Deciphering the health insurance requirements: What you need to know now about coverage

You can’t put it off any longer: Effective Jan. 1, the Affordable Care Actt requires all Americans to maintain a minimum level of health coverage or face a tax penalty. While some people are flocking to www.healthcare.gov  to research and purchase their insurance, others are unsure how to proceed.

Now is the time for individuals to educate themselves about their options for purchasing insurance and the steps needed to take to make sure they’re complying with the law, according to the Minnesota Society of CPAs.

The health insurance marketplace

Whether you’re uninsured, you’ve been denied coverage in the past or you just want to explore new options, you can now “shop” for health care insurance via the government’s online Health Insurance Marketplace at www.healthcare.gov or call 800-318-2596 for assistance.

Some states are operating their own health insurance exchanges, while other states have opted to have their programs run by the federal government. For Minnesotans, you can use www.mnsure.org. No matter where you live in the U.S., you can use the Health Insurance Marketplace.

How it works

The Heath Insurance Marketplace allows you to compare coverage options based on price, benefits, quality and other features important to you. Choose the combination of price and benefits that fit your budget and needs.

• Go to www.healthcare.gov or to your state-run exchange, and create an account.
• Enter basic information, like where you live and how old you are, and you’ll receive a list of plans available in your area.
• If you provide income information, you’ll be able to get an estimate of whether or not you’ll be eligible for federal help paying for insurance or whether you might qualify for Medicaid.

The exchange will then offer a list of health plans and their premiums and out-of-pocket costs, including deductibles and copayments. You can also submit a paper application or apply over the phone by calling 800-318-2596.

Costs and features

The costs and features of your plan depend on the type of coverage and options you choose as you move through the process, but all plans must offer a comprehensive set of essential health benefits, including doctor visits, preventive care, hospitalization, prescriptions and more. Plans cannot deny you coverage or charge you more due to pre-existing health conditions, including a pregnancy or disability.

Your monthly premium will depend on several factors, including your income, the state in which you live, your age, whether you smoke or not, and your family size. You could end up paying very little or nothing at all if your income falls within a certain range.

Take note of the tradeoffs as you study plan options. Cheaper plans come with big deductibles and many other out-of-pocket costs. For example, if you choose a plan that costs $40 or $50 a month, you may have a $5,000 or $10,000 deductible before the plan starts paying benefits. Compare options carefully.

In addition, if there is a particular doctor or facility you know you want to use, check that it takes part in the plan before you sign up.

Should you use the Marketplace?

The Health Care Marketplace is specifically designed for two groups of people: Those who don’t have insurance now, and those who currently purchase their own insurance, meaning they don’t get it through an employer.

If you have insurance at your job or through a public program like Medicare, Medicaid or Veterans Affairs, you don’t need to use the exchanges unless you lose your coverage for some reason. If you have insurance through your employer, you can shop for and buy insurance on an exchange if you like, but you probably won’t qualify for a subsidy or tax credit. And be aware that you’ll lose the contribution your employer makes toward health insurance.

You can shop for coverage on or off the marketplace. However, subsidies for those who are eligible are generally available only for plans sold on the exchange. The key is that you must have health insurance coverage by Jan. 1, 2014, regardless of whether you have it through your employer; purchase it privately; are covered by Medicare, Medicaid or the VA; or purchase it through the Health Insurance Marketplace.

Important deadlines

The most important deadline is Dec. 15 — the day the enrollment period ends for policies that go into effect on Jan. 1, 2014.

You can enroll until March 31, 2014, though you’ll need to sign up and pay your first premium by Dec. 15 if you want to be covered when the mandate to carry health insurance kicks in on January 1.

Additional Deadlines

• Sign up Dec. 16 – Jan. 15: coverage begins March 1.
• Sign up Jan. 16 – Feb. 15: coverage begins March 1.
• Sign up Feb. 16 – March 15: coverage begins April 1.
• Sign up March 16 – 31: coverage begins May 1.

Generally, people will be able to enroll in or change plans once a year during an annual open enrollment period.

Paying the penalty

Unless you’re in a group exempted by the Internal Revenue Service, you’ll be required to have insurance as of Jan. 1, 2014, or else you’ll be liable for a tax penalty.

The 2014 penalty for not having health insurance is up to $95 per adult and $47.50 per child, or 1 percent of your taxable income, whichever is greater. The penalty will increase substantially over time, eventually reaching a maximum of 2.5 percent of your taxable income. The amount you owe will be prorated to reflect the number of months you were without coverage.

If you owe a penalty, it will be assessed on your 2014 income tax form due April 15, 2015. If your income is so low that you do not file a tax return, you are exempt from paying the penalty.

A CPA can help

Confused by all of the options? A CPA can help you analyze your current situation and determine the best course of action with regard to your health insurance needs and your personal financial plan. Don’t have a CPA? Visit www.mncpa.org/referral to find a CPA in your area.

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