(This article was updated on October 20, 2016)
On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act, which governs healthcare in the United States and mandated unprecedented reform and controls over an industry that had previously been left to its own devices – often to bewildering results. Although the Affordable Care Act, which is more commonly referred to as Obamacare, regulates every aspect of healthcare, including plans offered by employers, Medicaid and Medicare, the bigger issue is how the ACA affects individuals and families.
By now, you probably know that you have to have health insurance that complies with the Affordable Care Act, but the problem that many people face is where to go if you need help enrolling for insurance. This article will provide you with some of the answers that you need in order to understand the requirements, know your options, research the issues and pick a policy that is right for you and your family.
I need help understanding when I have to enroll in insurance under Obamacare or whether I’m exempt.
Generally speaking, if you are a citizen of the United States, you are now required to major medical insurance with minimum essential coverage. The deadline to have insurance for next year is January 31, 2017. Open enrollment starts on November 1, 2016. There are, however, categories of people that are not required to get insurance under Obamacare. These groups of people are considered exempt from the individual mandate and only have to comply with the law if and when they are no longer part of the exempt group. Here are the categories:
- Members of federally recognized Native American and Alaska Native tribes
- Participants of federally recognized health care sharing ministries
- Members of federally recognized religious sects that object to health insurance
- People who don’t file taxes because they meet the IRS guidelines for low income
- People for whom the lowest-priced plan on the marketplace (or via work-based coverage) would cost more than 8.13 percent of their annual household income
- People who are incarcerated in jail, prison or a detention center
- People who are unlawfully present or illegal immigrants, excluding those with green cards, asylum, refugee status or some other protective status that allows them to live in the country legally without obtaining citizenship
- Those who qualify for a hardship exemption, including circumstances like losing your home or facing devastating natural disasters
If you have health insurance for nine months out of the year, then you’re considered compliant with the healthcare law. There’s a 3-month leeway period, which means you can go for three months without having health insurance and still be compliant with the ACA as long as you have coverage that starts after that third month ends.
I need help applying for an exemption under Obamacare.
If you think you qualify for an exemption from the individual mandate, then you’ll need to let the government know so that you don’t get hit with the penalty fee for not having health insurance. There are two ways to do this. You can tell the government ahead of time, or you can wait to do it when you file your taxes.
Healthcare.gov offers complete instructions and detailed information on how to apply ahead of time for an exemption. If you choose this route, you’re going to apply for an exemption during open enrollment. For the 2017 plan year, the enrollment period runs from November 1, 2016 through January 31, 2017. The government will review your application and accept or deny it based on the information they get. Note that certain exemptions may require more supporting documentation than others, so read the forms carefully before submitting.
If you’re approved for the exemption, then you’ll get an exemption certificate number, which you’ll need to use when you file your taxes for the year so that the IRS knows you’re exempt. Give yourself plenty of time to submit your exemption application. You might be denied, in which case, you’ll still have time to sign up for health insurance before the deadline passes. You may also be able to appeal the decision if you’re not approved.
Applying for an exemption up front is a good way to do it, but it’s not the only way. You can wait until you file your taxes for 2016 to claim an exemption from the individual mandate using Form 8965, which can be downloaded directly from the IRS website.
Keep in mind that this method leaves little room for error, so only use it if you know for a fact that you’re eligible for an exemption under the law. If you’re denied an exemption when you file your taxes, you may owe the penalty fee for the previous year. And depending on when you file your taxes, you could also miss the deadline for open enrollment (January 31 in 2017) again, thus continuing the cycle of noncompliance (and penalty fees).
I need help understanding what kind of insurance policy I’m required to have under Obamacare.
The Affordable Care Act is over 2,700 pages long and covers the vast scope of the American health care industry, including new regulations on insurers, rights and responsibilities for consumers, and other key features designed to improve the system as a whole. One of the many motivators behind the ACA was the fact that health insurance companies were able to charge exorbitant premiums for policies that didn’t cover certain benefits that insurance should cover, like preventive care. As such, one of the most important aspects of the ACA was ensuring that all new policies – private and job-based coverage – would offer 10 essential benefits. These benefits are now included in all plans sold after March 23, 2010. Whether you buy a plan on the federal marketplace, through your state’s marketplace, via a third-party broker or directly through an insurer, new major medical plans are ACA-compliant, which means you’re guaranteed 10 essential benefits along with your new rights and protections under the law. The 10 essential health benefits that must be included in every policy are:
- Ambulatory (outpatient) services
- Emergency services
- Inpatient hospitalization
- Maternity and newborn care (before, during and after birth)
- Mental health and substance use disorder services
- Prescription drug coverage
- Rehabilitative and habilitative services
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric care, including dental and vision coverage
In addition to these 10 essential health benefits, the ACA also mandates that insurance companies adjust certain rules that were previously implemented before Obamacare to limit or deny coverage to customers. These new rules include the following provisions, among others:
- Young adults can stay on their parents’ health insurance policy until age 26.
