Affordable Care Act: Your Top 8 Questions Answered
Reviewed by Lisa Zamosky
Oct. 2, 2013 -- To help readers on Day 1 of open enrollment for the health insurance Marketplaces, WebMD hosted a live chat to answer their questions about the Affordable Care Act. While our expert panel fielded a range of subjects, the eight topics below came up most often. Our weekly series of live chats will continue Oct. 8 at noon. You also can go here to ask a question or search for more answers.
1. Who can sign up for insurance in the new Marketplaces?
The new health insurance Marketplaces, also known as Exchanges, are mostly for people who buy insurance on their own and for people who don't have any insurance.
People with COBRA can also shop in their state's Marketplace.
If you have insurance through your employer, you probably don't have to do anything. But if your insurance costs more than 9.5% of your income or it doesn't cover an average of 60% of your medical expenses, you can shop for insurance through your state's Marketplace, and you may qualify for federal tax credits.
If you have insurance through Medicaid, Medicare, or another government program, you won't be eligible to buy insurance in the Marketplace.
2. How do tax credits work?
Tax credits are only available on health plans purchased through the Marketplaces. If you are single and you make less than about $46,000, or if you are a family of four and you make less than about $94,000, you may get a tax credit from the government to help pay your premium.
When you enter your personal information and income, you'll find out if you're eligible for credits.
Tax credits can be taken in three ways. You can apply it entirely to your premium to pay the lowest possible cost for coverage. You can apply part of it during the year and take the rest at tax time. Or you can pay your full premium throughout the year and use the credit as a deduction at tax time.
3. How is income calculated when you apply for insurance?
The income used to figure out if you are eligible for a subsidy is modified adjusted gross income (MAGI). That means your household income after deductions and other credits. For most people, MAGI will be the same as adjusted gross income, or AGI.
Here's where you can find your AGI, depending upon the tax form you use:
4. What's the penalty if I don't get insurance?
The Affordable Care Act says most Americans must purchase insurance or pay a penalty. If you can afford insurance but don't buy it, you'll pay a fine when you file your taxes in 2014. In 2014, you will pay $95 for each adult and $47.50 for each child (up to $285 per family), or 1% of your household income, whichever is greater. Penalties go up in 2015.
You won't have to pay a fine for not having insurance if:
5. Where do I sign up?
Go to the web site healthcare.gov. If you live in California, Colorado, Connecticut, Hawaii, Kentucky, Maryland, Massachusetts, Minnesota, Nevada, New York, Oregon, Rhode Island, Vermont, Washington, or Washington, D.C., you'll find a link to your state's Marketplace. Those states are operating their own Marketplaces.
If you live in any other state, the federal government is operating the Marketplace, or is operating the Marketplace in partnership with your state. Go to healthcare.gov to create an account, explore your options, and buy insurance.
WebMD also has a specialty page for each state that includes information specific to your state and links to state Marketplaces.
You also can sign up in person at special events that will be scheduled in your town or city and at designated community centers, government offices, and health care facilities. You also can sign up by phone. Call 800-318-2596 if you live in a state where the federal government is running the Marketplace.
6. How do I compare plans?
Each state web site has information about all the plans being offered. The web site for your state's Marketplace will include information about how much the policy will cost, how much the deductibles are, how much the copayments are, and other details.
You will have many different coverage options, depending on where you live. About 95% of consumers will have a choice of two or more plans. There is no government plan. All the health plans are offered through private insurance companies.
If you earn too much to be eligible for tax credits, there are also many individual plans available outside the Marketplace.
You can also check out the WebMD Coverage Adviser, which is a tool that lets you compare total costs (premiums and out-of-pocket expenses) based on where you live, your family size, and what conditions or prescription drugs you use.
7. What's the deadline for getting insurance?
Under the Affordable Care Act, most Americans must have insurance in 2014. Open enrollment started Oct. 1 and runs through March 31, 2014. If you want insurance to begin Jan. 1, 2014, you'll need sign up no later than Dec. 15, 2013. If you have coverage through early next year, you can wait a few months to sign up. Just make sure you purchase insurance by no later than March 31, 2014. The next enrollment period will be Oct. 15, 2014, to Dec. 7, 2014.
If you have a "life-changing event" such as marriage, divorce, or the birth of a child, you may be able to change your coverage during the year.
8. Can family members have separate policies?
Yes, you can buy separate policies if you want. When reporting your income, though, you must use your household income, not your individual income.
SOURCES: Lisa Zamosky, WebMD Health Reform Expert; author of Healthcare, Insurance and You: The Savvy Consumer's Guide, Apress, 2013. Sarah Goodell, independent health policy consultant specializing in private insurance issues. Dean Rosen, president and CEO, Breakaway Policy Strategies, Washington, D.C.