What You Need to Know About the Affordable Care Act

If you are seeking health insurance through the Health Insurance Marketplace, the enrollment period deadline for coverage starting January 1, 2014 ends on Monday, December 23, 2013. However, the open enrollment period will remain open until March 31, 2014.

Individual Mandate Penalty

“As of January 1, all United States citizens will be required, on a federal level, to have health insurance under the Affordable Care Act (ACA)” said Jennifer Krog, Life & Related Account Executive at McGrath Insurance Group. “Failure to follow this mandate could result in a penalty.”

Penalties are calculated from a formula based on several factors, including individual income, a flat dollar amount, and a benchmark premium amount, according to Blue Cross Blue Shield (BCBS). However, there are a few exceptions to this fine, such as individuals who cannot afford health insurance as defined by the federal government, or individuals whose income does not meet the federal tax-filing threshold.

“The penalty will be phased in, beginning at the greater of $93.50 per person or 1 percent of a person’s applicable household income that is in excess of the applicable tax-filing threshold in 2014. The penalty will then increase to the greater of $695 per person or 2.5 percent of a person’s applicable household income that is in excess of the applicable tax-filing threshold in 2016. … The penalty will never be greater than the average national premium for policies offered through exchanges, however,” according to BCBS’s National Health Care Reform website.

Subsidy Eligibility

If an individual or family is unable to afford healthcare coverage, they may be eligible through a federal subsidy effective January 1, 2014. Subsidies will be granted solely to those with incomes between 100 percent and 400 percent of the federal poverty level, according to BCBS.

The Commonwealth Care, which was originally created as part of the Massachusetts Health Care Reform legislation in 2006, will be eliminated effective January 1, 2014. Under the ACA, Commonwealth Care members will become eligible for Medicaid. This federal-state program will cover families with incomes up to 133 percent of the federal poverty level, which equals approximately $14,000 for an individual and $29,000 for a family of four, according to the U.S. Department of Health and Human Services.

If an employer offers healthcare coverage, it cannot exceed 9.5 percent of a household’s income because then it is considered unaffordable, said Jennifer Krog. If coverage does exceed this limit, then the employer will be penalized, starting January 2015.

For continued updates on how the different sections of the Affordable Care Act will play out, continue to follow McGrath Insurance Group’s blog.

*This article was written for informational purposes only and should not be construed as providing legal advice.