Joanna Morales, Esq.
CEO, Triage Cancer
Culver City, California
One of the most talked-about provisions of the Patient Protection & Affordable Care Act (ACA) is the individual mandate the requirement that most U.S. citizens and legal residents are required to have minimum health insurance coverage beginning in 2014. Because the majority of people in the U.S. currently have health insurance coverage, this requirement will affect only those who do not have health insurance.
So what happens if someone doesn’t have health insurance coverage in 2014? Individual adults will have to pay an annual penalty of $95 or 1% of their household income, whichever is more. The penalty goes up gradually each year; in 2017, the penalty will not be more than the cheapest bronze plan available in the health insurance marketplace. The goal is not to just create a penalty, but to encourage people to buy health insurance coverage.
There are, however, a number of exceptions that exclude certain people from having to comply with the individual mandate. For example, people can have up to a three-month gap in health insurance coverage during the year without facing a penalty. Also, individuals whose health insurance options would cost more than 8% of their household income do not have to comply with the individual mandate. Because coverage will continue through most employer plans, individual insurance policies, Medicare, Medicaid, Veterans Administration health plans, and other types of coverage, many people will not see any change in how they access health insurance coverage in 2014, and will not be affected by the individual mandate.
“If I’m Uninsured, What are My Options?”
The ACA also allows states to expand Medicaid to all low-income adults making less than 138% of the federal poverty level (in 2013, $15,856 for an individual or $32,499 for a family of four). However, many states have chosen not to expand their Medicaid programs, greatly impacting patients with low incomes. To date, only 23 states and the District of Columbia have elected to expand Medicaid coverage. For information on your state, click here.
On October 1, 2013, individuals and small businesses with fewer than 50 full-time employee equivalents will have the option to enroll in health insurance coverage through their state’s health insurance marketplaces. These marketplaces are also referred to as “exchanges,” and many state marketplaces are coming up with their own names, such as Maryland Health Benefit Exchange, Vermont Health Connect, or Covered California.
Marketplaces will be available in every state, but some states will run their own marketplace, some will have marketplaces run by the U.S. Department of Health & Human Services (HHS), and some will partner with HHS to run their marketplace. Click here to see where your state stands.
How Much Will Plans in the Marketplace Cost?
We are still receiving information about which plans will be available in each state’s marketplaces and will likely not have all of the details until October 1, 2013. However, a few states have released some information about plans that will initially be available, and plan prices have been lower than expected, so far.
Individuals with incomes between 100%-400% of the federal poverty level ($11,490-$45,960 in 2013) may be eligible for premium tax credits and cost-sharing subsidies to help pay for the cost of private health insurance through the marketplaces. The amount of financial assistance depends on an individual’s household income. For example, an individual who qualifies for a premium tax credit may choose a policy that is $242 a month, but may only have to pay $40 a month for that coverage.
When the marketplaces open for enrollment on October 1, 2013, consumers can fill out just one application to find out if they are eligible for:
- Children’s Health Insurance Program (CHIP),
- Private health insurance plans sold in the state health insurance marketplace,
- Tax credits that will help pay for health insurance premiums, and
- Cost-sharing subsidies that will reduce an individual’s medical costs.
Click here to see the sample application for single adults. People will also be able to apply through an interactive online form. There will also be applications for families and individuals who don’t qualify for financial assistance with health insurance premiums.
Plans in the exchanges also have a cap on how high a deductible may be; for an individual, the maximum deductible is $2,000, and $4,000 for a family. In addition, marketplace plans also have a cap on an individual’s out-of-pocket costs. These costs are generally an individual’s deductible, plus co-pays, and co-insurance expenses. The ACA caps the annual out-of-pocket maximum on exchange plans at $6,350 for an individual and $12,700 for a family. After people reach their out-of-pocket maximum, their insurance plan must pay for all of their covered expenses for the remainder of the year.
As long as someone enrolls in a marketplace plan before December 15, 2013, his or her coverage will begin on January 1, 2014; however, open enrollment will last until March 31, 2014.
Where Can I Go For More Information?
To learn more about the marketplaces and your state, click here. For more information about healthcare reform and health insurance options, visit www.HealthCare.gov. Be aware that as additional details of ACA implementation become available, this information will change frequently.
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