A Primer on the Affordable Care Act

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The “ObamaCare” Health Insurance Exchanges (“Exchanges”, also known as “Marketplaces”) opened Oct 1st, 2013, despite failed efforts to “defund” the program in whole or in part.  This PK Law newsletter article addresses some of the more salient points of the Affordable Care Act, which is often referred to (even by President Obama) as “ObamaCare”.

What are “health insurance exchanges”?

Much of ObamaCare is internet driven.  An Exchange exists on a website.  Maryland (and some other states) and the District of Columbia operate their own Exchanges.  In that manner they obtain maximum federal funding to maintain them. Other Exchanges will be operated by the federal government (through the Department of Health and Human Services (“HHS”)); or operated jointly by state and federal governments; or in “partnerships” between states.   The Exchanges will provide comparison pricing for health care coverage, according to the level of coverage desired by the applicant and the applicant’s income level.  (Note:  There will be no “offices” to visit to discuss options concerning coverage.  Applications will generally be submitted “online” via the internet.  Paper applications will be available either by requesting one via the internet or by phone.)

Where may I find Maryland’s Exchange on the internet?

Maryland’s Exchange is referred to as “Maryland Health Connection” which may be accessed at www.marylandhealthconnection.gov.  (Mailing address: 750 E. Pratt Street, 16th Floor, Baltimore, MD 21202.  Consumer Support Center: 1-855-MHC(642)-8572 and for TTY at 1-855-MHC(642)-8573 during M-F, 8 a.m.–6 p.m.) (The District of Columbia’s “DC Health Link” is at www.dchealthlink.com.)  Both sites, as well as the paper application, require the applicant to provide information on citizenship and income level.

When may an applicant enroll for coverage?

The enrollment period for ObamaCare began October 1, 2013 and runs through March 31, 2014.  Coverage will not be effective if application is made prior to January 1, 2014 until that date.

What happens if someone does not enroll for coverage?

A person does not have to enroll in an Exchange.  However, persons who do not have health insurance coverage by January 1, 2014, or do not have an exemption, will be charged a “fee” on their income tax return for 2014.  For 2014, the fee is the greater of $95 or 1% of gross income.  The fee is to rise through 2016.

Who is exempt from enrollment in an Exchange?

The Exchanges allow all Americans with incomes above the poverty line to be able to buy health insurance.  Those with incomes below the poverty line will be directed to state Medicaid programs.  Medicare beneficiaries are not eligible for ObamaCare, as are those in the country illegally or those who are incarcerated.  Also, those who have employer provided health insurance coverage will not need to enroll.  However, they may enroll if their share of their employer’s coverage exceeds 9.5% of their families’ income or does not meet the minimum requirements of plans sold on the Exchanges.

What health plans are offered on the Exchanges?

There are four tiers of “qualifying health plans” which may be purchased on the Exchanges. They range from lower quality, but more affordable “Bronze” plans, to “Silver” plans to a more expensive plan with better coverage, a “Gold”. There is also a “Platinum” plan which is the highest quality and cost plan. Lower premium plans will generally have higher deductibles, less benefits and larger out of pocket costs.

How is an applicant’s premium determined?

Premiums may be based on a number of factors, including whether the applicant is a “non-smoker”.  The primary factors in the determination of premiums are the applicant’s income and the type of plan which is to be purchased.  Those who visit Exchanges online will automatically be shown prices that reflect premiums after annually adjusted tax credits based on income (“subsidies”), which credits are then paid to the insurer the applicant selected to help lower premiums. Only those earning less than 400% of the Federal Poverty level (currently $11,490) (about $46,000 for an individual, $62,040 for a couple, and $94,200 for a family of four) will be eligible for tax credits.  There is additional assistance with co-payments and deductibles for people with incomes up to 250 percent of the poverty level ($28,725 for an individual or $58,875 for a family of four). Those who receive subsidies will be required to pay 2 to 9.5 percent of their incomes toward premiums, depending on their incomes.

What agency of the federal government administers ObamaCare?

HHS administers the requirements for the Exchanges and the health plans that can be sold on them. Any plan bought on the Exchanges must meet requirements set forth by HHS in order to be a “qualifying health plan” and fit within one of the “tiers” of Bronze, Silver, Gold or Platinum.

May employers use the Exchanges?

ObamaCare does not require employers with less than 50 full-time employees (30 hours a week or more subject to “aggregation” of those workers working less than 30 hours a week) to offer health insurance to their employees.  However, those employers may use the Exchanges to purchase affordable health coverage for their workers through a “branch” of the Exchanges known as Small Business Health Exchanges or “SHOPs”.  By 2015, due to a delay in the implementation of the “employer mandate”, employers with 50 or more full-time employees must offer health insurance coverage to their employees or pay a substantial “fee”.  Those employers participating in SHOPs may be eligible for the Small Business Health Care Tax Credit offered through the IRS to assist with premium costs.