|By Starrla Cray, Staff Writer
Signed into law in 2010, the federal government’s Affordable Care Act (ACA) has been gradually taking effect, with the goal of providing coverage to millions of Americans who were previously uninsured.
Many new changes will start Jan. 1, 2014, and the impact they’ll have on individuals will vary significantly.
No health insurance?
All US citizens and legal residents will be required to obtain health insurance coverage by Jan. 1, 2014. Those who choose not to comply will face a tax penalty of either $95 per adult, or 1 percent of taxable income (whichever is greater). The penalty for a child is half that of an adult.
In 2015, the penalty will increase to $325 per adult, or 2 percent of taxable income. The following year, it’ll rise to $695 or 2.5 percent and each year after that, tax penalties will continue to increase.
According to Minnesota’s official site for health reform (mn.gov/health-reform), 9 percent of people in the state (about 478,000) are currently uninsured.
Certain people are exempt from the requirement to buy health insurance, according to MNsure, including those who:
• are below a certain income,
• cannot afford the coverage that’s available,
• have been uninsured for less than three months,
• are members of American Indian tribes, or
• have a religious objection.
Not sure where to buy?
If your employer offers health insurance, you can purchase it that way, or on your own. However, government-subsidized health insurance is currently only designed for those without access to coverage through an employer.
According to a July 1 article from NPR, “people who are offered health insurance through an employer or a family member’s employer are not allowed to go to an exchange to get insurance, except in very limited cases. Or they can go to an exchange, but they won’t be eligible for any help paying their premiums.”
The exception to this is if the premium offered by an employer is not considered “affordable,” (more than 9.5 percent of a person’s household income for coverage of an individual), or if the employer’s plan pays less than 60 percent of the cost of covered benefits, NPR states that the employee can purchase through the health insurance exchange.
No employer coverage?
People whose employer doesn’t offer insurance will be able to buy it directly though the Health Insurance Marketplace. Enrollment begins Tuesday, Oct. 1, and coverage starts Jan. 1, 2014. In Minnesota, the marketplace is called MNsure (www.mn.gov/health-reform).
The open enrollment period extends through March 31, 2014. In future years, enrollment periods will begin Oct. 15 and end Dec. 7.
Minnesotans who don’t have health insurance available through their employer, and who earn up to 400 percent of the federal poverty level, may qualify for tax credits to help offset the cost of health insurance premiums. According to MNsure, an individual making $43,320 or less per year would be eligible. For a family of four, the eligible annual income would be $88,200 or less.
The credits are on a sliding income scale, and people with lower incomes will not be personally responsible to pay as much as those who earn more. In addition, the tax credits are refundable, so people who don’t earn enough to pay income tax can still get assistance.
People who earn up to 250 percent of the federal poverty level (about $27,925 for an individual in 2012) can receive an additional break through cost-sharing subsidies.
Taxpayers with household incomes higher than 400 percent of the federal poverty line aren’t eligible for health insurance premium tax credits.
Have a pre-existing condition?
Starting in 2014, no insurer can deny anyone health insurance based on health status. In addition, people with pre-existing conditions will pay the same premium as people who are healthy.
The US Department of Health and Human Services states that the new healthcare law “forces insurance companies to play by the rules, prohibiting them from dropping your coverage if you get sick, billing you into bankruptcy because of an annual or lifetime limit, or, soon, discriminating against anyone with a pre-existing condition.”
Wondering about cost?
Minnesota’s premium information isn’t available as of this writing, but data is starting to come in from some states, according to a July 1 article from NPR. The cost varies based on location, age, deductible amount, and subsidy eligibility.
For a 40-year-old non-smoker, the Avalere Health analysis gives an example for the “silver plan,” which ranges from a low of $205 per month in one area of Oregon, to $413 per month in one area of Vermont.
Some people will receive subsidies to help offset the premium costs. Additionally, for taxes filed in 2014, citizens can claim deductions for medical expenses not covered by health insurance if the total of those expenses reaches 10 percent of their adjusted gross income.
New taxes will help pay for some of the costs associated with the new subsidized healthcare system. According to the IRS, a new net investment income tax goes into effect starting in 2013. The 3.8-percent tax applies to individuals, estates, and trusts that have certain investment income above certain threshold limits.
An additional Medicare tax also goes into effect in 2013. The 0.9 percent tax applies to an individual’s wages exceeding $250,000 for married taxpayers filing jointly, $125,000 for married filing separately, and $200,000 for all other taxpayers.
Medical device manufacturers will have a new tax, as well, called the medical device excise tax. Starting this year, they will pay 2.3 percent of their revenue on sales of certain medical devices.
A 10-percent excise tax on indoor UV tanning services went into effect in 2010, and the Affordable Care Act also created an annual fee payable in 2011 by certain manufacturers and importers of pharmaceuticals, as well as a fee on certain health insurance providers, beginning in 2014.