Obamacare Health Care Reform FAQs
Obamacare for Beginners
FAQs About Colorado Healthcare Reform
Healthcare Reform has many Coloradans asking questions about their health insurance options. ColoHealth has 25 years of insurance expertise, and we’ve done the research necessary to answer these questions. And with multiple Open Enrollment Periods (OEPs) under our belt we’ve gained significant experience with the implications of the Affordable Care Act (ACA).
We’ve compiled a list of the most commonly-asked questions we hear from people as we help them navigate the waters of the post-Affordable Care Act health insurance marketplace. If you don’t see your specific question below, don’t hesitate to contact us.
- When do I have to enroll in an ACA-qualified health insurance plan?
The Affordable Care Act defined the yearly Open Enrollment Period as beginning November 1 and ending January 31 of every year. This is the only time you can purchase health insurance, unless you qualify for a special enrollment period at another time of the year.
Those who do not have ACA-compliant health insurance coverage for at least 9 months of the year will face penalties when they file their federal income taxes. This penalty, known as the “individual shared responsibility payment”, or sometimes simply “the mandate”, is calculated using one of two methods. You’ll pay the higher of the two calculations, either:
- 2.5% of your household income, not to exceed the total yearly average premium for a bronze plan, or
- $695 per adult and $347.50 per child in your household, not to exceed $2085.
- Income below the tax-filing threshold
- Religious objection to having health insurance
- Approval of hardship waiver
- Lack of a plan on the exchange with a rate under 8 percent of your Adjusted Gross Income
- What will happen if I’m not insured now, and still not insured next year?
You’ll need to supply proof of insurance with your tax filing every tax year. If you have no proof of qualified insurance coverage for at least 9 months during the tax year for which you’re filing the return, you’ll be charged a penalty. If you continue to be uninsured by a qualified plan, your penalties will be collected in future years as cancellation of refund owed to you. These penalties are monetary only; there is no criminal or jail penalty attached.
- What kind of insurance do I need?
Under the ACA, you must enroll in a qualified health plan if you do not have a grandfathered plan. Your plan can be an individual insurance plan purchased on the state or federal exchange or off, or through your employer. An employer is required to provide employees with both adequate and affordable coverage as outlined by the new law.
ACA-qualified plans are those that meet the requirements of the 10 Essential Benefits and 100 percent coverage for preventive services. Also, you cannot be declined coverage for a pre-existing health issue.
- What about grandfathered plans?
Having a grandfathered plan means that you have a plan that has not lapsed since the new law was signed on March 23, 2010. Premiums for these plans will most likely be lower than ACA-qualified plans, but they may not include all of the essential benefits required by the ACA.
- Is a subsidy a tax credit? What does it pay for? Do I qualify?
Subsidies are actually tax credits that pay portions of health care premiums for those who earn between 100 and 400 percent of the federal poverty level (FPL). The FPL is an amount determined every year by the Department of Health and Human Services. For the purpose of calculating subsidies used to purchase plans for 2016, the FPL ranges from $11,770 for individuals up to $40,890 for a family of 8.
So, for example, an individual earning $47,080 (400% of $11,770) or less will qualify for a health insurance subsidy. If the total family income for a family of 8 does not exceed $163,560 (400% of $40,890), that family is also entitled to an insurance subsidy.
- How do I get this tax credit?
Your subsidy is delivered as either a reduction in monthly premiums or as a tax refund when you file.
- How are tax credits calculated?
Your income will determine your premium tax credit. For instance, if you earn 250 percent of the FPL, you are responsible for 8.6 percent of your earnings for a Silver metal plan premium. Whatever remains of the premium is paid for by the tax credit. You’ll pay a lower premium if you earn 250 percent of the FPL—8.6 percent of your income for a Silver plan. Again, the remainder owed on your policy’s premium would be paid by the subsidy. Furthermore, if you’re earning less you’ll receive the maximum tax credit, leaving you to pay just 2 percent of your total income for the premium.
- Will my Silver tier tax credit apply to a Platinum level plan?
Yes. You can apply your tax credit to a Platinum plan, though it will be based on that of a Silver plan level.
