What is ObamaCare (Affordable Care Act)
So What Is The Affordable Care Act (Obamacare, HEALTHCARE.GOV, Covered CA, etc.)?
The Affordable Care Act (ACA), affectionately known as Obamacare is our current health care reform law in America. It was signed into federal law by President Obama on March 23, 2010. No matter what you call it, or what political side of the fence you are on, it’s important that you know what it can do for you and how to avoid some of the pitfalls we’ve seen.
…it originally was put into place to provide more Americans with access to affordable quality health insurance. It also gives access to people with pre-existing conditions and allows low-income people under age 65 to be on MediCaid. However, affordability is being debated now because if your Modified Adjusted Gross Income (MAGI – see below for quick calculation) is too high for help with the premium, rates have gone through the roof. Plus, many medical providers are dropping individual and family plans (IFP) plans, left and right. We can help minimize the blow as much as possible with a personalized insurance design. We also work with your tax professionals to make sure you’re minimizing your MAGI to maximize the subsidy or look for alternatives.
And a few more facts that you should know about the ACA:
- Those who make less, pay less: 2022 Federal Poverty Limit Chart (as of 3/19)
- Health plans must cover maternity, pediatric dental/vision and certain birth control pills
- There are NO lifetime limits on ACA Compliant plans
- All new plans sold ‘ON’ or ‘OFF’ the Health Exchanges (Covered CA or Healthcare.gov for instance) must include a wide range of new benefits including wellness visits and preventative tests and treatments at NO additional out-of-pocket costs
CA HEALTH INSURANCE UPDATE…The new health insurance kid on the block is a company called OSCAR. It’s an EPO and now available in AZ, NY, NJ, Cleveland, Columbus, FL, Memphis, Nashville, Austin, San Antonio, LA, Orange Cty and San Francisco. In So CA, UCLA and Hoag accept a couple of OSCAR plans. OSCAR is proactive on promoting wellness and using technology. Need to Skype a Doctor in the middle of the night? No problem and no charge with OSCAR!
Deadlines to Apply for a Health Plan
INDIVIDUAL and FAMILY HEALTH PLAN DEADLINES
Open enrollment begins on November 1st and continues until December 31st. (some states, CA, NY and Wash DC, etc., tend to extend past deadlines to 1/31…check with your individual State).
***After Open Enrollment ends (January 31st), you can only obtain an ACA compliant plan with a qualfying event.
If you need a health plan and you missed Open Enrollment, there are MANY qualifying events that will allow you to obtain a plan. Here are some of the events (click the link for the current events):
– Turning 26
– Losing current insurance
– Move to a new area
– Getting married
– Birth of a baby
– Getting divorced
– Death in the family
– Becoming a citizen
What is the Health Exchange?
What is The Exchange?
The exchange is an online marketplace for health insurance. This is where you can go to find and apply for coverage from competing private health care providers. You have the option of buying a plan ON the Exchange or OFF the Exchange (direct with the carrier). Many States have Health Exchanges. If your State does not, you can buy through Healthcare.gov.
Should I Apply On of Off the Exchange?
1) Your MAGI (Modified Adjusted Gross Income). If your MAGI is within certain parameters, you are eligible for a ‘subsidy’ (the government helps to pay for some or most of your insurance premium).
2) Some plans have a wider network of Providers ‘OFF’ the Exchanges (direct to the insurance company). Always check to see if your Drs, medications, and hospitals are ‘in-network’.
Working with an INDEPENDENT Insurance Agent (LIKE US😉) that is certified with the Exchange, will be able to figure out:
1) If you can receive a subsidy
2) Maximize the subsidy
3) Ensure your Providers are in-network
4) Educate you
5) Guide you to the right plan FOR YOU!
And the cherry on top of the already delicious ice cream? At HIR Insurance, you won’t pay any more for our services than if you did this yourself!
Type of Health Insurance Plans
What is the Metal-Tier System?
This is a way to compare health plans and figure out which is best for you and gives you the most Bang for your Buck! It’s all about how much you’re willing to pay in premiums and how much coverage you need.
Just remember the METALS:
- BRONZE – Insurance pays 60% you pay 40%
- SILVER – Insurance pays 70% you pay 30%
- GOLD – Insurance pays 80% you pay 20%
- PLATINUM – Insurance pays 90% you pay 10%
MAGI – you won’t find anything labeled MAGI on your tax form. For most people, MAGI will be:
- Line 7 on your tax form (Adjusted Gross Income)
- Plus lots of things but the two main additions are ‘un-taxed’ Social Security and tax-exempt income
Check with your tax professional if you want to be 100% sure of your MAGI
How Can I Get Help With My Premiums?
