Many of you have heard about a new place to buy health insurance starting at the end of this year called the exchange. As part of the Affordable Care Act (Obamacare), starting in 2014 ALL Americans must have a minimum amount of health insurance or be taxed by the government. The law also requires each state to have a health insurance exchange where people can buy health insurance.
Let’s think of the exchange for a minute as an airline ticket search engine. You enter your information based on family, age, geography and tobacco use, instead of airport city and date. The search engine then brings you plans based on four different metallic tiers, bronze, silver, gold and platinum. From the lowest premiums and least amount of coverage for the bronze tier, to the highest premiums and highest level of coverage on the platinum tier: A higher level of coverage means a lower deductible, lower out of pocket maximum, and more prescription drugs covered.
The bronze tier will cover 60% of your healthcare, silver – 70%, gold – 80% and platinum – 90%. Additionally, all of these plans are “guaranteed issue” meaning the insurance carrier can not deny your application due to any preexisting conditions. Furthermore, the government will subsidize the cost of your insurance based on your income. The less money you make the more credits and subsidies the government will give you.
If all goes as planned, exchanges will open for enrollment on October 1, 2013 and coverage effective dates will begin January 1, 2014.
The government will also offer another type of exchange where employers can buy group health insurance for their employees. This exchange is the Small Business Health Options Programs, or SHOPs, for short. Tax credits will increase for employers with 25 or fewer employees and the credit will cover up to 50% of the employer’s cost. Employers will be eligible for credits in the first two years they offer coverage through an exchange.
Now if an employer with a large group (50 or more employees) does not offer minimum coverage to full-time employees, and at least one employee gets subsidized coverage through an exchange, then a $2,000 penalty is assessed for each employee (after the first 30).
So starting in 2014 there are three ways for folks to get health insurance. 1) Get coverage through their employer, if available. 2) Buy a plan through either: The individual market exchange or the traditional market. 3) Go uninsured and pay a penalty.
The penalty in 2014 for going without health insurance is $95 annually or 1% of taxable income whichever is greater. In 2015 the penalty will be $325 or 2% of taxable income. In 2016 the penalty will be $695 or 2.5% of taxable income.
As the year progresses and more information is available, we will in turn keep you informed!
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