Impact on Individuals

 

The Affordable Care Act, or ACA, was passed in 2010. Some provisions of the law will become effective in 2014. These provisions will have a huge impact on how people buy health insurance and what their benefits look like. We created a series of videos to help you understand the impact on individuals, small employers and large employers. In this one, we’ll look at the top considerations for individuals in this changing marketplace.

When shopping for health insurance, there’s a lot to think about.

  • What is the individual mandate and what does it mean to you?
  • What is minimum essential coverage?
  • What are your options for buying insurance?
  • What else do you need to know about the 2014 provisions?

Let’s get started.

The way millions of people access health insurance may change —even for people who have been getting insurance from their employer. By 2016, potentially over 19 million people will be buying health insurance on the individual market instead of being uninsured or receiving benefits from their employer.

In October 2013, people can begin to shop for health insurance on exchanges. These are online health insurance marketplaces, available in every state. They will offer health plans that begin on January 1, 2014.

On public exchanges, tax credits and subsidies will be available for people who qualify. This will make health insurance more affordable for those who couldn’t afford insurance before.

Starting in 2014, most U.S. citizens must have some level of “Minimum Essential Coverage” or possibly pay a penalty. This is called the Individual Mandate. The penalty for not having Minimum Essential Coverage starts out relatively low. Beginning in 2014, the penalty for an individual is $95 or 1% of their household income, whichever is greater; but by 2016 the penalty for an individual is $695 or 2.5% of their household income, whichever is greater. So as that penalty rises, a lot more people will be buying health plans to meet this requirement.

The individual mandate applies to most U.S. citizens, but there are exceptions. For example, the mandate will not apply to people who are unlawfully present in the United States, are incarcerated, or are members of Indian tribes or some religious communities. There will also not be a penalty for being uninsured for less than three months in the year or being a US citizen that resides outside the United States.

If these exceptions do not apply to you, then you must have some level of minimum essential coverage or potentially pay the penalty. But what counts as minimum essential coverage? Here are some examples of health plans that meet the definition.

  • Coverage under certain government-sponsored plans, like Medicare or Medicaid
  • Employer-sponsored plans, like the health insurance benefits you receive as an employee of a company
  • Plans in the individual market, such as the plans offered on the Health Insurance Exchanges
  • Grandfathered plans, which are plans that were in existence on or before the date the federal Affordable Care Act was enacted
  • Any other health benefits coverage, such as a state health benefits risk pool, as recognized by the Health and Human Services Secretary

So how can people get health insurance coverage that meets this requirement? Many will continue to receive health insurance through their employer. Others may buy plans on a public exchange. If they qualify, they can take advantage of tax credits or subsidies available only on the public exchanges. However, it’s important to point out that these tax credits and subsidies are not available if affordable, minimum essential coverage is available through their employer. People can also buy health plans through the private market, like from an insurer like Aetna - subsidies and tax credits are not available for these plans. And more people may get their coverage through Medicare or Medicaid.

Other provisions effective in 2014 are Guaranteed Issue and Rating Changes. These provisions say that individuals cannot be denied coverage or be charged higher premiums because of their health status or because of pre-existing conditions. That means the cost of insurance for individuals can be based only on age, which area of the country they live in, family size, and whether or not they use tobacco.

Also, health plans must cover preventive care (such as child immunizations or cancer screenings) with no out-of-pocket cost when individuals go in-network. That means no coinsurance or deductible charges for these services. This is generally true whether a plan is offered through an employer or through a state exchange.

Any plan offered on a public exchange has to offer at least a core set of benefits. These “essential health benefits” include things like preventive and wellness services, prescription drugs, and coverage for hospital stays.

Keep in mind that health plans may cost more for some people because the price is set regardless of their health status or pre-existing conditions. Additional coverage for preventive services, essential health benefits, and new taxes and fees may also cause plans to cost more. The new taxes and fees include the Health Insurer Fee and Reinsurance Contribution. The Health Insurer Fee will help fund tax credits and subsidies for eligible individuals buying on a public exchange. The Reinsurance Contribution is temporary and will help offset the cost of high claims in the first three years that public exchanges are available.

So let’s review. Individuals have important considerations as a result of the ACA and some key provisions effective in 2014. Starting in 2014, most U.S. citizens must have health insurance that provides minimum essential coverage. If they don’t, they may have to pay a penalty. While the individual mandate applies to most, there are exceptions. And there’s different ways to access health insurance coverage. There are employer-sponsored plans, the public health exchanges, the private market and government sponsored plans like Medicare and Medicaid.

People will no longer be denied coverage or charged more based on their health status or pre-existing conditions. Plans purchased on the public health exchanges must provide coverage for essential health benefits. And all plans, on or off the exchange, must cover preventive care and women’s health services. Because of these new requirements, health plans may cost more.

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