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Health Care Reform FAQs

Health Care Reform FAQs
If you have questions about what the Affordable Care Act means to you, you are not alone. There are new tax penalties, government subsidies and health insurance plans will be different starting in 2014. With “open enrollment” around the corner, I have compiled a list of “Health Care Reform FAQs” to help guide you.

What is Health Care Reform?

The Affordable Care Act is a federal statute signed into law by President Barack Obama on March 23, 2010. It aims to increase the quality and affordability of health insurance coverage for Americans, and reduce the costs of health care for individuals and the government. Other names heath care reform is commonly called: ACA, PPACA, Obamacare, Affordable Care Act.

Do I Have To Get Health Insurance Next Year?

Most people will be required to obtain basic health insurance coverage beginning in 2014, or pay a penalty until they do. The tax penalties start in 2014 and increase over time. However, individuals may be eligible for an exemption if affordable coverage is not available. Learn more about penalties

What are Health Insurance Exchanges?

Health Insurance Exchanges are new marketplaces where individuals and small businesses* can shop for health coverage starting in 2014. They will consist of a set of state-regulated and standardized health care plans from which individuals and small businesses can purchase coverage and potneitally be eligible for federal subsidies.
(The exchange for small businesses, called the “Small Business Health Options Program” or SHOP, will be available in 2015

Can I Keep My Current Health Plan?

Figuring out whether you need to reapply for a different health plan in 2014 will depend on whether your current plan meets the ACA’s requirements and if your health plan is “grandfathered”. The transition process will vary from insurer to insurer, but it could happen in one of three ways:

  • 1) Inform Only: the insurer will notify you that your current plan does not meet the ACA’s essential health benefit requirement, and you may not qualify to avoid the tax penalty next year. They may offer different options so you are compliant, but they may elect to allow you to stay on your current plan.
  • 2) Re-Enroll: your insurer carrier will contact you to help you enroll in a new metallic benefit plan that is ACA compliant.
  • 3) Auto-Enroll: your insurance carrier will notify you that they’re moving you to a metallic benefit plan automatically and will require no action on your part.

The bottom line is, there are no standard guidelines, and how each carrier handles the transition will be different. Be proactive and contact your insurance carrier to see how they will process your specific health plan.

Will Health Insurance Cost More in 2014?

Possibly. For some individuals, costs may go up, while for others, costs may go down or stay the same. It is important to understand that you can still purchase health insurance as you do now through an insurance agent or directly from the insurance carrier. However, if you qualify for federal subsidies, the health plan must be purchased through the state’s health insurance exchange.

Can I Be Declined For Pre-Existing Medical Conditions?

Beginning January 1, 2014, insurance companies will not be able to decline your application for health insurance because you have a pre-existing medical condition, or for any other health-related reason. If you have been declined and are looking for health insurance coverage prior to January 1, 2014, we encourage you to contact us to discuss your options, and to see if we can get you coverage elsewhere.

Will The Affordable Care Act Affect My HSA?

Some changes were made to Health Savings Accounts (HSAs) and how they work as a result of the Affordable Care Act. First, people will no longer be able to use money in their HSA account to buy over-the-counter drugs. Also, if you withdraw funds from your HSA for something other than a “qualified medical expense”, the early withdrawal penalty increases from 10% to 20%.

What’s The Penalty For Not Having Health Insurance?

The tax penalties will begin in 2014. If you’re uninsured for more than three months in 2014, you could incur the tax penalty, which would be applied when you file your 2014 income tax return.

The penalty is phased-in over a three year period.

  • In 2014, the penalty will be the greater of 1.0% of taxable income or $95 per adult and $47.50 per child (up to $285 per family).
  • In 2015, the penalty will be the greater of 2.0% of taxable income or $325 per adult and $162.50 per child (up to $975 per family).
  • In 2016, the penalty will be at the greater of 2.5% of taxable income or $695 per adult and $347.50 per child (up to $$2,085 per family).

After 2016, the penalty will be increased annually by the increase to the cost-of-living. People may qualify for an exemption to the Affordable Care Act’s mandate to purchase qualifying health coverage, in which case they would not be subject to a tax penalty. People can apply for exemptions if:

  • they have financial hardships,
  • if they’re uninsured for less than three months,
  • religious objections,
  • if they’re an American Indian,
  • if they’re an undocumented immigrant,
  • if they’re incarcerated.

When Is Open Enrollment?

Open enrollment for purchasing coverage through the exchange begins on October 1, 2013. The new plans will be effective January 1st, 2014. Open enrollment ends on March 31st. If you miss open enrollment, your ability to enroll in health insurance may vary from state to state. It may be limited to the occurrence of a “qualifying event,” such as the loss of a job, a marriage or divorce, a move, or the birth of a child.