How Federal Health Care Reform will Affect You
Beginning in 2014, most people must have health insurance that meets minimum federal coverage standards or pay a tax penalty. Health benefit plans provided by your employer and most state or federal government health plans (Medicare, Medicaid, CHIP, TRICARE, and some veterans’ health programs) will usually satisfy this requirement.
If you don’t have access to employer- or government-sponsored health coverage, you can buy an individual plan to cover yourself, or yourself and your family.
You can buy directly from companies and insurance agents or brokers. You can also buy coverage through the new federally operated online health insurance marketplace at HealthCare.gov, or by calling the marketplace toll-free at 1-800-318-2596. If you choose not to get health coverage, you might have to pay a tax penalty when you file your federal income taxes. For more information, visit the IRS website at www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision.
Open enrollment. You generally may buy health insurance only during a designated open enrollment period. But there are exceptions if you have a qualifying life event, like a marriage, divorce, birth of a baby, or if you move to another state. To avoid the tax penalty in 2014, you must get insurance that meets the federal coverage standards by March 31, 2014. There is an open enrollment period each year. In future years, the open enrollment period will run from November 15 to February 15. All individual coverage will be tied to the calendar year regardless of when you buy it. For example, if you get coverage on April 1, your deductible and out-of-pocket maximum will reset on January 1.
Insurance marketplaces. The online health insurance marketplace, HealthCare.gov, is a resource to help you shop for health coverage to comply with the health care reform law.
Preexisting conditions. Starting in 2014, health insurance companies may not deny you coverage or charge you more because of a preexisting condition or disability. Companies will have to sell a plan to anyone who applies during the open enrollment period.
When determining your rates, companies may consider only your age, where you live, whether you smoke or use tobacco, and whether the coverage you are buying is for an individual or a family.
Premiums and rebates. Insurance companies must spend at least 80 percent of your premium dollars on medical services and programs rather than administrative costs. Companies that don’t spend at least 80 percent must give a rebate to plan participants or the employer who paid the premiums. In addition, companies must justify any rate increase of 10 percent or more before the increase takes effect.
Penalty amounts. The tax penalty for adults who don’t have insurance in 2014 will be $95 for each adult or 1 percent of household income above the filing threshold, whichever is higher. In 2015, the penalty will increase to $325 or 2 percent of household income above the filing threshold; and in 2016, the penalty will be $695 or 2.5 percent of household income above the filing threshold. After 2016, the penalty will be determined based on inflation. The penalty for children is 50 percent of the penalty for adults. The penalty for households paying the flat amount is capped at 300 percent of the penalty for a single adult. Overall, the penalty won’t exceed the cost of buying a bronze-level plan through the marketplace. The amount owed will be adjusted to reflect the number of months without health insurance coverage.
Exemptions. Some people are exempt from the requirement to have health insurance or pay a tax penalty. You might be exempt if you:
- are a member of a recognized religious sect in existence since 1950 with a conscientious opposition to the acceptance of medical care
- are a member of a recognized health care sharing ministry in existence since at least December 31, 1999
- are a member of a federally recognized American Indian tribe
- had a gap in coverage during the year of fewer than three months
- get a hardship exemption certification from the marketplace.
You’re also exempt if the only coverage you can find would cost more than 8 percent of your household’s income or if your household income is below the tax-filing threshold. In 2013, the tax-filing threshold is about $10,000 for an individual and $20,000 for a family.
Federal law also exempts people who are in prison and those who are in the United States illegally.
Subsidies. You might be able to qualify for subsidies to help pay for your coverage and out-of-pocket costs. To be eligible for a subsidy, your employer must not offer qualifying insurance and your income must be between 100 percent and 400 percent of the poverty level. In 2013, this would mean a gross annual income between $11,490 and $45,960 for an individual, and between $23,550 and $94,200 for a family of four. Subsidies are available only if you buy coverage through the marketplace. You aren’t eligible for a subsidy if your income is below 100 percent of the federal poverty level. However, some noncitizens in the United States legally and not eligible for Medicaid may still qualify for a subsidy even if their incomes are below 100 percent of the poverty level. If you underestimate your income, you might have to return some of the subsidy money you receive.
Preventive services, immunizations, and screenings. If you’re insured, you can get some preventive services free (with no copayments or deductibles). Depending on your age and gender, you may get blood pressure and diabetes testing, mammograms, cancer screenings, and flu shots. Some plans that existed on or before March 23, 2010, are exempt from this provision. For more information, visit www.HealthCare.gov/what-are-my-preventive-care-benefits/.
