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Ask the Expert: What do I need to Know about Open Enrollment and the ACA (non-Medicare)?
Q. In your last "Ask the Expert", I read about Medicare Open Enrollment Period and the Affordable Care Act (ACA). I am in my early-50's and am not yet eligible for Medicare. What do I need to know about the Open Enrollment Period and the Affordable Care Act? As the previous person did, please see my questions below in blue. Thanks!
Q. What is the ACA open enrollment period?
A. The ACA's open enrollment period is when you can purchase health insurance plans that include new health reform provisions and required benefits. Coverage under these new plans will begin no sooner than January 1, 2014. These new provisions allow you to obtain government subsidies, and enroll without fear of being denied for pre-existing medical conditions.
Q. When is the new open enrollment period?
A. The first-ever open enrollment period for individual and family health insurance plans under the Affordable Care Act (ACA) begins October 1, 2013 and ends March 31, 2014. Open enrollment periods in following years will be shorter than this one-time six-month period.
Q. Who needs to apply for coverage during open enrollment?
A. The new open enrollment period applies to individuals and families who are not subject to an exemption or who do not have qualifying coverage, such as employer-sponsored health insurance. So, if you have employee health benefits, you do not necessarily need to enroll in a new plan during the Affordable Care Act's open enrollment period, but rather through your employer's open enrollment period for their group plans. If your share of your employer-sponsored health insurance monthly premium is too costly, you may choose to opt out of that plan and purchase a qualified health plan with subsidy assistance, depending on your income level.
Q. Will I be required to purchase a health insurance plan during this six-month open enrollment period?
A. If you wish to enroll in a health reform-compliant plan, you will need to enroll during this open enrollment period unless you qualify for a "qualifying event". If you don't purchase a health reform-compliant plan, you may be subject to a tax penalty.
Q. What happens if I don't purchase during the open enrollment period?
A. Outside of open enrollment, your ability to apply for health insurance may vary from state to state. It may be limited to the occurrence of a qualifying event, such as the loss of a job, a marriage or divorce, a move, or the birth of a child.
Q. Will my current health insurance plan need to change in 2014?
When the Affordable Care Act (ACA) was signed into law, it effectively created three classes of individually purchased major medical health insurance plans:
- Grandfathered plans: If you bought health insurance with an effective date before March 23, 2010 - when the ACA was signed into law - you have a grandfathered plan, which does not have to meet all the requirements of the law (unless the plan's coverage has changed significantly since you purchased it).
- Non-grandfathered plans: If you bought major medical health insurance after March 23, 2010, with coverage in effect before January 1, 2014, you have a non-grandfathered plan. These purchases took place during the transition to a federally regulated individual health insurance market. All non-grandfathered plans meet some of the new benefit standards required by the ACA, and some plans include them all. Plans that don't meet all of the new benefit standards may need to be updated at some point in 2014.
- New plans: If you buy insurance with an effective coverage date of January 1, 2014 or later, your plan meets all of the mandatory benefits required by ACA.
Q. Am I required to have health insurance in 2014?
A. Most people will have to have major medical health insurance in 2014. If you don't, you'll probably have to pay a tax penalty to help offset the costs of caring for uninsured Americans.
Households with incomes above 400% of Federal Poverty Level (FPL) will be exempt from paying tax penalties if insurance in their area costs more than 8% of their taxable income, after taking into account employer contributions or tax credits.
Q. What are the tax penalties for not having health insurance in 2014 and why do they have them?
A. The tax penalties start small in 2014 and increase over time.
- In 2014, the penalty will be the greater of 1.0% of taxable income or $95 per adult and $47.50 per child (up to $285 per family).
- In 2015, the penalty will be the greater of 2.0% of taxable income or $325 per adult and $162.50 per child (up to $975 per family).
- In 2016, the penalty will be the greater of 2.5% of taxable income or $695 per adult and $347.50 per child (up to $2,085 per family).
- After 2016, the penalty will be increased annually by the increase to the cost-of-living.
The ACA's new tax penalties for people without insurance are designed, in part, to offset the cost of paying for the health care of people without health insurance. And, if you earn a lower-income, you may qualify for government subsidies that make insurance more affordable.
Q. What are the eligibility requirements for Affordable Care Act benefits?
A. Most of the benefits of Obamacare are available to anyone who buys health insurance.
But, if you want a subsidy (premium tax credit) to help pay for your health insurance, these are the requirements. You:
- Must live in the U.S.
- Be a U.S. citizen or national, or be lawfully present in the U.S.
- Have a household income between 133% and 400% of the Federal Poverty Level (FPL).
- Cannot be currently incarcerated
If you don't qualify for a subsidy, you can still apply for health insurance and get all of these benefits from the Affordable Care Act:
- Medical Loss Ratio requirements and rebates
- Preventive care services, without cost-sharing
- More mandatory coverage for women's health care (Pap smears, birth control, etc.)
- Children can stay on parents' health plan until age 26
- No lifetime dollar limits on health insurance for covered benefits
- In 2014, applications for health insurance cannot denied because of a pre-existing conditions.
Q. What are some notable Affordable Care Act Provisions coming into effect on January 1, 2014A.
- Individual mandate - The individual mandate is the provision of the Affordable Care Act (ACA) requiring most people without employer-based coverage to buy qualifying coverage on their own, or pay a tax penalty. The goal of the individual mandate is to make coverage more affordable for less healthy people by bringing more healthy people into the insurance system and thereby balancing costs.