- I am unemployed. How do I get tax credits on my health insurance premiums when I don’t owe income taxes?
Since you won’t be getting a tax refund, your qualified subsidy will be applied to your premium costs. The IRS will pay your insurance carrier directly to pay for the approved portion of your premium.
- How are premiums and tax credits affected by group plans?
Employees covered by their employer-based group plan routinely don’t qualify for a subsidized tax credit. If your employer fails to meet the adequate and affordable standards of ACA-qualified plans, (not offering the 10 essential benefits, and costing more than 9.5 percent of your income), you could be eligible for cost-sharing assistance.
- What benefits must an ACA-qualified plan include?
The Affordable Care Act requires that all health care plans include 10 Essential Benefits. These benefits include a list of Preventive Services and guaranteed acceptance of pre-existing conditions that were often excluded in the past.
- Do I have to get my insurance from the health exchange?
No. Exchanges are either state- or federally-operated, and are staffed by government employees to assist consumers in purchasing insurance only from those companies registered with the exchange, as well as activate your subsidy should you qualify. But there’s no requirement that you purchase coverage on the exchange.
Keep in mind that there are many other coverage options not found on the exchanges, and an experienced Personal Benefits Consultant on the ColoHealth team can help you find the best option.
- Do qualified health plans mean lower premiums?
No, probably not. The increase of covered benefits, and the increased number of insured individuals, many of whom have pre-existing conditions will likely raise rates for everyone.
A potentially helpful strategy for many people is a health savings account (HSA) combined with a high-deductible health plan. An HSA can:
- Lower your taxable income
- Reduce your annual income tax bill
- Help you qualify for a health insurance tax credit
- Be prepared for future out-of-pocket medical bills
- I have a health problem. Will I be denied coverage?
Under the ACA no one can be denied coverage due to a pre-existing health conditions. Determining policy premiums based on gender is also no longer allowed.
- What if I want to get help from an insurance agent to search the exchange?
We think that is a great idea. You won’t get better advice than from an experienced, independent agent. However, not all insurance agents are certified to sell plans on the exchange. And not all agents have the years of experience to decipher insurance language and options. ColoHealth brings 25 years of insurance expertise to all of our clients. Plus, we don’t charge for our services.
- What about the small business owner? Can I use the exchange?
Small business owners can shop for coverage on the exchange. Employers face a per-person penalty if they have more than 50, but fewer than 100 full-time employees and do not provide a sponsored health insurance plan.
- Why are some companies reducing full-time hours?
Some companies are opting to reduce their employees’ hours from 40 to 30 hours in order to avoid penalties and reduce costs. Employees who work 30 or fewer hours per week are not included when determining whether a business must provide a sponsored health plan.
In addition, companies only have to provide individual plans when attempting to eliminate the higher costs of group coverage. This means that they don’t have to cover your spouse under individual plans.
Some companies are taking more drastic steps by eliminating positions entirely, creating more unemployment in the process.
- What about women’s health coverage?
Women and children will benefit greatly from healthcare reform because the preventive and maternity benefits are all-inclusive. Prenatal and child wellness care are 100% covered part of the ACA’s essential benefits and preventive services within an ACA-qualified health plan. Even breast pumps are covered under Obamacare.
- What if I want to wait to enroll in a health insurance plan?
If you do not enroll in a plan during the OEP (November 1 through January 31) you can enroll the following year. Keep in mind that, unless you are insured for 9 months out of the year, you’ll be required to pay a penalty.
You can and should purchase short-term insurance coverage if you miss OEP, in order to ensure that you’re protected against major losses. Keep in mind that short-term coverage does not meet the minimum requirements for an ACA plan, so you will still have to pay the individual mandate penalty.
- If I owe a penalty for being uninsured, how does the government collect?
The penalty will be calculated when you file your taxes in the following April. However, the IRS’ only recourse for collection is through withholding your tax refund. You won’t see a lien on your bank account, property or pay check, or jail time for not paying the penalty.
- How can I avoid being the victim of an insurance scam?