- Insurance companies can no longer deny a person coverage due to a preexisting health condition.
- Insurance companies can no longer impose limits or caps on annual or lifetime policy payouts.
- Insurance companies can no longer discriminate on a person based on certain factors like their medical history, gender, sex, financial situation or disabilities when calculating a premium.
I need help understanding how to get a federal subsidy.
The Obama Administration understood that the reason many families lacked health coverage before the law went into effect wasn’t because they didn’t care about their health, but it was because they simply couldn’t afford the cost. To combat financial issues, the ACA provides cost assistance in the form of federal subsidies to people who meet certain income criteria. If your income falls between 100 and 400 percent of the federal poverty level (FPL), then you may be eligible for a federal subsidy.
There are also new guidelines for Medicaid in states that opted to expand the program as outlined in the ACA. If you live in a state that expanded Medicaid, then the eligibility threshold is 133 percent of the FPL instead of 100 percent. You can’t have a marketplace plan and Medicaid, though, so you’ll need to determine which coverage works best before signing up. When you start the enrollment process on Healthcare.gov, the system will tell you if you qualify for Medicaid, the Children’s Health Insurance Program (CHIP) or a federal subsidy.
Income requirements may not mean much to you if you don’t know what the “federal poverty level” is, so here’s a quick breakdown of the limits, which change on an annual basis. For the 2017 plan year, the FPL is:
|Household Size||Income Threshold|
If you have more than eight people in your household, you’ll add $4,160 for each person to get the threshold amount. These figures are for people living in the 48 contiguous states and the District of Columbia. People living in Alaska or Hawaii have their own poverty levels. For example, an individual Alaska resident can earn up to $14,840 and still qualify for cost assistance.
If you think you and your family may be eligible for financial assistance through the state or federal marketplace, you must enroll for insurance either through the official website, or you can work with a licensed agent or broker who can help you sign up through Healthcare.gov. Subsidies are not available outside of the marketplace.
If you need help actually enrolling for a federal subsidy, the process is pretty streamlined. The following is a brief summary of the steps and information generally required to enroll for insurance through the marketplace if you’re seeking a federal subsidy.
Step 1: Go to Healthcare.gov and create a personal account, login name and password. The purpose of creating an account is to ensure that you can jump in and out of your enrollment application and can take your time reviewing your insurance policy options.
Step 3: State whether you’re receiving any help with filling out the application, either from a certified application counselor, a licensed broker or agent, or some other third-party representative or person.
Step 4: Identify whether you need financial assistance to pay for your health insurance premiums. If you answer yes to this question, the system will trigger a series of questions related to the financial state of your family later on. It would be beneficial to gather your family’s tax returns for the past year and any recent pay stubs you may have for all people contributing to the household income.
Step 5: Identify every person in your family who needs health insurance, providing details such as age and relationship to the person applying.
Step 6: Answer a series of questions about your family and household. These questions must be answered in one sitting, meaning that you cannot start to answer the questions in this section and then log out to finish another time. If you do log out before completing all of these questions, you may lose the information submitted.
This section will ask you to reveal certain information about each person seeking insurance through the marketplace. For instance, it will ask for the sex, social security number and legal status of each person. In addition, the application will ask whether you filed your previous year’s tax returns as a single or married person and whether it was a joint or individual filing. Finally, the application asks you to volunteer the race and ethnicity of the people applying for insurance through the marketplace.
The next set of questions is also optional, making your answers voluntary. These questions ask whether anyone needing insurance has a disability or needs help with daily living. The application also asks whether anyone seeking insurance through the marketplace was ever found to be ineligible for CHIP or Medicaid. This last question is not optional.
Finally, the application asks whether anyone applying for insurance is part of a federally recognized Native American or Alaska Native tribe, or whether anyone is pregnant.
After reviewing all of this information, you can move on to the next step.
Step 7: Provide income-specific information so that the system can determine eligibility for cost assistance. These questions will ask you to identify how you make money, how much money you make a month, and in certain situations, the identity of your employer.
The next set of questions will determine whether you have any authorized monthly deductions, such as an alimony payment or a student loan interest payment, and if so, the amount.
When answering income-related questions, it’s important to be as accurate as possible to avoid any tax consequences later. Remember, the government will know the exact amount of money that you made in a month and the exact amount of authorized monthly deductions you have a month when you file your income taxes for that year. If you claim to net a certain amount a month and receive a federal subsidy based on that representation, and that representation turns out to be false and you were not actually eligible for a federal subsidy, you will be penalized. Accuracy and truthfulness are critical here.
Step 8: Answer a few final questions about the person(s) applying for insurance.
After reviewing all of the information submitted, the system will tell you whether you’re eligible for a federal subsidy and provide you with your health insurance options. These options will indicate the insurance company, the level of plan (bronze, silver, gold, platinum, CHIP or Medicaid), the monthly premium amount, the amount that you would have to pay after the federal subsidy is applied if you were eligible for a subsidy, and the details of the plan.