Whether you can get help with your insurance premiums from the government (subsidy) and how much it will be, depends on a few factors:
1) What is your MAGI (Modified Adjusted Gross Income)? It’s basically your AGI (Line 7 on your taxes) plus a few extra things (tax-exempt interest and untaxed Social Security benefits) but always best to contact your tax accountant.
2) Your location. Yes, your zip code matters and it can be a dramatic difference.
3) Whether your Providers are ‘in-network’ with the Health Exchanges. Yes, the network can be vastly different if you get your plan ‘on’ the Health Exchange or ‘off’ the Exchange (direct to the insurance companies).
All in all, contact an independent insurance agent that is certified with the Exchange you will use. With HIR Insurance agents, you’ll always receive non-biased guidance and will NEVER cost you any more than if you did it yourself!
What happens When My Income Falls Below the Income Limits
FEDERAL POVERTY LIMIT (FPL): This is the barometer that the government uses to see if you qualify for help with your premiums and/or benefits. The issue is, if your income falls below certain amounts, you may be pushed into MediCaid (MediCal in CA). Now, if you are ok on Medicaid, then it’s no issue. If you don’t want to be on MediCaid however, you’ll want to be on top of this because it’s easier to get ON to MediCaid than it is to get OFF. We’ve had to go through the ‘appeals’ process for many of our clients to get them off of MediCaid. It’s no problem for us to do this, it’s just part of our customer service. However, many times it takes months to get you completely out of the States’ computer systems. To avoid this mess, your insurance agent should be keeping an eye on this for you. If they aren’t, change the Broker of Record to us and we’ll take care of the making the changes for you! Remember, it doesn’t cost you one extra penny to have us as your advocate 🙂
***IMPORTANT NEWS!! The government has just released the new FPL chart (March 2022). Click here for a pdf: 2022 FEDERAL POVERTY LIMIT CHART.
What is The 'Family Glitch'?
So, what is considered ‘Affordable’ coverage’? Here’s how you can calculate if your employer based plan is affordable or not:
- What is the monthly amount the employee pays toward the LOWEST-PRICED PLAN THE EMPLOYER OFFERS (exclude the beneficiaries’ premium)? $_________
- Multiply Line #1 x 12 to come up with an annual amount = $ _________
- What is the ENTIRE family’s tax HOUSEHOLD MAGI for the year? $_________
- Multiply #3 x 9.78% = $__________. If the amount the employee contributes to their health plan (Line #2) does not exceed 9.78% of the household MAGI (including spouse’s income), the employee’s plan is considered ‘affordable’. It’s not fair but unfortunately affordable. If the amount from Line #2 is MORE than Line #4, then it is considered ‘unaffordable’ and the rest of the family is eligible for a subsidy through the Exchange.
So that means if your spouse works or receives Social Security, ALL their income will count against you. However, the premium you would pay for dependent coverage at work DOES NOT COUNT as the employee’s required contribution! I know, it doesn’t make much sense. That’s why we call it, the ‘FAMILY GLITCH’!
- Here’s a ‘Family Glitch’ example: Consider a family of five with a household taxable MAGI of $60,000/year. They’re well below the income limits for subsidy eligibility for a family of 4 (see FPL chart). Let’s assume that the working parent’s employer offers a good health insurance plan, and pays most of their employees’ premiums. The employee pays $100/month and the employer pays the rest. That’s just 2% of their income – well under the 9.78% threshold – so the coverage is considered affordable. Wait…there’s more to the story…
The other three (3) members of the family are considered ‘dependents’ and most employers offer dependent coverage but do not contribute anything toward dependent coverage. Therefore, in this example, if the other 3 family members were to choose a plan through the employer group plan, it would cost them $1,500/month. Now the total payroll deduction for family health insurance is $1,600/month ($100/employee + $1,500/other 3 family members), which is a whopping 32% of their household income. Hold the phone! Here’s the GLITCH…the whole family is still considered to have access to “affordable” employer-sponsored health insurance, because the affordability determination is based solely on what they pay to cover the employee, not the dependents’ premiums . I know, it doesn’t make sense and it doesn’t seem fair but that’s the rule. And if the family does obtain a subsidy, the employer could get penalized!