No dollar limits. Insurance companies may no longer put dollar limits on the coverage for essential benefits you receive, either in a year or over your lifetime. Previously, insurance companies could set limits on the amount they would pay. When you reached the limit, the company would no longer pay for your health care. Plans may have limits on the number of times you can get certain types of services in a year. Make sure you review your plan carefully to understand if it meets your needs.
Losing your insurance. Insurance companies may not rescind your policy if you get sick. Companies may now only rescind a policy if you commit fraud or intentionally misrepresent a material fact. Rescind means to cancel a policy back to the effective date as if it had never been issued. If a company rescinds a policy, it will not pay for any of your health care.
Choice of doctors. You can choose any doctor in your plan’s network as your primary care doctor, and you don’t have to get a referral before visiting a network ob-gyn specialist. If there’s an emergency, you may go to a hospital outside your network without prior approval from your plan, and your plan can’t charge higher copayments or coinsurance. Plans that existed on or before March 23, 2010, may be exempt from this provision if they qualify as “grandfathered” plans. If you’re in a plan with no out-of-network benefits, you may have special protections in cases of emergency or if the network is inadequate.
Staying on your parents’ plan. Adult children who don’t have coverage through their job may stay on their parents’ plans until age 26. They don’t have to live at home, be enrolled in school, or be claimed as a dependent on their parent’s tax return. The law doesn’t require coverage of an adult child’s spouse or children. Beginning in 2014, children up to age 26 can stay on their parents’ employer plans even if they can get health coverage through their employer.
Grandchildren under age 26 don’t qualify for the extended coverage under federal law, but Texas law requires insurers to provide coverage for dependent grandchildren up to age 25.
Prescription help. Seniors on Medicare and in the “donut hole” in 2014 will get a discount on their prescriptions. You’ll pay 47.5 percent of the cost for covered brand-name drugs and 72 percent of the cost for covered generic drugs. (The donut hole is a coverage gap during which some Medicare prescription drug plans won’t cover your drug costs.) The amount you pay while in the donut hole will decrease each year until the donut hole is eliminated in 2020.
Preventive services, immunizations, and screenings. You may get free preventive services, including an annual wellness exam and flu shots, through Medicare without a Part B coinsurance or deductible.
Tax penalties. Large businesses – those with more than 50 full-time and full-time equivalent employees – that don’t offer affordable health care coverage of minimum value must pay a penalty if any full-time employee gets a subsidy through the insurance marketplace. Full-time is defined as an employee working an average of at least 30 hours per week. (Every 120 hours worked in a month by part-time employees counts as a full-time equivalent.) The IRS has delayed the penalty until 2015.
Small businesses – those with fewer than 50 full-time and full-time equivalent employees – aren’t required to offer health coverage to their employees. There won’t be a penalty for small businesses that don’t offer or provide coverage.
Enrollment. Businesses with more than 200 employees must automatically enroll employees in a health plan. Employees can opt out of the automatic enrollment, but they must have some form of health insurance or be exempt from the requirement to avoid paying a tax penalty.
SHOPs. Businesses with 50 or fewer full-time-equivalent employees may buy coverage through a health insurance marketplace called the Small Business Health Options Program (SHOP). An employer that has SHOP coverage and hires more employees than the threshold will be able to continue coverage through SHOP.
Tax credits. Small businesses with 25 or fewer full-time employees may get tax credits if they pay at least 50 percent of their employees’ premiums and pay average annual wages below $50,000. The credit is worth up to 50 percent (35 percent for tax-exempt employers) in 2014.
For More Information or Assistance
For answers to general insurance questions, for information about filing an insurance-related complaint, or to report suspected insurance fraud, call the Consumer Help Line at 1-800-252-3439 or 512-463-6515 in Austin between 8 a.m. and 5 p.m., Central time, Monday-Friday, or visit our website at www.tdi.texas.gov.
For printed copies of consumer publications, call the 24-hour Publications Order Line at 1-800-599-SHOP (7467) or 512-305-7211 in Austin.
To report suspected arson or suspicious activity involving fires, call the State Fire Marshal’s 24-hour Arson Hotline at 1-877-4FIRE45 (434-7345).
The information in this publication is current as of the revision date. Changes in laws and agency administrative rules made after the revision date may affect the content. View current information on our website. TDI distributes this publication for educational purposes only. This publication is not an endorsement by TDI of any service, product, or company.
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