Despite all the talk, hype and debate, there’s still a lot of confusion about the Affordable Care Act (ACA), which consists of hundreds of pages filled with a lot of insurance industry, healthcare and political rhetoric. So we sifted through the jumble and sorted out the most important ACA basics you need to know so that you’re not only educated about the ACA, but are equipped to make the best health decisions possible for yourself and your loved ones.
Here are the most important aspects of the Affordable Care Act you need to know.
1. The premise
The ACA includes provisions aimed at ensuring that most individuals have access to health insurance. The Health Insurance Marketplaces (Exchanges) are designed to enable individuals who do not have access to coverage either through public assistance programs or affordable employer coverage to purchase insurance.
Health plans are guaranteed issue, which means that health insurance issuers that offer individual policies in a state must offer all available individual coverage to all individuals in the state (including those with a pre-existing conditions), and must accept any eligible individual who applies for those products, says Adam Bates, vice president of Insurance Services of America, a leading producer of short-term medical, international health and travel medical policies.
Under the Affordable Care Act, people younger than age 26, are eligible for coverage under a parent’s plan even if they’re married, not living with the parent, and/or not attending school. “Starting in 2014, people under 26 can remain on their parent’s plan even if they’re eligible to enroll in his or her employer’s plan,” says Bates.
2. If you have employer-based coverage, you’re probably okay.
The average American gets his or her coverage through an employer-based group health insurance plan.
However, most employers hold open enrollment between October and December of each year, and this year you’ll want to pay special attention to what’s offered to you for 2014. Weigh how much your group coverage will cost you and how much it will cost to cover your dependents? A few employers may change or scale back their offerings, effectively pushing employees into the open market to buy coverage on their own.
If your employer-based plan costs more than 9.5 percent of your household income, it’s considered “unaffordable” by the government, and you may qualify for subsidies to purchase coverage on your own.
3. You can shop for insurance at the market.
If you’re uninsured or want to explore alternatives to coverage offered through your employer, you’ll have to go to the market. Each state will have a Health Insurance Marketplace (also called an Exchange) that provides consumers with the ability to easily compare and purchase health insurance and allows individuals and small businesses to purchase insurance.
“The Health Insurance Marketplaces will be open from October 1, 2013 to March 2014 for open enrollment. This is when you can go online and purchase health insurance on your own,” says Roxanne Belloni, marketing specialist at Horizon Blue Cross Blue Shield of New Jersey. Healthcare.gov is the official site and is live as of Oct. 1, 2013. Coverage purchased via a state marketplace or exchange will take effect January 1, 2014.
4. Plans vary by state.
There are five categories of marketplace coverage, and they are based on how much of the care costs the plan covers versus what you cover, says Amy Gordon, employee benefits attorney at the international law firm McDermott Will & Emery.
The levels are:
- Catastrophic, which has the highest deductible and is limited to individuals younger than age 30 who otherwise do not have an affordable option or qualify for a hardship exemption
- Bronze (60 percent coverage by the insurer)
- Silver (70 percent coverage by the insurer)
- Gold (80 percent coverage by the insurer)
- Platinum (90 percent coverage by the insurer)
The medical plan options for which you will be eligible will vary by state. These vary based on the state and can be found on www.healthcare.org.
Government workers, also known as “Navigators,” can help explain plans offered in your state and make referrals, and they may be available live, on the phone and/or on the internet to help you determine the best plan for you.
5. You may qualify for a tax credit or subsidy.
Belloni says there are special tax credits available for people who qualify. While people will now be mandated to have health insurance, there are special tax credits available to those who qualify to help subsidize the cost of mandatory health insurance.
You may qualify for an upfront reduction in cost of coverage, or subsidy. “Qualification for a subsidy, and any amount, depends on whether the individual/family income falls within 100 to 400 percent of the federal poverty line,” says Bates.
6. Pre-existing conditions won’t get in your way.
Americans will now have access to healthcare coverage regardless of pre-existing medical conditions. This is great news for people who were previously denied coverage due to pre-existing conditions. “However, that comes at a cost and will be one of the factors that raises healthcare premiums for everyone,” says Belloni.
That’s because Belloni says essentially, individuals in need of high-cost care will now be subsidized by healthier individuals whose medical costs have traditionally been lower but will now increase in the future. “This may be one of the possible reasons people might see a raise in the health insurance costs. Because there will be more people with high-cost needs in the healthcare “pool”,” she explains.
7. Gender is no longer a factor.
Under new ACA legislature, health insurance premiums are no longer able to vary based on gender. “As a result, younger females will see lower rates and younger males will see higher rates when compared to what their rates were prior to 2014. Inversely, older females may be pay more than older males under the new legislature,” she says.
8. Coverage might not be cheaper.
Don’t assume coverage purchased through an exchange will be less expensive than your existing medical plan premiums. Carriers on the exchange are all competing with each other for your business; however, in some states there is less competition than in others. In addition, the anticipated risk for exchange coverage is projected to be high, thus the premiums will reflect that risk. It is best to compare the premiums for the exchange coverage to your current medical plan premiums, and do a cost benefit analysis when making your decision.
Monthly premiums will be determined by age, family composition, geographic location, tobacco use, level of coverage, the insurance company plan chosen plus tax-credits applied.
9. Your current coverage might change.
Certain health insurance plans will be eliminated if they do not meet ACA standards. This is important for many people who have very basic health insurance plans currently. Their plans may be discontinued due to the fact that they do not meet ACA basic standards. So even if you are happy with your current plan, you may be forced to choose another plan that will have better coverage but will mostly likely also come at a higher price.
10. Your spouse can stay on his employer’s plan, while the rest of our family moves to the exchange.
There is no requirement that the entire family enroll in the exchange. Bates suggests do a cost benefit analysis to decide whether to enroll or drop coverage in a spouse’s employer’s medical plan or go through the exchange. “If you do drop coverage in your spouse’s employer’s medical plan, there is currently no legal obligation for your spouse’s employer to let you re-enroll in their plan mid-year unless you experience a change in status or special enrollment event.”
11. Not having coverage is costly.
If you don’t already have coverage, don’t drag your feet. The penalty for not having a qualified healthcare plan in 2014 is equal to the greater of $95 per adult and $47.50 per child, or 1 percent of family income.
To learn more about the Affordable Care Act and how it will affect you, visit healthcare.gov.