- Pre-existing condition coverage - This is sometimes called the "guaranteed issue" provision of the law. It requires health insurance companies to extend coverage to all applicants regardless of their medical history or the presence of pre-existing medical conditions. Prior to 2014, many states could decline your coverage for individually purchased health insurance based on your pre-existing medical conditions.
- Employer mandate - This provision of the ACA requires employers with 50 or more full-time workers (or the equivalent in part-time workers) to provide employer-sponsored health insurance to employees. Employers who fall under the employer mandate in 2014 but choose not to provide health insurance to workers may face financial penalties.
- Subsidies - The ACA provides subsidies to make coverage more affordable for individuals and family who are required to buy it on their own. The amount of subsidy help received by consumers will vary and is structured so that the insurance premium an individual or family will have to pay will not exceed a specific percentage of income, ranging from 2% for those with incomes up to 133% of the Federal Poverty Level (FPL) to 9.5% for those with incomes between 300 and 400% of the FPL.
- Online health insurance exchanges - The ACA calls for the establishment of online state health insurance exchanges by 2014 - websites where individual consumers and small businesses can compare and shop for health insurance plans available in their state. State-sponsored health insurance exchanges will facilitate online enrollment in health insurance plans and enable eligible persons to obtain subsidies to help make their coverage more affordable.
Just as you are planning for the Open Enrollment Period, you should plan for your future and for your loved ones. If you have not done Estate Planning or Incapacity Planning (or had your Planning documents reviewed in the past several years), or if you have a loved one who is nearing the need for long-term care or already receiving long-term care, call The Fairfax Medicaid Asset Protection Law Firm of Evan H. Farr, P.C. at 703-691-1888 to make an appointment for a no-cost consultation.
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How does the Affordable Care Act Impact Medicaid?
Dear Big Red,
I also read your piece on open enrollment, the Affordable Care Act, and Medicare last week, and heard through the grapevine you were doing an Ask the Expert today for others not on Medicare. How about how the ACA affects those on Medicaid? Can you provide some information about the provisions and how they impact us?
Thanks a bunch!
Wanda Knowe-Moore
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Dear Wanda,
The Affordable Care Act refers to two separate pieces of legislation -- the Patient Protection and Affordable Care Act (P.L. 111-148) and the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152) -- that, together expand Medicaid coverage to millions of low-income Americans and makes numerous improvements to Medicaid. The following was excerpted from the Medicaid.gov website.
"Since the new law was enacted in March 2010, CMS has worked together with state partners to identify key implementation priorities and provide the guidance needed to prepare for the significant changes to Medicaid and CHIP that will take effect on January 1, 2014. In particular, CMS has provided several forms of guidance and federal support for state efforts to develop new or upgrade existing eligibility systems.
In March 2012, CMS released two final rules defining the eligibility and enrollment policies needed to achieve a seamless system of coverage for individuals who will be eligible for Medicaid beginning in 2014, as well as eligibility and enrollment for the new Affordable Insurance Exchanges. The final rules establish the framework for States' implementation of the eligibility expansion going forward. A specific description of all of the major Medicaid and CHIP-related provisions of the Affordable Care Act as well as related policy guidance can be found below:
-Eligibility: Fills in current gaps in coverage for the poorest Americans by creating a minimum Medicaid income eligibility level across the country.
-Financing: Beginning in 2014 coverage for the newly eligible adults will be fully funded by the federal government for three years. It will phase down to 90% by 2020.
-Information Technology Systems and Data: Policy and financing structure designed to provide states with tools needed to achieve the immediate and substantial investment in information technology systems that is needed in order to ensure that Medicaid systems will be in place in time for the January 1.2014 launch date .
-Coordination with Affordable Insurance Exchanges: This system eases how individuals and families apply for coverage and have their eligibility determined for insurance affordability programs.
-Benefits: People newly eligible for Medicaid will receive a benchmark benefit or benchmark equivalent package that includes the minimum essential benefits provided in the Affordable Insurance Exchanges.
-Community-Based Long-Term Services and Supports: Includes a number of program and funding improvements to help ensure that people can receive long-term care services and supports in their home or the community.
-Quality of Care and Delivery Systems: Improvements will be made in the quality or care and the manner in which that care is delivered while at the same time reducing costs.
-Prevention: Promotes prevention, wellness and public health and supports health promotion efforts at the local, state and federal levels.
-Children's Health Insurance Program (CHIP): Extends funding for the Children's Health Insurance Program (CHIP) through FY 2015 and continues the authority for the program through 2019.
-Dual Eligibles: A new office will be created within the Centers for Medicare & Medicaid Services to coordinate care for individuals who are eligible for both Medicaid and Medicare.
-Provider Payments: States will receive 100 percent federal matching funds for the increase in payments.
-Program Transparency: Promotes transparency about Medicaid policies and programs including establishing meaningful opportunities for public involvement in the development of state and federal Medicaid waivers.
Thanks for asking! I hope to see you and/or your family members in the office soon.
-Big Red
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About Big Red:
Big Red has lived at The Farr Law Firm for two years, and he belongs to Evan and Jeannie Farr. He loves socializing with the African Dwarf Frogs (Ernie and Jannette) and greeting all of the clients that come to the firm.
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