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Vorys Health Care Advisors

Health Insurance Options in 2014

Posted in Affordable Care Act, Health Care, Health Care Reform, Medicaid

In a recent post, we discussed the insurance mandate itself.  That is, the requirement that most people have health insurance beginning in 2014 or face a financial penalty.  We also briefly mentioned the insurance options that will be available to you in order to fulfill this requirement.  They are—

  1. Have employer-sponsored insurance
  2. Be covered by Medicaid or the Children’s Health Insurance Program
  3. Be covered by TRICARE
  4. Be covered by the veteran’s health program
  5. Be covered by Medicare
  6. Purchase insurance in the health insurance marketplace

In this post, we will spend more time on these various options.  If you already have insurance through Medicare, the veterans health program, or Tricare, nothing about your eligibility will change because of the Affordable Care Act (ACA).  For this reason, we will not focus on these insurance options.

Employer-Provided Insurance

Employer Mandate Delayed; Individual Mandate Still To Be Effective in 2014

Before we get into the details of employer-sponsored insurance, it is important to remember that in early July, the Obama administration announced that it will delay by one year the ACA requirement that employers with 50 or more employees offer health insurance to their employees or face a penalty.  This delays the ACA “employer mandate.”  This has nothing to do with the individual mandate to have insurance.

Even though individuals are required to have health insurance beginning January 1, 2014, you do not have to accept the health insurance your employer offers you.  However, the mandate to have health insurance remains.  If you do not accept the health insurance your employer offers you, you still need to have health insurance.  This means you must purchase health insurance either inside or outside of the Marketplace (discussed more fully below).  Or, if you are eligible for Medicaid, you can receive insurance through Medicaid.

Having employer-provided insurance satisfies the mandate that you have health insurance.  If you accept the health insurance that your employer offers you, you do not have to do anything else in order to fulfill the individual insurance mandate.

Employers with 50 or more full-time equivalent (FTE) employees are required to offer their employees “affordable” health insurance.  “Affordable” health insurance is health insurance where the out-of-pocket premium for employee (single) coverage does not exceed 9.5% of family income or the plan  pays, on average, 60% or more of the cost of covered services.

What happens if your employer-provided insurance is not “affordable” by ACA standards?

If your employer offers you health insurance that is not deemed “affordable,” you have two options:

  • Elect to receive the health insurance offered by your employer, along with the required copayments, premiums, and other cost-sharing provisions.
  • Turn down the employer-provided coverage and elect to purchase health insurance inside or outside of the Marketplace.  If you choose this option, because your employer did not offer you “affordable” health insurance, if you purchase insurance through the Marketplace, you may have access to premium tax credits or cost-sharing subsidies (described more fully below) if you meet the financial eligibility parameters.

What happens if your employer-provided insurance is “affordable” by ACA standards?

If your employer offers you health insurance that is deemed “affordable,” you have two options:

  • Elect to receive the health insurance offered by your employer, along with the required copayments, premiums, and other cost-sharing provisions.
  • Turn down the employer-provided coverage and elect to purchase health insurance inside or outside of the Marketplace.  However, because your employer offered you “affordable” insurance, you will not be eligible for premium tax credits or cost-sharing subsidies, even if you meet the financial parameters described below.

In either case – with or without a tax credit or subsidy – it is worth comparing all of your insurance options, including the scope of the coverage, benefits, your individual or family needs, and the total cost.

Insurance Purchased In the Marketplace (Formerly Known as the Exchange)

Remember that the individual insurance mandate requires that you have health insurance beginning on January 1, 2014, or you will be required to pay a penalty.  So if you are not otherwise insured, you should familiarize yourself with the Marketplace, as it will be your primary vehicle for purchasing insurance.

Who will use the Marketplace to purchase health insurance?

Individuals who might purchase insurance through the Marketplace include the following:

  • Individuals who do not want to accept their employer’s health insurance,
  • Individuals whose partner or spouse has insurance through his or her employer, but the plan does not cover the other spouse or partner or their children,
  • Individuals who are not eligible for Medicaid,

Individuals who do not otherwise have access to health insurance (i.e., are uninsured) on January 1, 2014.The Marketplace is a virtual one-stop-shop for purchasing affordable health insurance.  Each state will have its own Marketplace, operated one of three ways – independently by the state, in partnership with the federal government, or independently by the federal government.  For example, Ohio’s Marketplace will be operated in partnership with the federal government.  Alternatively, New York has opted to run a state-based Marketplace.  This map of states indicates which states are running their own Marketplace, participating in the federal Marketplace, or operating a partnership Marketplace.

Every health insurance plan in the Marketplace will offer comprehensive coverage, from doctors to medications to hospital visits.  Qualified health plans sold in the Marketplace must cover Essential Health Benefits, which is the topic of our next post.

In the Marketplace, you will be able to compare all your insurance options based on price, benefits, quality, and other features that may be important to you, in plain language that makes sense.  Enrollment in the Marketplace begins in October 2013.

Access to Premium Tax Credits and Cost-Sharing Subsidies

Individuals earning between 100% and 400% of the federal poverty level FPL ($23,550 to $94,200 for a family of four) will have access to premium tax credits in order to make purchasing insurance in the Marketplace more affordable.  Additionally, individuals earning between 100% and 250% FPL  ($23,550 and $58,875 for a family of four) will have access to cost-sharing subsidies that will bring down their deductibles, copayments, and coinsurance.

The Henry J. Kaiser Family Foundation has published a health reform subsidy calculator to help individuals understand what their premiums may cost in 2014.

Medicaid

Being enrolled in Medicaid satisfies the mandate that you have health insurance.

Beginning on January 1, 2014, you may be eligible for Medicaid in two different ways.  First, you may be “traditionally” eligible.  Second, you may be “newly eligible” if your state implements the Medicaid expansion.

The Affordable Care Act expanded Medicaid eligibility to nonelderly, non-pregnant adults with income at or below 138% FPL ($32,499 for a family of four) who are not otherwise eligible for a mandatory Medicaid eligibility category or enrolled in or eligible for Medicare.  The U. S. Supreme Court subsequently made this mandatory Medicaid expansion optional.  This means that states have the option to choose whether to expand Medicaid to individuals earning up to 138% FPL.  Currently, Ohio has not expanded Medicaid.

If your state chooses to expand Medicaid up to 138% FPL and you become eligible for Medicaid under this expansion, you are considered to be “newly eligible” for Medicaid.  If you were already eligible for Medicaid in your state (even if you were not already enrolled), you are considered to be “traditionally eligible” for Medicaid.

To find out if you are traditionally eligible for Medicaid in your state, you will need to speak with someone in your state’s Medicaid department – probably someone in the eligibility section.  You can do this right away because traditional Medicaid eligibility is not tied to January 1, 2014.  You might already be eligible for Medicaid today!

If you are already traditionally eligible for Medicaid, you will likely remain so come January 1, 2014.  Because some states are changing their Medicaid eligibility requirements in anticipation of 2014, however, it is a good idea to speak with someone in your state’s Medicaid department just to confirm that you will maintain your traditional Medicaid eligibility come January 1, 2014.

This site shows both a table and a map of states’ decisions on expansion.