Impact of The Affordable Care Act

Have you been watching the news on The Affordable Care Act more commonly known as Obamacare?

Do you know what the requirements are? Do you know if the health insurance you have qualifies? Do you know the penalty for not having coverage?

You are probably like me – the news coverage is about what a disaster the rollout of the insurance exchanges have been. And the finger pointing has begun.

Here is what you need to know:

The insurance you have needs to cover ALL of the following:

Hospitalization, doctor’s visits, emergency care, laboratory services, preventative services, prescription drugs, substance use disorder service, mental health, maternity and newborn care, and rehab and rehabilitative services and devices.

Insurance programs before had been a smorgasbord and you could pick the items you wanted covered and the premium was adjusted accordingly. Now if you are past child bearing years, you still pay for maternity. You know you don’t need substance abuse services, yet you will pay for that coverage too.

So, how do you control the cost of your coverage? One means is the plan you choose.

Bronze plans provide 60% coverage; you pay 40%.
Silver plans provide 70%coverage; you pay 30%
Gold plans provide 80% coverage; you pay 20%
Platinum plans provide 90% coverage; you pay 10%.
Catastrophic only coverage is allowed for only those under 30 years.

You will be able to compare plans among insurance carriers. You will see some price adjustments based on zip code – more rural being limited network; age-brackets have been shrunk to 3 brackets from 7. This benefits older people. The rates are unisex for health insurance. This benefits women.

The premium subsidy and tax credit are related to your income. You have to make $11,490 to get assistance. The amount of assistance you receive, phases out with the increase in income up to 400% of the poverty level.

At this time, if you want to get a subsidy or tax credit, you may want to talk with an insurance agent. In order to speed up the roll out, some of the security measures were stripped down. Identity theft is a strong possibility.

In order to receive the premium subsidy and or tax credit, you have to apply for insurance on the insurance exchanges. (You can use the insurance agents to apply.) The subsidy only applies to the Bronze level plan.

In 2014, Idaho legislative session, we will likely hear debate over expanding Medicaid. The states did win that round with the Federal Government. They cannot be forced to provide expanded Medicaid services or lose all federal funding. Idaho chose not to expand Medicaid. So that leaves a population in the gap – not eligible for Medicaid but they don’t make enough to be eligible for premium assistance.

Idaho is one of 17 states that do a state based exchange. They are using the Federal platform to begin, but will build their own platform in the second phase.

Why did Idaho choose to take on the responsibility of the insurance exchange? This will save Idaho residents money. Idaho has a healthier population then many states. Having our own pool for risk is less expensive than being a part of a national pool. Also, the excise tax charged by Idaho’s exchange is 1.5% compared to 3% charged by the Feds. (Excise tax pays for the operation of the exchange).

36 states chose to rely on the Federal Insurance Exchange. This is a much higher number than anticipated and has bogged the process down. Reports on the progress of the exchanges indicate state run programs are faring better.

Idaho is one of the states that chose to start over on individual health plans. Regulators felt there were too many modifications to bring into compliance. If you have an individual plan, expect to be notified of plan changes and premium increases when you renew.

Penalties for individuals who don’t have adequate health insurance coverage are:

2014 – The penalty is $95 minimum or 1% of your income. The penalty for children is ½ that amount. $2,250 is the cap for penalties for a family.

2015 – The penalty begins at $325 up to 2% of your income.

2016 – The penalty begins at $695 up to 2.5% of your income.

For children in divorce, whoever claims the dependency exemption has the responsibility of coverage and related penalty. That is how IRS will enforce the tax law. Your divorce decree may require one spouse to carry the insurance, yet the fine goes to the spouse claiming the dependent.

Those who may be exempt are:

1) Can’t afford the coverage. The cost exceeds 9.5% of your income. Up to 9.5% of your income is considered “affordable”.
2) Taxpayer is below the tax filing requirement.
3) Gaps in insurance coverage of 3 months or less.
4) Member of an Indian tribe.
5) Hardships need to apply through the exchange and Health & Human Services decides if a hardship exists.

Other exemptions were passed by law or administrative mandate. Congress will not be a part of the new health care system. You may have heard some unions have been excused. But it is exemption from the luxury tax, a tax because the policy is a ‘Cadillac’ or too much coverage; which results in over use of the medical system.

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