There’s a lot of misinformation about the Affordable Care Act. I thought I would take a moment this morning, and come up with some FAQs about healthcare.
Q: What impact does the ACA have in my health care decisions?
A: The ACA generally requires that all individuals have qualifying health insurance coverage, also referred to as Minimum Essential Coverage (MEC), in effect for each month, other than certain coverage gaps of 2014 and succeeding years. If you already have MEC through your employer, the government-sponsored program, a direct purchase from an insurance company or the Health Insurance Marketplace, you need only to maintain it.
However, MEC does not include coverage that provides only limited benefits, such as standalone vision or dental care.
If you are without MEC, you can purchase it in the Marketplace, which facilitates the purchase of health insurance in each state in accordance with the ACA.
Q: What is the Health Insurance Marketplace?
A: The Marketplace facilitates the purchase of health insurance in each state in accordance with the ACA. It provides government regulated and standardized health care plans from which individuals, families, and small businesses can compare health insurance plans based on costs, benefits and other features, and enroll in coverage.
Marketplace plans cover essential health benefits and have four levels Bronze, Silver, Gold, and Platinum each space in the average percentage of the plan pays towards healthcare services. The Platinum Level generally pays the highest percentage and has the lowest deductibles, co-pays, and cost-sharing structures, though it requires higher premiums.
Q: Are there any circumstances under which I can be exempt from the ACA’s coverage requirement?
A: you may be exempt from the ACAs coverage requirement if:
Your minimum required payment for annual premiums is more than 8% (8.05% in 2015) of your annual household income
Your annual income is below the minimum threshold for filing a tax return, or
You belong to a group specifically exempt from the coverage requirement such as Christian Scientists or federally recognized American Indian tribe.
Q: What steps do I need to take for an exemption to apply?
A:The application procedures will depend on your exemption category.
For example, if you are claiming an exemption due to a coverage gap that was less than three months or citizenship status, you can simply claim the exemption when you file your tax return.
However if you are seeking exemption due to religious affiliation, or certain situations that prevented you from obtaining coverage, you must submit an application to the Marketplace to obtain an exemption code that is reported on your tax return.
Keep in mind that the exemption code must be obtained before you file your tax return.
Filing the exemption request early will help ensure the timely filing of your return.
Q: How much is the Individual Shared Responsibility payment?
A: For 2014 the payment is the greater of:
1% of your household income above your tax filing threshold for 2014, or
A monthly flat dollar amount, which is $95 per adult and $47.50 per child, up to the family maximum of $285.
For 2015, it will be the greater of:
2% of household income above your tax filing threshold of $325 per adult, $162.50 per child, up to the family maximum of $975.
Your payment cannot exceed the costs of the national average premium for the Marketplace’s Bronze Level Health Plan, which is $2448 for 2014.
Also, if you did not enroll in coverage during the Marketplace’s Open Enrollment. Or qualify for the special enrollment period, your payment will be prorated based on the number of months you are uninsured.
Q: If I do not qualify for an exemption, what are the consequences for not having qualifying coverage for me, my spouse, and any dependents?
A: You are required to make an Individual Shared Responsibility Payment for yourself and any non-covered family members for each month that you do not have qualifying coverage, which is due when you file your federal income tax return.
However, there is no payment required for covers lasting less than three months.
Q: How is the Premium Tax Credit applied?
A: When applying for marketplace coverage, you will provide information such as projected income and family size that is used to estimate your premium tax credit. You can then decide to have some or all of the estimated credit paid in advance to your insurance company to lower your monthly premiums, or wait to claim the credit when you file your tax return.
If you have the credit paid in advance, the payment will be reconciled with the actual credit when you file your federal income tax return. Any of the payment needs to be paid back to the IRS. If you do not take it advance credit payments, you may claim the credit when you file your tax return which will either reduce your taxes owed, or increase a refund.
You can help expedite correct financial assistance and advance payments by probably reporting any changes to your income or household size to the Marketplace.
Q: Can my employer reimburse me for health insurance premiums that they pay for an individual policy?
A: They can, but will probably be subject to a nondeductible excise tax. The amount of the excise tax is steep. $100 per employee, per day which amounts to $36,500 per year for each individual reimbursed under an arrangement. These arrangements are subject to the excise tax because they limit the amount of benefits to a maximum amount and do not provide for preventative services.
Under the ACA, group health plan annual and lifetime benefits cannot be limited and must provide preventative services. The excise taxes imposed on the employer reimburse in the premium.
These are the most common questions asked about the ACA. If you have a specific question you can email me directly at craig@cwseapa.com.