can Take Control of Your Health® as well as health care spending if you:
- Determine your level of health with affordable lab testing paid for out-of-pocket
- Remain healthy by including healthy habits and moderate weekly fitness
- Choose a plan wisely – through the Marketplace, your employer or an individual plan
- Opt to pay for affordable services, such as lab testing, out-of-pocket
What is the Individual Mandate?
The individual mandate is the requirement imposed by the Affordable Care Act (ACA) that all individuals be covered by a health insurance plan. If an individual does not already have health insurance and does not purchase health insurance by March 31, 2014 they must pay a penalty or an” individual shared responsibility payment” to the IRS at tax time in 2015.
When does the Individual Mandate go into effect?
Open enrollment for individuals who are required to purchase health insurance began on October 1, 2013 and will close on March 31, 2014. All individuals and families must have purchased health insurance by March 31, 2014 even if it doesn’t go into effect until May 1, 2014. If the plan was purchased by the March 31st deadline they will not have to pay a penalty for the first months of 2014 in which they did not have health insurance coverage.
Who is already complying with the Individual Mandate?
The individual requirement to purchase health insurance applies to all Americans. Those who already have health insurance coverage do not have to purchase new insurance and are already complying with the law. This includes those who:
- Already have private health insurance or a Marketplace plan.
- Already have health insurance through their employer with or without “grandfathered” status.
- Are covered by Medicare, Medicaid or CHIP (The Children’s Health Insurance Program).
- Are covered by Tricare or a Veteran’s health care program.
- Are covered by a Peace Corps Volunteer plan.
- Have a self-funded insurance plan for college students beginning on or before Dec. 31, 2014.
- Are 26 or younger and are covered by their parent’s health insurance plan.
What if my insurance company chooses not to comply with the ACA?
Starting in 2014 most individual health insurance plans are changing to provide the essential services and benefits required by the Affordable Care Act including preventive care. Some plans have been “grandfathered” in allowing them to be exempt from many of the changes required by the ACA.
A number of insurance companies are choosing not to comply with the ACA. A recent change in the ACA allows individuals and employers to renew health insurance plans that do not comply with the ACA, with renewals allowed as late as October 1, 2016 allowing them to maintain this coverage into 2017. Some companies that choose not to comply with the ACA have canceled their plans or are planning to do so during 2014.
What if my insurance company or my employer canceled my insurance plan and I can’t afford health insurance on the Health Insurance Marketplace?
If your insurance has been canceled by the insurance company you have a “hardship exemption” through October 2016. You can wait until 2016 to purchase health insurance and you will not have to pay the tax penalty. If you believe that the health insurance offered on the Health Insurance Marketplace is too expensive you may wait or you can apply for Catastrophic Health Insurance if you provide documentation that your plan was canceled.
It is up to individual state insurance commissions and health insurance companies to decide if they will re-offer canceled plans.
Is anyone else eligible for an exemption from the Individual Mandate?
Other than those who can prove that their health insurance plan was canceled everyone must have health insurance for 2014 that has been purchased by March 31, 2014.
There are some caveats that make it more affordable to specific groups:
- If you are under 30 or have a “hardship exemption” (a severe financial situation that makes it difficult for you to afford monthly health insurance premiums) you may purchase a catastrophic health plan which has lower monthly premiums (but high deductibles).
- You don’t have to purchase health insurance if the lowest cost health insurance premium is more than 8% of your household income or if you make too little to file an income tax return.
- Tax subsidies are available for individuals or families who make less than 400% of the Federal Poverty Level ($46,000 for an individual or $94,000 for family of four).
- You don’t have to purchase health insurance if you are a member of a federally recognized tribe, are a member of a health sharing ministry, have religious objections to health insurance, are incarcerated or are not living in the United States.