What You Need to Know About the Affordable Care Act
Oct 01, 2015 01:11PM ● By Debra Tucker
The Affordable Care Act requires nearly all Americans to purchase health insurance that meets its standard of essential health benefits or pay a penalty.
Which health plans qualify as minimum essential coverage?
Some plans that qualify include job-based plans, marketplace plans, retiree coverage, COBRA, Medicare Part A or Part C, most Medicaid plans, most TriCare plans and several others.
What is a subsidy, and how does an individual know if he/she qualifies for one?
A healthcare subsidy lowers the amount one spends on one’s monthly premium or reduces one’s out-of-pocket costs for things like copays, coinsurance, deductibles and out-of-pocket maximums.
Subsidy eligibility is based on income for all legal residents in the U.S. However, anyone that has access to affordable, employer-based health insurance, is eligible for Medicare or falls in the Medicaid “gap” will not be able to get subsidies. Other restrictions may apply. In most states, anyone making less than 400 percent of the federal poverty level is eligible for some type of subsidy on marketplace plans.
2015 poverty guidelines for the 48 contiguous states and the District of Columbia
Persons in Household Poverty Guidelines
1 $11,770
2 $15,930
3 $20,090
4 $24,250
5 $28,410
6 $32,570
7 $36,730
8 $40,890
For families/households with more than eight persons, add $4,160 for each additional person.
Example 1: A family of four would qualify for a subsidy if their income was between $24,250 and $97,000. [$24,250 x 4 = $97,000) four times or 400 percent of the federal poverty level.
Example 2: A family of two would qualify for a subsidy if their income was between $15,930 and $63,720. [$15,930 x 4 = $63,720] four times or 400 percent of the federal poverty level.
The federal poverty level is adjusted for inflation each year, allowing more Americans to qualify for assistance.
What are the penalties and how are they determined?
The penalty amount is determined by factors including taxable income, number of dependents and joint filing status. Penalty breakdowns for individuals:
2014 $95 or 1 percent of income above tax filing threshold
2015 $325 or 2 percent of income above tax filing threshold
2016 $695 or 2.5 percent of income above tax filing threshold
The penalty for dependents less than age 18 is one half of the individual amount.
Penalty breakdown for family of four (two adults, two children)
2014 $285 or 1 percent of income above tax filing threshold ($95+$95+$47.50+$47.50)
2015 $975 or 2 percent of income above tax filing threshold ($325+$325+$162+$162)
2016 $2,085 or 2.5 percent of income above tax filing threshold ($695+$695+$347+ $347)
If one has coverage for part of the year will one still pay a penalty?
It depends. Not having insurance that meets the essential benefit requirements for three months or more will lead to a penalty.
How is the penalty collected?
The penalty is paid when filing a federal income tax return.
What happens if one doesn't pay the fee?
The IRS will hold back the amount of the fee from any future tax refunds. There are no liens, levies or criminal penalties for failing to pay the fee.
How does one find a plan, and when can one enroll?
Unless one qualifies for Medicare, one can use HealthCare.gov or one’s state’s marketplace to sign up and enroll in a plan during each year’s open enrollment period. One can use the marketplace to compare plans, apply for cost assistance and see if one qualifies for Medicaid.
Working with a licensed insurance agent is also an option. They often know the ins and outs of many plans and can help one understand the rules and laws that may apply to one’s particular situation. All agents working in the individual market are required to complete a Federally Facilitated Marketplace certification, ensuring they understand all rules and regulations. An agent can also help one evaluate and shop for additional benefits one may need, including dental, vision and life insurance.
When can one join a plan?
The open enrollment period begins November 1 and ends January 31, 2016.
Debra Tucker is a licensed life and health insurance agent specializing in the needs of individuals, families and seniors. For more information (including free quotes), call 877-783-0235, email [email protected] or visit OptionsPlusPlan.com.
