Starting on January 1, 2014, the Affordable Care Act (ACA) will require
nearly all United States citizens to have health insurance coverage or pay a penalty. If you are purchasing insurance as an individual
or small business owner, you must ensure that your new plan complies with the
ACA by having the following ten essential health benefits:
1. Ambulatory patient services
2. Emergency services
3. Hospitalization
4. Maternity and newborn care
5. Mental health and substance use disorder substances, including behavioral health treatment
6. Prescription drugs
7. Rehabilitative and habilitative services and devices
8. Laboratory services
9. Preventive and wellness services and chronic disease management
10. Pediatric services, including oral and vision care
Health insurance plans may differ to the extent in which these ten essential health benefits are offered, but in all cases must have benefits that are “substantially equal” to the essential health benefits outlined above.
There are a number of different
ways that the individual mandate may be satisfied:
- Medicare meets the minimum essential coverage requirement. Both Original Medicare (Parts A and B) and Medicare Advantage (Part C) plans qualify.
- If you are covered by a grandfathered health plan (qualifying health insurance coverage in which an individual was enrolled on or before March 23, 2010), you can stay in your plan as long as you continue to pay premiums and do not make any changes that would defeat the plan’s grandfathered status.
- If you are covered by a non-grandfathered individual health insurance plan, you will not have to pay a penalty provided that the plan complies with requirements set by the ACA (including the ten essential health benefits).
- Employer plans (including retiree plans), with or without grandfathered status, are deemed sufficient coverage. If the employer is a small business, and it does not provide a grandfathered health insurance plan, it must provide the ten essential health benefits. Non-grandfathered large group plans are only expected to provide hospitalization, emergency services, physician and midlevel practitioner care, pharmacy benefits, and laboratory and imaging services in order to comply with the ACA.
- Medicaid beneficiaries are also covered, and do not need to pay the penalty. This includes individuals and families up to 138% of the federal poverty level in states that have chosen to expand Medicaid (Florida not included).
- The Children’s Health Insurance Program (CHIP).
- TRICARE (for veterans and their families).
- Other veterans health care programs.
- Peace Corps Volunteer plans.
- Any health insurance plan purchased on the new health insurance exchanges will be sufficient coverage. The health insurance exchanges (HIXs) are scheduled to open on October 1, 2013 for purchase of health plans with an effective date on or after January 1, 2014. Health insurance plans on the exchange will be rated by the “metal system”, based on their benefits:
- Bronze Level – The plan must cover 60% of expected costs for the average individual
- Silver Level – The plan must cover 70% of expected costs for the average individual
- Gold Level – The plan must cover 80% of expected costs for the average individual
- Platinum Level – The plan must cover 90% of expected costs for the average individual
It is important to look at your HIX (state or
federal) to start researching plans as soon as possible, in particular if you may
be eligible to receive a premium subsidy (available at 100% - 400% of the Federal
Poverty Level) and/or a cost-sharing subsidy (available at 100% - 250% of the
Federal Poverty Level). While health
insurance will continue to be sold off the exchanges in 2014, you must purchase coverage on
the exchanges in order to receive any premium and cost-sharing subsidies.
The consequences for not purchasing health
insurance in 2014 are modest; however, penalties will continue to rise until 2016. In 2014, the penalty will be $95 or 1% of the
family’s annual income- whichever is greater- per adult ($47.50 per child) or a
maximum of $285 per family. However, by
2016, this will have increased to $695 or 2.5% of the family’s annual income-
again whichever is greater- per adult, or a maximum of $2,085 per family.
There
are a few groups who are exempted from the penalty, including those with income
so low that coverage is considered unaffordable, those who qualify for expanded
Medicaid but who live in a state that has chosen not to expand its Medicaid
program, members of federally-recognized Indian tribes, and members of
recognized religious sects with religious objections to health insurance. For those who do not fit these exemptions and
do not already have sufficient coverage, it is almost time to
get the ball rolling if you wish to avoid paying the ACA’s financial penalty.
Until next time,
Andrew Herman
