Good Neighbor Insurance (dev.gninsurance.com and www.gninsurance.com) is continuing to update our clients on the new health insurance laws. There are six major coverage options for those in the US and even though some of the rules and regulations are similar for all many differences are there and it all depends on how old you are and for whom you work. Many critical details of this new insurance law will be clarified in the months and years to come.
These six major coverage options are:
(1) Individual or family coverage (private health care plans)
(2) Employee/employer group option for small businesses (typically under 50 employees)
(3) Employee/employer group option for large businesses (typically larger than 50 employees)
(4) Exchange options through the state you are residing in (fully integrated 1-1-2014 and are quasi-government and private insurance coverage combined)
(5) Medicare (which include Parts A, B, C, and D) for those 65 years onwards
(6) Full government health plans like Medicaid, CHIP, TRICARE, VA and other coverage plans as may be designated by the Department of Health and Human Services based mostly on financial criteria and/or military service.
The PPACA includes an individual mandate (including penalties for not obtaining health insurance) and requires the creation of state Insurance Exchanges by January 1, 2014. I know these are years away, but can you shed some light on the initial rules that surround these measures?
Beginning in 2014, all individuals are required to maintain “minimum essential coverage.” Failure to do so for an entire year will result in a penalty or tax. The penalty is on a sliding scale for three years and is described as 1/12th of the greater of:
- For 2014: $95 per uninsured adult in the household or 1% of the household income over the filing threshold
- For 2015: $325 per uninsured adult in the household or 2% of the household income over the filing threshold
- For 2016: $695 per uninsured adult in the household or 2.5% of the household income over the filing threshold
- The penalty will be 1/2 of the amounts listed above for individuals under the age of 18
- The total household penalty may not exceed 300% of the adult penalty or the national average annual premium for bronze level health coverage offered through the Exchange (the Exchange is another mandate scheduled for 2014)
More on This Mandate:
The “Minimum essential coverage” mandate can be satisfied through:
- Eligible employer-sponsored coverage
- Individual health plans
- Grandfathered health plans
- Medicare part A
- Other coverage as may be designated by the Department of Health and Human Services
Individuals who do not satisfy the individual mandate through participation in one of these programs will be able to purchase coverage through the state Insurance Exchanges discussed below.
Exceptions to the individual mandate include:
- Religious exemptions
- Individuals not lawfully present in the United States
- Incarcerated individuals
- Those who cannot afford coverage (required contributions toward coverage exceed 8% of household income)
- Taxpayers with income under 100% of the poverty level
- Those who have received a hardship waiver
- Those who were not covered for a period of less than three months during the year
State Insurance Exchanges
In 2014, states are required to have an operational Insurance Exchange (this may be in the form of an Internet portal). Many critical details are yet to be clarified through regulations. Below are some early requirements noted in the new law:
- Open to individuals and small employers (up to 100 full-time employees over 30 hours/week)
- Estimated to provide coverage to 24 million people
- Each Exchange is required to offer individuals five benefit levels:
- Individual responsibility requirements will apply and employer requirements and penalties for not offering coverage will apply
With the new state Insurance Exchanges, what is the difference between the premium assistance tax credit and the free choice voucher?
The free choice voucher must be provided by the employer, beginning in 2014, to “qualified employees” to purchase qualified health plan coverage through the Exchange. Qualified employees for this purpose are those:
- whose required contribution for minimum essential coverage through the employer’s plan is between 8% and 9.8%* of the employee’s taxable income for the year;
- whose household income is less than 400% of the Federal Poverty Level; and
- who do not participate in a health plan offered through their employer.
The amount of the voucher will equal the most generous amount the employer would have contributed for applicable coverage (self-only or family) on a monthly basis under the employer’s plan.
The Premium Assistance Tax Credit is a federal tax credit available to employees whose household income is between 100% and 400% of the Federal Poverty Level and who are either:
- not offered minimum essential coverage by their employer; or
- offered minimum essential coverage by their employer, but the plan’s “actuarial value” (or plan’s share of the total allowed costs of benefits provided under the plan) is less than 60%, or the premium exceeds 9.5%* of the employee’s household income.
The Premium Assistance Tax Credit is also available to individuals whose household income is between 100% and 400% of the Federal Poverty Level to purchase individual coverage through the State Insurance Exchange.
Note: There may have been a technical drafting error in the legislation that did not conform the 9.5% and 9.8% of income thresholds between these two provisions. The law uses different numbers in those places and absent a technical corrections bill, it will stay as such. Implications are unclear right now for those who get caught in between.
Doug Gulleson loves to scuba dive overseas and makes sure he has his US health care and overseas health care, www.gninsurance.com , information with him at all times when he travels Keep our blog close by you, www.gntravelinsurance.com, for continual updates on the changes with the US health care system.