TIP: It’s very possible the ‘Family Glitch’ only applies to employers with over 50 employees. Why? We have many clients’ that are receiving a subsidy and are offered insurance through their workplace. We have copies of the letter that the employers receive from the Exchanges and it states they should respond if they are an Applicable Large Employer (ALE). That leads us and our clients to believe if the employer is under 50 employees, the Family Glitch would not apply and the family SHOULD be able to legally obtain a subsidy on the Exchanges. We have researched extensively and cannot find this in writing anywhere on the government sites nor has anyone on the Exchanges been able to verify if this is true. In the meantime, many of our clients that work for employer under 50 employees are still comfortable enjoy receiving their subsidies!
TIP: Here’s another glimmer of good news. If the employer purchased a group plan through their State Exchange (CoveredCA in CA), they can EXCLUDE dependent coverage which opens up the door for your dependents to receive a subsidy on the Exchange, even if they are over 50 employees.
Does My Dr. Accept ObamaCare plans?
TIP: If you Doctor doesn’t accept any IFP plans, consider a high-deductible, Bronze, Health Savings Account (HSA) plan. They used to be more affordable than they are now but it’s not what it is, it’s what it does. It allows you to put money away in an account (tax-deductible going in and tax-free coming out when used for qualified medical expenses). You can then use the HSA to pay for those Doctors’ bills.
Is there a Penalty for Being Uninsured?
In CA, the penalty applies if you are without an ACA Compliant plan for more than three months and will be assessed on your State income tax return.
Starting in 2020, California residents will be penalized unless you have an ‘Exemption’. Call us and we’ll discuss whether you will be exempt and what you will have to do to prove it.
What is the Penalty for Being Uninsured?
The penalty for not having coverage for more than 3 months in CA will be at least $750 per adult and $375 per dependent child under 18 in the household or 2.5% of your household income. A family of four may face a penalty of $2,250.
The penalty will be applied by the California Franchise Tax Board. For information about the penalty, including the amount your family could owe for not having coverage in 2020, visit the Penalty Estimator (https://www.ftb.ca.gov/file/personal/filing-situations/healthcare/estimator/Home/Estimate).
NOTE: There are many exemptions from the penalty available. Check out my blog for tips and hints to help you save money. If you are an expatriate (live outside the country) for most of the year, you may be exempt from the penalty along with financial hardship or a member of a health sharing ministry.
HINT – Remember, it is ok to reduce your MAGI by legal means so if you’re close to a plan being unaffordable, consider putting more money into your retirement account. We’ve seen where putting $500 in an IRA has saved our clients $2,000 because they were able to get a higher subsidy or get their MAGI so that they are in the ‘unaffordable’ area and not pay the penalty. Of course, check with your tax professional to see what else you can do to reduce your MAGI. TIP – ARE YOU HEALTHY AND PAYING THROUGH THE NOSE FOR A HIGH DEDUCTIBLE PLAN? Back away from the ledge! There may be some good news for you. You may be able to obtain an exemption to avoid the penalty if you can prove that the ACA Compliant plans are UNAFFORDABLE. There are two components of the rule that you will need: First, is the lowest cost Bronze ACA Compliant plan available to you from your employer group plan or the Health Exchange. Second, what is your MAGI (see below for calculation – the lower, the better)?
Exemptions From the CA Health Insurance Penalty?
What are the exemptions from the CA health insurance penalty?
Click here for a full list: CoveredCA Penaties and exemptions
What Happens When My Child Turns 26?
The Affordable Care Act increased the age that children can stay on your health plan from 21 to 26. Then it’s time to move them to their own health insurance plan. If your child is disabled and you claim them on your taxes, they can stay on your plan.
Call your health plan and ask when the child will be terminated off the parents’ plan. Look for options a couple of months before they that date and apply for a new plan the month before it is terminated.
HIR Insurance agents are well versed in finding the right plan for young adults turning 26. And we won’t charge any more than if you had to search for yourself!
Where Can I Find Help?
This is all just the…
TIP OF THE ICEBERG when it comes to Obamacare!
All pretty confusing, right? We’re sure you have a lot more questions like…
- Have a child turning 26?
- When and how do I apply?
- Do I go On or Off the exchange?
- Will I be penalized for not obtaining health insurance?
- What do I do if I can’t afford my employers’ insurance?
- Can I get help with my premium?
- What happens if my premiums cost too much? What are my options?
- Who can assist me with all of this?
- What is the penalty for not being insured?
That is where we come in!
You know that ole’ saying, “we just don’t know what we don’t know”. The biggest issue nowadays? Most people have no idea what questions to ask. We will help easily guide you to the strategy and plan that is right for you. Or if your current plan is the right one, we’ll let you know that too!
For more information please give us a call at:
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