…cue the scary music from Poltergeist!
The Health Insurance Marketplace (HIM) opened today! The Affordable Care Act (ACA) mandates that almost everyone must have health insurance by January 1, 2014. The HIM is a way for anyone not covered by an employer’s affordable plan to shop for health insurance. Let’s face it the ACA is complicated and the HIM part is no exception. This post will cover the highlights of the Marketplaces to give you an overview of what will happen. Future post will have more details.
The goal of the ACA is twofold. The first is to make sure that every American has health insurance coverage. Secondly, the law sets a minimum coverage for everyone. All health insurance plans must cover medical expenses for both preventative and traditional expenses and can’t have an annual or lifetime limit. Also, the plans must cover pre-existing conditions and can’t discriminate based on gender or current health. The plans can be adjusted for age, tobacco use, family size and geography, however.
Taxpayers who are not covered by an employer plan can use the HIM to buy their insurance. They are not required to use the HIMs but the coverage must meet the ACA standards. Those with employer coverage can use the HIM to check for a better deal. There are people who are exempt from having healthcare coverage under ACA. Those include people from certain religious groups, prisoners, non-resident aliens, Indian tribes and some people in extreme poverty may qualify for the healthcare exemption. For those with low income but don’t qualify for the exemption, there are also low cost alternatives, like Medicare, Medicaid or CHIPs. HIM is supposed to tell applicants who qualify about those options. There is also a tax credit/subsidy for lower income taxpayers to help offset their insurance costs.
Health Insurance Marketplace for your state can be found at healthcare.gov. There is also a national marketplace for the states which have opted out of setting up their own. This is how it’s supposed to work. A taxpayer can contact a HIM online, by phone or by walk-in (for HIMs with a physical presence.) The taxpayer will then fill out an application and get a list of insurers available to them. While the basic healthcare coverage must be the same, prices will vary between insurers. Each option will have four rates for that coverage; bronze, silver, gold and platinum. The difference in price will reflect the deductible and co-pay combination and not what healthcare is covered. So a bronze package will have a higher deductible and co-pay but a lower price than a silver package. The taxpayer can chose their package based on what is best for them. There will also be supplemental plans for dental and vision available which can be added for a separate price.
As I mentioned earlier, some taxpayers will qualify for a tax credit to help with the cost of their coverage. The application for the tax credit is made at the time they buy insurance. The HIM calculates the credit and submits it directly to the insurance company. The taxpayer pays the rest of the premium.
Taxpayers who choose not to buy health insurance from any source will have to pay a penalty on their tax return. For 2014, the cost is $95 dollars per individual, $47.5 for each child. The maximum will be the greater of $285 or 1% of their income. The penalty increases each year. The uninsured will also be liable for all their medical expenses.
The Health Insurance Marketplace opened today and will close on March 31, 2014 until the next enrollment period. Insurance coverage will begin January 1, 2014.
The heathcare.gov website has a lot of information and answers a lot of specific questions. And I’ll post in more detail as the system gets up and running. However, anyone who will be using the HIM, and that includes me, needs to understand that there will be glitches. This is a new program and there has been a lot of mis-information out there. We should all give the people at the HIMs a chance to work the bugs out of the system and approach the process with a lot of patience and good will.