Do you feel like you have been waiting forever for the shoe to drop on health reform?
Open enrollment for state health insurance exchanges is right around the corner.
There seems to be more confusion than ever.
The following is a quick update on where we’re at with health reform’s Affordable Care Act.
Warning: Changes occur as quickly as the ink dries on updates.
Updates for the Individual
As a card-carrying owner of an individual health insurance policy, I thought I’d start with changes that hit close to home.
If you buy your own health insurance, then this update section is for you.
1. Individual Mandate Still On
One of the hottest debates (all the way to the Supreme Court) was the Affordable Care Act’s (ACA’s) requirement that most individuals purchase health insurance.
- There are few exceptions to the requirement
- The effective date for coverage is January 1, 2014
- Open enrollment for state health insurance exchanges is October 1, 2013
If you are required to purchase coverage and do not do so, you are subject to a fine.
- $95 per adult and $47.50 per child the first year
- Or 1 percent of family income, whichever is greater
- The fines increase in subsequent years
NOTE: The mandate applies to individuals who purchase their own insurance or sign up for coverage through their employer.
Most of us are required to purchase health insurance.
There are a few exceptions.
- If you don’t earn enough (according to IRS guidelines) to file tax returns
- If you cannot afford insurance (according to IRS guidelines)
- If you fall into certain categories that are excluded
Refer to Kaiser Family Foundation’s flow chart for more details.
Those of us who are required to purchase health insurance must have coverage for January 1, 2014.
Typically, you purchase health insurance through one of the following options.
- Employer-sponsored – coverage your employer offers
- State health insurance exchange (marketplace) – this is a new option through health reform’s ACA
- Government program – like Medicare or Medicaid – if you qualify
- Direct purchase – through an insurance company or insurance agent/broker
If you have coverage through your employer and coverage starts January 1, open enrollment probably starts sometime in the last quarter (September through December).
- Open enrollment refers to the time period when you sign up for health insurance
- If you have coverage through your employer, check with Human Resources for open enrollment dates
- If you are purchasing health insurance through your state insurance marketplace, open enrollment begins October 1, 2013
Go to Healthcare.gov and click on See your options to review your state’s options.
2. Subsidy Help
You may qualify for help paying the premiums for health insurance.
ACA allows tax credits for moderate- and low-income Americans to purchase health insurance.
Kaiser Family Foundation offers a subsidy calculator to help you determine if you qualify.
- You can choose to take only a portion of the subsidy
- The amount elected is paid directly to the insurance company
- If you receive a credit, but earn more income than you estimated – you owe additional taxes
Updates for Employers
The key word for employers sponsoring health benefits is DELAY.
1. Employer Mandate Delayed
Employers were not the only one scrambling to meet ACA requirements.
Despite its marketing as giving employers a break, I suspect federal administrators’ monumental task of monitoring ACA compliance had a hand in this delay.
The employer mandate requires employers with 50 or more full-time employees to offer a specified minimum of health insurance coverage or face a tax penalty.
- The original effective date was January 1, 2014
- The mandate has been delayed until 2015
2. Out-of-Pocket Limits Delayed for Certain Plans
Another ACA provision requires the following for non-grandfathered plans.
- Limiting out-of-pocket expenses for consumers
- $6,350 for an individual/$12,700 for a family
The effective date for the cap was January 1, 2014.
Full compliance with this provision has been delayed to 2015 for SOME plans.
This one caused a firestorm of confusion and misreported outcomes. After reviewing several resources, the following is my understanding of the “delay.”
Out-of-Pocket Limits Apply to 2014 Benefits
- On individual policies (coverage you buy yourself – not through an employer)
- Employer-sponsored plans with one administrator or insurer for plans (Example: the same administrator for medical and prescription plans)
Full Compliance Delayed Until 2015
Certain plans will be allowed to transition to full compliance with the out-of-pocket limits ($6,350 for an individual/$12,700 for a family).
- Employer-sponsored plans with separate administrators, such as one for the medical plan and another for a prescription plan
- IF each plan currently has separate maximums, then each plan can continue that way in 2014
- IF none of the plan maximums exceed the ACA limits
- THEN, beginning in 2015, the ACA out-of-pocket maximums apply to all plans combined
So, all plans – except those that meet grandfathered status — must comply with the out-of-pocket maximums no later than 2015.
3. Exchange Notification Penalty Eliminated
ACA required employers to provide notification to employees about the state health insurance exchanges (marketplace) by October 1, 2013. Non-notification would incur a $100 penalty per employee.
Government officials eliminated the non-notification penalty.
4. Summary of Benefits and Coverage Required
Employers are required to provide a Summary of Benefits and Coverage (SBC) during open enrollment that includes the following.
- A summary of benefits
- A glossary of terms
- Examples of coverage for specified scenarios
The effective dates started with the first day of open enrollment after September 23, 2012 and continues on the first day of the first plan year on or after that date.
Individuals and employers have only begun to feel the effect of health reform’s Affordable Care Act (ACA).
Delays and changes mean provisions will continue to drag on, but the following summarizes where we are right now.
- Most individuals are required to have health insurance in 2014 or pay a penalty.
- Subsidy help for paying health insurance premiums may be available.
- The employer mandate for offering health insurance is delayed until 2015.
- Full compliance with out-of-pocket limits is delayed for certain plans with separate administrators.
- The penalty for failing to provide notifications about state insurance exchanges has been eliminated.
- Summary of Benefits & Coverage documents are required at open enrollment.
Stay tuned for more twists and turns in health reform.
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Notice of Disclaimer –Cathy Miller is not an attorney or health care provider and cannot provide legal or health care advice. The information provided is for your general background only, and is not intended to constitute legal or health care advice as to your specific circumstances. We recommend you review legislation with legal counsel and visit your physician for health care issues.