Federal health reform, officially called the Affordable Care Act (ACA), will have a significant impact on the healthcare and insurance industries. Below is a list of what you need to know about Obamacare to be prepared.
Plans Are Guaranteed Issue
As of January 1, 2014, health insurance issuers must accept every individual in the state that applies for coverage regardless of health, age, gender, or other factors (including pre-existing conditions).
When the Affordable Care Act (ACA) was enacted on March 23, 2010, President Obama said that if Americans liked their coverage, they could keep it. Therefore, the ACA allows carriers to distinguish plans that existed prior to March 23, 2010 (Grandfathered Plans) and those that came afterward (Non-Grandfathered Plans). Since Grandfathered Plans were intended to stay as they existed as of March 23, 2010, they are not subject to many of the ACA’s requirements.
Health Insurance Marketplaces / Exchanges
The Affordable Care Act (ACA) creates new ‘marketplaces’ (also known as ‘exchanges’) where individuals and small businesses (1 to 50 employees) will be able to purchase health insurance for coverage beginning in 2014. California’s health insurance marketplace is known as Covered California. In addition to buying coverage via Covered California, individuals and small business will be able to purchase health care the way they do today through brokers and directly through health insurance carriers.
Individual Open Enrollment
Annual open enrollment periods for individuals and families purchasing their own health coverage will be held October 15-December 7 of each year with an initial effective date of January 1st of the following year.
Small Business Open Enrollment
Employers can begin participating at any time in the year (rolling enrollment), but employees can only enroll or change plans once a year, unless they qualify for a special enrollment period.
Essential Health Benefits
All non-grandfathered health plans offered in the individual and small business markets, both inside and outside of the ‘exchanges’, will be required to offer a core package of benefits and services known as “essential health benefits”, which must include coverage within at least the following 10 categories:
- Ambulatory Patient Services
- Emergency Services
- Maternity & Newborn Care
- Mental Health & Substance Use Disorder Services, Including Behavioral Health Treatment
- Prescription Drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
Metal Level Plans
Under the Affordable Care Act, all non-grandfathered, health plans offered in the individual and small business markets, both inside and outside of the ‘exchanges’, will be required to provide coverage at a “metal level” – Bronze, Silver, Gold and Platinum. These metal levels represent actuarial values. The values are a measure of the of the level of coverage for a particular health insruance plan. For the bronze metal level, the actuarial vlaue is 60%. For silver – 70%, gold – 80% and platinum – 90%. What this means is that someone who purchases a Gold plan would have to pay 20% of health care costs, while the plan covers 80%.
Affordable Care Act Metal Levels
|METAL LEVELS||PLAN PAYS||YOU PAY|
Federal Subsidies / Premium Assistance
Premium assistance is available to consumers whose annual income is between 134% and 400% of the Federal Poverty Level (FPL) and who meet other applicable guidelines. These cost-sharing reductions and advanced premium tax credits will lower the cost of premiums and out-of-pocket expenses for health coverage purchased through the exchange. Those with an FPL under 134% may be eligible for Medi-Cal.
Tax credits are available to small businesses with no more than 25 full-time equivalent employees who offer their employees health insurance benefits, to help offset the cost of providing coverage.
The ACA introduces two new taxes to pay for subsidies and finance high risk individuals:
a) Health Insurer Tax: This tax will be approximately 2.3% of premiums.
b) Transitional Re-Insurance Tax: From 2014 to 2016, this tax funds programs to finance the cost of high risk individuals and is expected to represent 1.5% of premiums.
Individual Mandate Tax Penalties
Individuals are required to have health insurance that qualifies as minimum essential coverage. If people fail to obtain this health coverage, they risk paying a tax penalty for every month they are uninsured.
Affordable Care Act Tax Penalties By Year
|2014||Penalty is $95 per adult and $47.50 per child (up to $285 for a family), or 1.0% of family income, whichever is greater.|
|2015||Penalty is $325 per adult and $162.50 per child (up to $975 for a family), or 2.0% of family income, whichever is greater.|
|2016 & Beyond||Penalty is $695 per adult and $347.50 per child (up to $2,085 for a family), or 2.5% of family income, whichever is greater.|
|Source: Kaiser Family Foundation|
Employer Pay or Play Rule
The Affordable Care Act (ACA) requires companies over a certain size to offer affordable health plan coverage to full-time employees and their dependents or face a penalty if an employee receives federally-subsidized coverage from a health insurance exchange or marketplace, such as California’s “Covered California”.
We are here to help every step of the way. Contact us today to learn more about the Affordable Care Act (ACA), and to get more information about how the law impacts you.
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