The Affordable Care Act’s, “Obamacare’s,” health insurance exchanges will open on Oct. 1 barring a last minute deal by Republicans and Democrats to delay the onset of the law. As the open enrollment period for the health care exchanges begins, Americans will be able to sign up for health insurance on their state exchange, also called health insurance marketplaces. The health insurance exchanges are only the most recent part of Obamacare to take effect. Some portions of the law took effect immediately on passage of the law in 2010 or in the years since.
If you currently have insurance coverage through your employer, Medicare, or Medicaid, you will not need to visit an exchange to purchase coverage. An exception to this is if you work for one of the many companies that are dropping health insurance coverage for their employees due to rising premium costs. Workers with company health insurance plans can also choose to buy coverage through their state exchange if their company’s plan does not meet certain standards. Workers who choose to participate in the marketplace in lieu of their company health plan may lose any employer contribution to their health insurance.
If you would like to shop for health insurance on your state exchange, you can find the web address through the Dept. of Health and Human Services website at http://finder.healthcare.gov. Registration for the site will be available after Oct. 1 when the exchanges open. Open enrollment on the health care exchanges will last until March 31, 2014. Coverage purchased after Oct. 1 on the exchanges will take effect on Jan. 1, 2014.
There will be several different health insurance plans offered on the state exchange. All plans will be required to offer certain minimum levels of coverage, but additional features will be available for an additional cost. Users of exchange websites will be able to compare plans and costs in plain language.
The individual mandate requiring that all Americans purchase health insurance will take effect in 2014. When filing income taxes in 2014, Americans will be required to prove that they have health insurance or pay a fine. There are two ways to calculate the fine. In 2014, the fine will be $95 per adult and $47.50 per child. The maximum will be $285 per family. Alternatively, the fine could also be capped at one percent of family income. The fine will be prorated on a monthly basis.
Under certain circumstances, taxpayers can receive an exemption from the individual mandate fine. Situations where exemptions are permissible are listed at https://www.healthcare.gov/exemptions/ and exemption applications will be available on health insurance exchange websites. No exemption application will be required if your income is low enough that you are not required to file or pay taxes, if you live outside the U.S., or if your gap in coverage is less than three months.
The fine will increase in coming years. In 2015, the fine rises to $325 per adult and $162.50 per child with a maximum of $975 per family or two percent of family income. In 2016, fines will be $695 per adult or $347.50 per child with a maximum of $2,085 per family or 2.5 percent of family income.
While the fine is far less than the unsubsidized price of insurance, Americans who choose to pay the fine instead of buy insurance will run the risk of large out-of-pocket costs. Open enrollment on the health care exchanges will last from Oct. 1, 2013 to March 31, 2014. In subsequent years, open enrollment will last from Oct. 15 through Dec. 7 unless the individual has a qualifying life event. While insurance companies will no longer be allowed to deny preexisting conditions, individuals without insurance may have to pay their own costs until the next open enrollment.
Whether the exchanges prices for health insurance are good largely depends on the individual. An analysis by Forbes found that on average health insurance prices will increase by 99 percent for men and 62 percent for women. In general, because Obamacare uses health insurance premiums from healthy young people to subsidize those with health problems or those who are older, people with preexisting conditions and senior citizens might expect lower premiums while younger people will pay more.
For some Americans, the increasing cost of health insurance may be at least partially offset by the subsidies offered by Obamacare. To qualify for these subsidies, the individual or family must not be eligible for Medicare, Medicaid, or have affordable health insurance (defined as less than 9.5 percent of gross income for the employee only) from their employer. Subsidies are income based. Americans with incomes between 100 and 400 percent of the federal poverty line, less than $46,000 for individuals or $94,000 for a family of four, may qualify. The subsidies will be paid in the form of refundable income tax credits.
The Kaiser Family Foundation has developed on an online estimator for the government’s health insurance subsidies on their Kaiser website. According to Kaiser, an individual earning $30,000 would receive a $24 subsidy on their annual $2,535 premium. A family of four that earns the same amount would receive a subsidy of $6,677 on their $8,642 premium. This would pay 77 percent of the family’s health care premium costs.
There are more changes on the horizon as the Affordable Care Act continues to be implemented. The next big date will be Jan. 1, 2014. As HealthCare.gov notes, several more changes take place then. These include the requirement that insurance companies accept preexisting conditions (which most have already complied with voluntarily), the expansion of Medicaid eligibility to include adults up to 138 percent of the federal poverty level ($15,800 for individuals or $32,500 for a family of four), the elimination of lifetime limits for payouts on health insurance policies, and the expansion of small business tax credits.