The Affordable Care Act and you: Questions and answers

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Jim Leute
Saturday, September 28, 2013

Barring any last-minute developments, key provisions of the Affordable Care Act will kick in Tuesday.

Months of rhetoric will turn to reality as millions of U.S. residents start making difficult and often confusing decisions on their health insurance.

Here are questions and answers on the new law and what it will mean. Information was compiled from Gazette wire services and the Kaiser Family Foundation, a non-profit private foundation dedicated to health policy analysis and health journalism.

Q: How will my health insurance change in 2014?

A: That depends on your source for health insurance. If you get health insurance through your job, chances are you won't see many changes—unless your employer changes your coverage options.

If you buy insurance for yourself or your family directly from a health insurance company, you have a choice to use the Health Insurance Marketplace, which is sometimes referred to as the Health Insurance Exchange.

Beginning Tuesday, the online exchange will allow you to compare health plans from different companies and make a decision for coverage that will start Jan. 1, 2014.

The federal exchange also will help you determine if you might qualify for financial help.

Q: Is the federal exchange different from the state exchanges I've heard about?

A: Yes. Wisconsin decided not to set up its own exchange and is instead routing its residents through the federal exchange. You can use it if you are an individual or family buying insurance on your own or don't have access to affordable coverage through your job.

For Wisconsin residents, the exchange is expected to offer plans from 13 companies, including local insurers MercyCare and Dean Health Plan.

The exchange opens Tuesday, with health insurance coverage starting Jan. 1. Specific plans and prices on the exchange will be available Tuesday, the start of the open enrollment period that runs through March.

Q: What will the exchange plans include?

A: The exchange plans will offer a set of essential health benefits—services the new plans are mandated to cover—offered at four cost levels—bronze, silver, gold and platinum. The costs will vary depending on levels of coverage, ranging from 60 percent to 90 percent, and the size of deductibles.

For plans purchased directly from the exchange or through an employer with between two and 50 employees, the essential health benefits include:

-- Ambulatory patient services, such as doctor office visits

-- Emergency services

-- Hospitalizations

-- Maternity and newborn care

-- Mental health and substance use disorder services

-- Prescription drugs

-- Rehabilitative services and devices such as physical therapy and walkers

-- Laboratory services

-- Preventive care and chronic disease management

-- Pediatric services, including vision and dental care for kids

When it comes to the pricing of plans, insurers can base the cost on only four factors: individual or family coverage, the area where the policy is sold, age and tobacco use.

Other provisions of the law mandate insurers sell coverage to anyone who applies, and they can't limit or exclude coverage because of preexisting conditions.

Q: Do I have to buy insurance on the exchange?

A: No. Consumers can go directly to insurers, including those that have opted not to participate in the exchange. But it's only through the exchange that consumers may obtain tax credits and subsidies depending on their family size and income.

Q: What if I already get insurance through my employer?

A: Employers with more than 50 employees must provide “affordable” coverage that meets a “minimum value.” Those phrases are important, and most large employer-sponsored plans will meet those requirements.

“Affordable” means you don't have to pay more than 9.5 percent of annual household income for a plan that covers only the employee, even after federal discounts are applied. “Minimum value” means the plan is designed to pay 60 percent of the total cost of medical services.

Employees in employer-sponsored plans that don't meet those standards may purchase their own policy on the exchange and be eligible for tax credits.

Beginning in 2015, employers who offer insurance that does not meet the standards must pay penalties of $3,000 per full-time employee who receives a tax credit in the marketplace. Employers who offer no insurance at all must pay $2,000 for each full-time employee after their first 30 employees.

Businesses with fewer than 50 employees are exempt from penalties faced by larger employers that do not offer coverage.

Q: What about the cost. How can I afford health insurance?

A: If you use the exchange to buy coverage, you may qualify for financial help. When you fill out your application, you'll find out if you can get a premium tax credit and cost-sharing reduction. Both can reduce your health care costs. They are available to people with incomes at a certain level.

Q: Who will be eligible for subsidies?

A: Beginning in 2014, tax credits will be available to those who buy coverage in the exchange and who have income up to 400 percent of the federal poverty level. To be eligible, individuals must not be eligible for public coverage, including BadgerCare in Wisconsin, the Children's Health Insurance Program, Medicare, or military coverage—and must not have access to health insurance through an employer.

The tax credits will be advanceable and refundable, meaning they will be available when an individual buys coverage and will be available regardless of whether or not an individual owes any taxes. The tax credits will vary with income and are structured so the premium an individual or family will have to pay will not exceed a specified percentage of income, ranging from 2 percent for those with incomes up to 133 percent of the poverty level to 9.5 percent for those with incomes between 300 percent and 400 percent of the poverty level.

Q: What happens if I don't have health insurance?

A: Starting January 2014, most Americans will be required to have health insurance. If you don't, you'll pay a penalty that will increase each year that you don't have coverage.

The Internal Revenue Service will collect fines based on your tax return, where you will be asked to show proof of health insurance. You won't have to show proof of insurance or that you are exempt from the requirement to have health insurance until you file your 2014 federal income taxes in 2015.

If you have to pay a penalty, the amount you owe may be subtracted from any tax refund you are due. The penalty will be the larger amount of either a flat rate or a percentage of income. The exact amount will depend on family size.

Q: Can young adults remain on a parent's insurance?

A: The law contains a provision that requires private insurers to continue dependent coverage of children until age 26. Regulations specify that a young adult can qualify for this coverage even if he or she is no longer living with a parent, is not a dependent on a parent's tax return or is no longer a student.

Both married and unmarried young adults can qualify for the dependent coverage extension, although that coverage does not extend to a young adult's spouse or children.

Q: What if I receive Medicare?

A: Medicare isn't part of the Health Insurance Marketplace, so you don't have to replace your Medicare coverage with marketplace coverage.  No matter how you get Medicare, whether through Original Medicare or a Medicare Advantage Plan, you'll still have the same benefits and security you have now. You don't need to do anything with the marketplace during open enrollment.

Q: What if I receive Medicaid?

A: In Wisconsin, Gov. Scott Walker's administration sent letters to an estimated 92,000 residents, notifying them that they no longer will be eligible for health care insurance coverage through the state's BadgerCare Plus program, the state's version of Medicaid.  Instead, recipients are being encouraged to enroll in the federal exchange.

New income limits will restrict BadgerCare coverage to adults earning less than 100 percent of poverty. That is $11,500 for an individual or $23,550 for a family four. Until the change, adults earning up to 200 percent of poverty were BadgerCare eligible.

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