As you already know, the major provisions of the Affordable Care Act (ACA) are now taking effect. But what do these dramatic changes in the U.S. healthcare landscape mean for insurance agents?
This article will describe what the opening of the Health Insurance Marketplace and enactment of the ACA’s “individual mandate” provision means for consumers. It will also provide some information and resources to help you handle some of the inevitable questions that consumers are going to ask.
Individual Mandate Takes Effect
The ACA’s individual mandate requires that most Americans either obtain health insurance by 2014 or pay a tax penalty. However, in certain cases such as a recent bankruptcy or homelessness, a consumer can apply for an exemption from the fee.
The individual mandate goes into effect Jan. 1, 2014. The penalty will be applied to a consumer’s annual taxable income for each month they don’t have health insurance. However, consumers do have a 3-month grace period; that’s why the open enrollment for the Marketplace extends until March 31.
Consumers can also take advantage of an exemption that covers short gaps in health insurance coverage. If a consumer goes without coverage for less than 3 consecutive months during the year, they will not be responsible for the fee for those months. To avoid the per-month fee in 2014, a consumer would have to sign up for a plan that starts by April 1, 2014. Open enrollment ends March 31, but if a consumer signs up after March 15, their coverage won’t start until May 1 and they may be responsible for a monthly, prorated fee for going without health coverage in April.
The fee for not having insurance in 2014 is $95 per adult and $47.50 per child under 18 or 1% of your taxable income (up to $285 for a family), whichever is greater. A consumer’s tax penalty (shared responsibility fee) for not having insurance is paid with their taxes at the end of the year. If a consumer is uninsured for just part of the year, they pay one-twelfth of the yearly penalty for each month they’re uninsured, according to HealthCare.gov.
The fee increases each year. It becomes 2% of income or $325 per person in 2015. In 2016 and later years it’s 2.5% of income or $695 per person. After that year, it’s adjusted for inflation.
Exemption for Consumers with Canceled Plans
The individual mandate portion of the ACA has had a bit of a rocky rollout. An outcome of this legislative change is that insurers have had to cancel many individual policies that didn’t meet compliance levels. This uncertainty presents you with an opportunity as a producer; you can communicate the benefits of Short-Term Medical (STM) insurance as an affordable alternative.
STM plans are a great choice for consumers with a canceled policy until their long-term options become clear. The cost of coverage may be less, and the waived penalty for those whose coverage was terminated provides an alternative as the problems with implementation are corrected.
Here are some other ACA-related resources and reading materials for you to read:
Rights, Protections and the Law (HealthCare.gov)
Timeline of the Health Care Law (HealthCare.gov)
Millions of Poor Are Left Uncovered by Health Law (New York Times, Oct. 2013)
The Requirement to Buy Coverage Under the Affordable Care Act (Infographic, The Henry J. Kaiser Family Foundation)
The Individual Mandate No Longer Applies to People Whose Plans Were Canceled (Washington Post, Dec. 2013)