If you’re eligible for a federal subsidy, you can have that amount advanced right away, which means that the government will pay its part to the insurance company and the insurance company will bill you for the remainder, or you can choose to pay the entire premium out of pocket and then receive the federal subsidy amount as a credit on your annual income tax return.
I need help understanding the consequences if I don’t have insurance under Obamacare.
If you choose not to follow the law and enroll in health insurance that meets the minimum essential coverage requirements of the ACA, then you will be taxed for noncompliance. For every month that you forgo insurance (or remain under-insured), you will be assessed a penalty tax, which is added to your taxes when you file a return in the spring. The penalty fee increases every year.
The next open enrollment period for buying private health insurance on or off the marketplace runs from November 1, 2016 through January 31, 2017. If you don’t obtain insurance by that deadline and don’t qualify for an exemption, then you will be taxed for every month that you are uninsured. In 2016, the penalty fee was either $695 per adult and $347.50 per child per household, or 2.5 percent of your household taxable income, whichever was greater. These fees will increase for 2017 based on inflation.
I need help understanding whether I meet the requirements for a Special Enrollment Period.
Generally speaking, if you don’t sign up for health insurance by the end of the enrollment period, you’ll be taxed unless you qualify for an exemption. But there are circumstances in which you can sign up for insurance after the deadline has passed and avoid the tax for noncompliance. These circumstances are called qualifying life events and will trigger a special enrollment period. The special enrollment period will last for 60 days following a qualifying life event, which could include:
- Having or adopting a child
- Getting married or divorced
- Losing your previous health plan for specific reasons, such as losing your job
- Experiencing a change of income that either makes you ineligible or eligible for a federal subsidy, CHIP or Medicaid
- Moving to a new place, not including temporary relocation
- Gaining legal resident or citizen status in the United States
- Losing eligibility for an exemption
- Experiencing an exceptional circumstance or complication that prevented you from being able to apply for insurance during the enrollment period, such as a natural disaster
I need help understanding how to enroll in CHIP or Medicaid
The Affordable Care Act attempted to expand nationwide eligibility requirements for Medicaid from 100 percent of the federal poverty level ($11,880 for a single person) to 133% ($15,800 for a single person). However, the Supreme Court ruled in June 2012 that the government overstepped its powers when attempting to force nationwide expansion, and the result was that the states were left to choose whether they wanted to expand eligibility or not. Because of the way that the income is calculated, the income requirements for people living in a state that expanded Medicaid eligibility is actually 138% of the FPL. That would make the threshold $16,394 for an individual.
The Children’s Health Insurance Program (CHIP) is insurance offered by each state to children whose parents make too much to qualify for Medicaid in that state.
You can obtain information regarding both CHIP and Medicaid on Medicaid.gov or your state’s specific website. To enroll in CHIP or Medicaid, you can start with the federal marketplace, your state’s health insurance exchange site or the state-specific website for these programs.
If you’re not sure about your eligibility for Medicaid or CHIP when you’re filling out an enrollment application on Healthcare.gov, rest assured that the results page will indicate whether your income meets your state’s specific requirements or not. At that point, you will either be directed to your state’s website for CHIP or Medicaid, or you’ll be prompted to enroll on the federal marketplace.
I’m a business owner, and I need help understanding whether I have to offer insurance to my employees.
The federal government cannot (and does not) force business owners to insure their employees, but there are incentives in place for small business owners who do offer coverage. Large employers will also face a penalty fee if they don’t offer minimum essential coverage to full-time workers. Note: you only have to offer coverage as a large employer.
Starting in 2016, if you employ 50 or more full-time equivalent (FTE) employees, you’re considered a large employer. Being a large employer comes with several responsibilities under the ACA. Unless you do the following, you’ll have to make an employer shared responsibility payment:
- Offer insurance to your full-time employees
- Offer coverage that is affordable
- Offer insurance that meets the minimum essential coverage requirements under Obamacare
“Affordable” means that the plan can’t cost your workers more than 8.13 percent of their annual income, and if any of your employees finds cost assistance on the marketplace, then your health plan is considered unaffordable.
If you want to know more about the fees associated with not offering coverage as a large employer, check out the chart developed by the Kaiser Family Foundation. Fees increase each year with inflation, and employers can subtract up to 30 workers from the total when calculating the cost. You can also visit the IRS or Treasury Department websites for more information on the employer shared responsibility provision.
If you have fewer than 50 full-time workers, then you’re considered a small business and not subject to the shared responsibility payment for not offering coverage. However, small business owners may get tax breaks and other incentives for offering affordable, ACA-compliant plans to their employees. Small employers can also utilize a marketplace called SHOP, which can be found on Healthcare.gov, to sign up for insurance for their employees. There is no enrollment period for SHOP, which means you can sign up at any time.
Anyone working for a company that does not offer health insurance or offers unaffordable healthcare plans will be eligible for a tax credit or federal subsidy to help pay for coverage.