Confused About Health Care Reform?
The implementation of the Affordable Care Act – commonly referred to as Obamacare – has generated a lot of questions from our members. To help you understand how changes to the law impact you, please review this list of “Frequently Asked Questions.” Over the next few months, we’ll provide you with even more information about health care reform so you can make smart coverage decisions for yourself and your family.
Remember, the team at iCan is standing by ready to help you find the coverage that best meets your needs and your budget!
I’m confused about Health Care Reform (Obamacare). What does it mean to me?
You are not alone. Millions of Americans still don’t understand what health care reform means to them and their families. Implementation of the law has not gone smoothly – many parts of the law have been delayed already. But we are here to try to help you understand what’s happening and make sure you have the coverage that best meets your needs and your budget.
If I don’t get a certain type of coverage, will I have to pay a penalty?
There is no law that requires you to purchase any kind of health insurance. However, the Affordable Care Act does say that those that don’t have coverage with “minimum essential benefits” could be subject to a modest tax penalty . . . but for many people that penalty could be as low as $95, and you wouldn’t be subject to that penalty until you file your taxes in 2015.
The penalty is one of many factors you should consider when selecting coverage, but it shouldn’t be the only factor. The smartest option is to find the coverage that best meets the needs of you and your family at a price you can afford.
Also, you should know that there are several exemptions from the penalty – and you may qualify for one or more of them. For instance, if your income is so low that you don’t have to file a tax return, there’s no penalty for not having health insurance. Also, if the cost of comprehensive health insurance costs more than 8% of your household income, there’s no penalty. You’ll be able to file for those exemptions when you file your income taxes in the spring of 2015.
What kind of coverage satisfies the requirement to purchase coverage?
If you are on a government health plan such as Medicare, Medicaid, CHIP or TRICARE you have comprehensive coverage and won’t be subject to a tax penalty. Also, most but not all employer-provided health care coverage satisfies the requirement (ask your company’s human resources office if you aren’t sure).
Most indemnity insurance or “fixed benefit” policies do not provide the minimum required coverage to avoid the penalty. However, those policies are popular with consumers as they often have lower premiums and offer “first dollar” coverage for medical costs.
Again, the penalty should be one of many factors you consider when making your decision. The most important consideration is to find a plan that meets your medical needs at a price you can afford.
What is the penalty for not having proper coverage?
The penalty is very low in the first year, and it looks like the only way the IRS can even collect that penalty would be by subtracting it from any income tax refund you might receive in 2015. Initially, the penalty for not having the right coverage is just $95 per adult and $47.50 per child, with a maximum of $285 per family. But the penalty could be larger depending on your income – up to 1% of your income above the income tax filing threshold (which is approximately $10,000 for an individual or $20,000 for a family). The penalty will be higher in future years.
However, under the law many people will NOT have to pay a penalty for not having comprehensive health insurance. For instance, if your income is so low that you don’t have to file a tax return, there’s no penalty. Also, you won’t have to pay a penalty if the cost of that comprehensive insurance is more than 8% of your income.
How does the penalty get charged?
The law expressly prohibits the IRS from being aggressive in collecting this penalty, and at this time it is believed that the primary way for the IRS to collect that penalty will be to subtract it from any tax refund you may receive in 2015.
Is my employer required to cover me? My family?
Originally, the law required that all employers with 50 or more employees provide affordable coverage to their employees or pay a hefty penalty. But like with so much else in this law, that requirement has been delayed. So for now, the “employer mandate” is on hold. It may take effect in 2015, but we are not sure yet.
Will your plan cover my pre-existing condition after January?
Beginning on January 1, 2014, all comprehensive “major medical” plans must cover your pre-existing conditions, and there will be no lifetime or annual limits on those policies. However, indemnity policies are a bit different and are a not subject to that requirement of the law. If treatment of a pre-existing condition is a concern of yours, we can help you look at your major medical options so you can get the coverage you need at a price you can afford.