Here are a few gimmicks you should look out for when getting shopping for health insurance:
- Aggressive sales pitches
- High-pressure deadlines to accept coverage
- Demands sharing of financial information by phone, fax, or email
- Advertises an Obamacare Health Plan…There is no such thing!
- How do I report an insurance scam?
If you experience any of the tactics described above, contact the Colorado Department of Insurance. Your agent should be licensed in the state of Colorado, and should never ask you for money to find you a policy.
ColoHealth never pressures our clients, and we never charge for our 25 years of insurance expertise. Our only goal is to find you the best coverage, lowest taxable income, and legitimate tax-favored health savings accounts for your future medical expenses.
- Why should I consider a high-deductible plan?
While a high-deductible health plan means you must pay a typically larger deductible, it does usually result in lower premiums. Your premium could be 40 percent lower than other plans.
Only high-deductible plans are eligible to be combined with a tax-favored health savings account (HSA). The least expensive of these is an HSA-qualified Bronze metal tier plan. When combined with an HSA, tax benefits and reduced taxable income can lower out-of-pocket costs. Sometimes by reducing taxable income by contributing to an HSA a individual may qualify for a premium subsidy.
- Are high-deductible plans a good idea if I need frequent medical care?
f you are in need of frequent medical attention, a high-deductible plan may not be the most advantageous plan for you. A metal tier platinum or gold plan may be better for you. Your licensed ColoHealth Personal Benefits Consultant can help you find the best solution for your unique health care needs.
- Why should I enroll in a Health Savings Account?
Commonly called an HSA, a health savings account is a tax-free savings account that, when combined with an HSA-qualified health plan, can be used to pay for medical expenses not covered by your insurance.
HSA plans are very popular among our clients. The contributions you make to your HSA are tax-free. These contributions also act to lower your taxable income, thereby reducing your income taxes. An HSA can also put your income level to qualify you for a tax credit on your health premiums.
We encourage you to contribute the maximum allowable amount every year in order to accumulate the largest balance possible in your account by retirement. Starting at age 55 you are allowed to contribute an extra $1,000 each year above the typical maximum amount.
If you don’t use the money in your HSA at the end of the year, you can roll it into the next year while earning tax-free interest and building your funds for retirement as well.
If you use any of your funds for qualified medical expenses, the withdrawals are tax-exempt. However, withdrawals used for non-medical uses before the age of 65 are taxed at 20 percent. After the age of 65, you can use your savings for any purpose with no tax penalty.
- Who should consider a short term plan?
A short-term health insurance plan is normally designed to cover you for a 6-month period during a life change or period of unemployment. Intended for healthy individuals and families, these plans can provide temporary coverage. We recommend that you consider a short-term plan only if you are planning to acquire coverage during the next open enrollment period.
- What should young adults do to comply with Obamacare?
Those under the age of 30 have the option of enrolling in a catastrophic plan that meets the requirements of the ACA while providing them with the essential benefits of preventive care.
However, no tax credits are available to help pay for catastrophic plans, so if you earn less than 400% of the federal poverty level, you probably want to choose a different type of coverage.
Adults under 26 can stay on their parent’s health plan, even if they’re married. The coverage under their parent’s plan does not extend to the spouses of adult spouses or grandchildren; neither does it cover an adult child’s pregnancy.
- Will the Affordable Care Act change Medicaid coverage?
The ACA law will increase the reach of Medicaid to include low-income citizens and their families. Incomes less than 133 percent of the FPL qualify for Medicaid. The ACA is planning to accommodate additional fees paid to doctors treating Medicaid patients.
- What about coverage waiting periods?
Waiting periods common to group health plans are limited to 90 days. Individual health policies will not be able to impose waiting periods under the law.
More questions? We have answers!
With 25 years of expertise behind our team of licensed Personal Benefits Consultants, we simplify your health care options to find the absolute best coverage that saves you the most money. ColoHealth can help you understand your options, and feel confident in the decisions you make about your health care and your financial future.
We’re always available and we never charge for our services! Call your ColoHealth Personal Benefits Consultant at (800) 913-6381, or email us at info@ColoHealth.com today!
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