Obamacare Frequently Asked Questions

What is The Individual Health Insurance Exchange?

When key parts of the health care law take effect in 2014, there will be a new way for individuals to get health insurance. Starting October 1st, 2013, you will be able to shop online, in person, or by phone for health insurance in every state. 18 states will have their own websites, while the rest will use the federal website www.healthcare.gov.

The Health Insurance Marketplaces will offer Qualified Health Plans (QHPs) that are the same high- quality health plans available on the private market today. These QHPs will provide the essential levels of coverage and comply with consumer protections set forth in the Affordable Care Act. Plans offered on the exchange by insurance companies will be directly comparable, reducing the confusion of plans with a myriad different options.

Who can use the exchanges?

Generally, legal residents of your state who do not have access to affordable health insurance through their employer, Medicare, or another government program will be eligible to purchase health coverage from the state Health Insurance Marketplace.

What kind of assistance is available to help me decide among the plans?

For phone or in-person visits assisters will be available to help you through the process.

Online each state’s website will provide you with a variety of online tools so you can learn more about the range of health plans that will be offered through your state Health Insurance Marketplace.

In many (but not all) states, traditional insurance brokers will be able to help you with the products offered on the exchange and will receive their usual commissions for placing your order.

What kinds of plans are available on the exchanges?

There are four tiers of plans you can purchase on the exchange. They range from lower quality, but more affordable “Bronze plans”, to “Silver plans” to a more expensive plan with better coverage called a “Gold plan”. There is also a “Platinum plan” which is the highest quality and cost plan. Lower premium plan will have higher deductibles.

This ranking system will make it easy to compare plans in the same category or across categories. As the metal category increases in value, so does the percent of medical expenses that a health plan will cover. You can choose to pay a higher monthly cost so that when you need medical care, you pay less. Or you can choose to pay a lower monthly cost so that when you need medical care, you pay more. You can choose the level of coverage that best meets your health needs and budget.

Plan % Paid By Health Plan % Paid By Individual
Platinum 90% 10%
Gold 80% 20%
Silver 70% 30%
Bronze 60% 40%

Is there an enrollment period for purchasing the insurance?

Yes, there is. Insurance can only purchased in October through December each year. However, this first year the Health Insurance Marketplaces will open October 1st, 2013 and continue enrollment until March 31, 2014. You must purchase health insurance during this open-enrollment period to obtain coverage in 2014. If you have a life-changing event such as the loss of a job, death of a spouse or birth of a child, you would be eligible for special enrollment within 60 days of the event. If you do not enroll during this period, you will not be assured a health plan will cover you. The next open-enrollment period is October 2014 to December 2014 for coverage in 2015.

What if I have a pre-existing health condition?

You can still purchase health insurance regardless of any current or past health conditions. Starting in 2014, insurance companies will be required to sell policies to everyone regardless of current or past health issues, and they will be prohibited from using your health status to determine how much your health insurance will cost. You can purchase health insurance regardless of any current or past health conditions, and insurance companies cannot charge you a different premium.

This requirement means whether you buy insurance through a Health Insurance Marketplace or somewhere else, you cannot be denied coverage or even screened based on a pre-existing medical condition. It is important to remember that this requirement only applies during the open enrollment periods.

Affordable Insurance Exchange: How much does the Health Insurance Exchange cost?

The cost of your health care on the online Health Insurance Exchange depends on many factors. The primary factors are income and what type of plan you want to purchase. Plans range from basic with minimal coverage to all encompassing high-end plans. (ObamaCare has raised the standards of health care, so all plans have the new basic benefits laid out by ObamaCare).

Even though we don’t know the exact cost of insurance bought through the health insurance exchanges, the ObamaCare exchanges should lower the cost of health insurance premiums by 7% to 10%. The following factors are projected to decrease the cost of premiums:

  • Increased competition among private insurance plans via comparative shopping and consumer information available on the exchanges.
  • Individuals will get the same purchasing power on the Health Insurance Exchanges as large businesses.
  • Administrative costs are streamlined by standardizing forms and reducing the amount of paperwork doctors have to do.
  • Insurance companies can’t discriminate against Americans with pre-existing conditions. This provision will force insurance companies to provide high-quality benefits at more competitive prices.

Currently, the average American pays about 20% of their income for health insurance. Based off of what we know so far, the exchanges’ “Bronze plans” and “Silver plans” are capped at 9.5% of your income for 300 – 400% FLP. It’s a sliding scale so those who make less, will pay less due to cost assistance offered through the exchange in the form of premium tax credits. “Gold plans” and “Platinum plans” can cost no more than 12% of income.

