A Basic Overview of the Affordable Care Act for Consumers In March 2010, President Barack Obama signed the Affordable Care Act (ACA) into law. The goals of the ACA are to improve the affordability, availability and quality of health insurance and to reduce the number of uninsured people in the country through the expansion of both private and public health insurance. Healthcare Mandate The ACA established a healthcare mandate, which requires that most uninsured Americans enroll in a health insurance plan by March 31, 2014 in order to avoid an individual shared responsibility payment of $95, or 1% of total income during the first year, whichever is greater. The payment will increase over time, eventually maxing out at $695, or 2.5% of total income. Expansions to Coverage Under the AC, insurance companies are no longer allowed to deny people coverage because of preexisting conditions, and all plans (except those that have been “grandfathered”) must meet minimum standards for coverage, including 10 essential health benefits. Additionally, many states elected to expand their Medicaid coverage to cover more low-income Americans. Establishment of Health Insurance Exchanges The ACA established a federal health insurance marketplace through which individuals and small business employees can buy insurance. As of today, 27 states opted not to create a statebased health exchange, while the remaining states, including California, New York and Colorado, opted to create state-run health insurance exchanges. People living in states that chose not to create a state-based exchange are able to purchase coverage through the federal exchange. Tier-Based Plans Health plans available through the health insurance marketplace have been set up in a tier-based system, with higher-value metal plans covering progressively more, but also costing more. The four tiers are: Bronze -- Covers 60% of expenses Silver -- Covers 70% of expenses Gold -- Covers 80% of expenses Platinum -- Covers 90% of expenses “Coinsurance” is the term for the amount an insured person has to pay toward covered expenses. For example, with a silver-level plan the insured person pays 30% of covered costs (the coinsurance amount) while the insurance company pays 70%. Cost-Sharing Subsidies and Tax Breaks The ACA established cost-sharing subsidies and tax breaks both to help individuals and families
afford coverage and to incentivize businesses to offer health insurance to employees. Costsharing subsidies help pay for covered medical expenses, while tax breaks help trim premium costs. Whether a person qualifies for financial assistance is dependent on income, not employment status. So, for example, if a person is unemployed but receives monthly income from rental properties, he or she would need to report this income when applying for coverage. There is an important caveat to receiving subsidized coverage, however. If a person receives coverage through work that costs less than 9.5% of their income, they will not qualify for subsidized coverage through the exchange, even if adding their spouse and/or children to their employer plan would dramatically increase the cost of coverage. In other words, as long as the employee’s coverage alone does not exceed 9.5% of income, the person cannot get subsidized coverage through the exchange. This issue has been dubbed the “family glitch,” and Congress has not come up with a solution to date. Those with incomes between 138% and 400% of the federal poverty level will likely qualify for some type of financial assistance. For example, individuals who earn up to $45,960 annually or a family of four making up to $94,200 should qualify for some type of assistance. Those who earn less than 138% of the federal poverty level may qualify for Medicaid, depending on the state in which they reside and/or whether their state elected to expand Medicaid coverage. Impact to Businesses Small businesses with fewer than 50 full-time equivalent (FTE) employees will not be required to offer employees health insurance under the healthcare mandate. Those who choose to do so, however, may qualify for tax breaks. In California, the Small Business Health Insurance Options (SHOP) program was set up as part of the state’s health insurance exchange to help businesses get their employees enrolled in coverage. Large businesses with more than 50 full-time equivalent (FTE) employees will be required to offer employees health insurance beginning in 2016 or pay a shared responsibility payment of $2,000-$3,000 per employee. Company Bio Benefit Packages is a health exchange-certified agency that has been helping individuals and businesses find affordable California health insurance for over two decades. Their licensed agents understand the healthcare law inside and out, and can help you find a plan that meets your needs through California’s health insurance exchange or through a private plan. Contact Benefit Packages today at 1-800-356-3615, or visit their website at www.benefitpackages.com.