Our objective is to help you through the difficult and uncertain area surrounding the Affordable Care Act. We understand the Patient Protection and Affordable Care Act (PPACA) is a complex subject that continues to undergo necessary legislative scrutiny. We guide our clients through the entire process of understanding and enrolling in health insurance coverages that are compliant with the Affordable Care Act (ACA). As a result of the Affordable Care Act (ACA), individuals may be eligible for premium assistance (based on household income), guaranteed essential healthcare benefits, and individuals cannot be turned down due to preexisting conditions.
What Is The ACA?
On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (also shortened to ACA or Affordable Care Act). Basically, the ACA is a set of rules and regulations that all “qualified” insurance plans are required to follow in order to count as “Minimum Essential Coverage”. Some of these provisions include preventive care covered at 100%, no lifetime limits on claims, and no exclusions for pre-existing medical conditions. The intent of the ACA was to provide more Americans with access to affordable, quality health care, which more equally priced for all.
What is “Affordable” about the Affordable Care Act?
While the cost of monthly premiums has risen sharply since the implementation of the Affordable Care Act, most people with gross income less than 400% of the Federal Poverty Level who are not offered employer-sponsored coverage are eligible for tax credits, which could reduce your monthly premium cost.
Your monthly premium cost is directly related to the actual cost of care and claims that are filed. Insurance companies are required to spend 80% of all incoming premium dollars to pay the claims of their insured members. That means the higher the claims are for a given year, the higher the premiums get in future years. Because of some of the requirements of the ACA, most notably the fact that all plans are “Guarantee Issue”, the filed claims are getting higher and higher, which causes your premium to go up. “Guarantee Issue” means that there are no exclusions, rate-ups, or limitations for having a pre-existing medical condition.
In the first year of the ACA (2014), one Colorado insurance company reported claims incurred totaling over $54 million! That same company had reported claims of almost $2 million in the year before the ACA was passed (2013). It’s no wonder premiums had to go up so much!
Why is there a penalty if I don’t have health insurance?
Insurance works as a “risk pool”. All members are put into the same pool for claims. The insurance company always hopes that people with low claims will outnumber the people with high claims. In order for the ACA to work and be sustainable, the number of healthy people paying premiums has to offset the number of people who have high claims due to the Guarantee Issue portion of the law. However, most healthy people would opt out of insurance in general with the premium prices as high as they are! In order to reduce the adverse selection of people who would get health insurance if there was no penalty, the mandate (penalty) to purchase health insurance was included in the law.
What are subsidies/tax credits and how to I get one?
A tax credit is essentially money off your premium. You can choose either to take it each month, or elect to take it in the form of a tax refund. There are several factors to determine whether or not you qualify. If your income falls within a certain range, you may qualify. We have a team of experts in our office ready to answer your questions about Tax Credits/subsidies, explain how they work into your health insurance plan, and help you apply! Learn more about subsidies here.
What’s next for the ACA?
Our current political administration is in discussion on a possible change to the Affordable Care Act, perhaps even repealing it and replacing it with something new. We are keeping close watch on how things are developing, and you can learn more on our News and Resources
Are there alternative options for the ACA?
There are a few alternative options out there, but not all of the alternatives are compliant to satisfy the individual mandate, or give you an exemption from the mandate to purchase health insurance. If you’ve heard about a way to “not pay the penalty” but still opt out of traditional health insurance, ask our experts to guide you and make sure you’re compliant with the law!