July 14, 2013 Individual Mandate

Column 2-Individual Mandate:

What is the individual mandate & when is it effective?

 

The ACA (Affordable Care Act) requires that all individuals have health insurance coverage that meets the "minimum essential benefit" standards or is a "grandfathered plan" beginning 1/1/2014.  If they do not, they will pay a penalty. 

 

How much is the penalty if I don't have coverage:

n  2014: Greater of $95 or 1% of taxable income

n  2015: Greater of $325 or 2% of taxable income

n  2016: Greater of $695 or 2.5% of taxable income

n  2017 and Beyond: Annual Adjustments

 

When and how do I pay the penalty if I am uninsured?

This will be calculated and paid when you prepare your tax return for 2014.

 

What if I am uninsurable?  I have been declined for insurance in the past.

The ACA requires that all insurance is Guaranteed Issue.  That means you cannot be turned down or charged a higher premium based on your health history.  You will pay the same rate as any other individual of the same gender in your same geographic area, regardless of your health.

I get my insurance through my employer.  What if I am between jobs and I can't afford COBRA or individual coverage from an insurer?

Up to a 3 month extension is allowed during the year for this type of circumstance.  You may also be eligible for subsidized coverage through the Exchange.

What is the Exchange?

The Exchange is an additional marketplace for private insurance.  There are options for coverage in the Exchange for Individual plans and Small Group plans.  Covered California is the name of the Individual Exchange in our state. Not all insurers will offer coverage in the Exchange.  The main vendors for the North State are Anthem Blue Cross, Blue Shield of CA and Kaiser.  They will also offer coverage outside the Exchange.  But if you qualify for a subsidy you can only take advantage of it through the Exchange.

How do I find out more about the Exchange?

All employers in the country, regardless of size are required to provide a notice about the Exchange, no later than 10/1/2013. We will discuss more about the Exchange in later columns.  In the interim, you can go to www.coveredca.com.  Benefit outlines and cost estimates are on the website.  But final rates and detailed benefits have not been released.  They are expected to be out late in the summer.

 

Is anyone exempt from the penalty?

Yes, the following folks are exempt from the law: low-income individuals covered by MediCal and others (e.g., those with religious objections, Indian Tribes), those covered by Medicare, undocumented aliens, and those that can prove a "hardship" or for whom coverage is "unaffordable".  Unaffordable is defined as required contribution that exceeds 8% of household income.

What is a Grandfathered Plan? Why is that important to me?

 

A plan that was issued prior to March 23, 2010 and has not had any "material changes" is considered "Grandfathered".  Your insurer should notify you of the status of your plan.  Once the plan is changed, it is no longer Grandfathered and cannot revert to Grandfathered status.

 

The ACA requires that new plans meet certain essential benefit standards.  A grandfathered plan is not subject to some of these provisions.  Since many of these benefits are enhancements, they will likely increase the cost of the new plans.  It is possible that Grandfathered plans will have a lower cost than the new plans.

 

What changes have already been made to health insurance benefits?

Starting in 9/23/2012 the following were not allowed on non-grandfathered plans. 

  • Annual and lifetime maximum limits
  • Pre-existing conditions exclusions for children under age 19

In addition preventative care is required to be covered without deductibles and coverage must be extended to adult children to age 26 regardless of dependent or marital status.