How does expanded Medicaid fit into this?

The Health Insurance Exchanges will not offer subsidized premiums for those earning less than the poverty level. Instead they will offer a streamlined signup for Medicaid. In the past Medicaid was often not available to those without children, or those with some assets.

Expanded Medicaid under ObamaCare will be offered to all whose income is less than 133% of poverty level. In essence, if your income is low enough you will get free medical care instead of insurance. The same Health Exchanges that offer health plans with insurance companies will determine if you qualify for Medicaid and will get you registered.

Eligibility for Medicaid Expansion is decided on state by state (typically under the 138% FLP mark). All legal residents who earn less than $15,302 for individuals and $31,155 for a families of four can receive Medicaid under Medicaid Expansion. However, some states (mostly red states) have rejected Medicaid expansion, and will operate under the old rules that excluded those without children or who had too many assets. Currently in those (red) states, individuals under the poverty level but excluded because of assets or no children will not have access to health insurance or to Medicaid.

What is the Individual Health Insurance Tax Credit?

Starting in 2014, massive tax credits will be available to help you buy individual health insurance coverage through new state-based Health Insurance Marketplaces. The tax credits will only be available to you if you enroll in health insurance through your state’s Health Insurance Marketplace. If you are eligible for these health insurance tax credits, they will cap your cost of health insurance at 2% – 9.5% of your household income.

How do I get this credit?

Tax credits are only available through the Health Insurance Marketplaces. You must enroll in a health plan through the Health Insurance Marketplaces if you want to use your tax credits.

Tax credits can be applied to the cost of your health plan when you enroll — you do not need to wait until you file a tax return at the end of the year. Tax credits are paid directly to your health plan. These tax credits are paid by the Health Insurance Marketplace to your health plan to keep your out-of-pocket costs low.

If your income changes over the year, your tax credit will be adjusted accordingly. If your income increases, you will have to pay the difference at tax filing time. It will be important that you stay on top of any income changes so you have an idea of how much you will owe at tax time.

Am I eligible for tax credits?

Health insurance tax credits are available for individuals and families who meet certain income requirements and do not have access to affordable health insurance through their employer or another government program. Eligibility for tax credits is based on a standard, called the “federal poverty level,” that looks at your household income and the number of people in the household.

The size of the tax credit is based on a sliding scale with those who make less money getting a larger financial support to lower the cost of their insurance coverage. Individuals and families who make between 138 percent and 400 percent of the federal poverty level may be eligible for a tax credit. This means that an individual making up to $45,960 and a family of four earning up to $94,200 may be eligible for a tax credit.

How much of credit are we talking about here?

The amount of the tax credit depends on household income and family size of eligible individuals. Use this link to get an estimate for your situation. Here are some examples of premiums and credits.

Family Size Family Income Age Premium Tax Credit Your Out Of Pocket Cost
1 $25,000 30 $3,735 $2,006 $1,729
1 $25,000 50 $6,255 $4,526 $1,729
2 $40,000 30 $6,508 $3,196 $3,312
2 $40,000 50 $10,900 $7,588 $3,312
4 $60,000 30 $10,068 $5,155 $4,913
4 $60,000 50 $16,861 $11,948 $4,913

How is household income determined?

When applying on the health insurance exchange, eligibility will be determined by your projected income. Family income and the final credit determination will be made on your subsequent tax return. Family income is your adjusted gross income (the last line on page 1 of form 1040) plus certain items. Additional items including:

  • Tax exempt income
  • The excluded portion of Social Security
  • Income of your dependents
  • Excluded foreign income

What is the individual shared responsibility penalty?

There is a penalty for not having health insurance. In 2014, the penalty is minimal ($95 for each person), but by 2016 will rise to $695 person or 2% of your income whichever is higher.

Several groups are exempt from the requirement to obtain coverage or pay the penalty, including:

  • People who would have to pay more than 8 percent of their income for health insurance
  • People with incomes below the threshold required for filing taxes (in 2012, $9,750 for a single person and $27,100 for a married couple with two children)
  • People who qualify for religious exemptions
  • Undocumented immigrants
  • People who are incarcerated
  • Members of Native American tribes

If you do not have insurance and do not fit into one of these categories, then you will likely pay a tax penalty.