Obamacare: Frequently Asked Questions
For consumers and employers, enrollment in the Health Insurance Marketplace under the Affordable Care Act provides an opportunity to shop for a health plan that works best for them. Here are answers to some frequently asked questions about the health care law and types of available plans. You can also learn more about the health care law and its various provisions in this interactive timeline.
1. When will the health care reform law take effect?
The health insurance reforms adopted as part of the Affordable Care Act began to be implemented when the law was signed in 2010, after which they began to be rolled out in a five-year phase. Most provisions will not take effect until January 1, 2014. As of 2013, these new protections have already been implemented:
- Lifetime limits are prohibited and annual limits are restricted
- Enhanced appeal procedures are available to consumers
- Children under 19 years of age cannot be denied coverage
- Children up to age 26 may remain on a parent’s policy
- Preventive services must be coverage and cannot have cost-sharing
- New rate review transparency requirements are in place
- Medical loss ratio standards limit insurers’ overhead
- A standardized summary of benefits must be used by all insurers, allowing for easier comparison of plans
In addition, subsidized coverage for people with pre-existing conditions that cannot find coverage in the private market is made available in every state through January 1, 2014.
2. Will I be required to give up my current coverage?
No. Health plans in effect as of March 23, 2010, are grandfathered under the law and will be considered “qualified coverage.” As long as the issuer continues to offer health insurance without substantial changes, your current coverage meets the mandate to have health insurance that goes into effect in January 2014.
3. Why does the law require me to purchase health insurance coverage?
The key goal of the health care reform law is to ensure that nobody can be denied coverage or be priced out of coverage due to a health problem. Proponents of the law say that the market will not work if people are allowed to wait to purchase insurance after they have a health problem because there would be few choices available to consumers, and those choices would be expensive for everyone. The law’s requirement that everyone have minimum coverage ideally creates a pool of both sick and healthy individuals.
4. What are “Exchanges”? Can I still purchase coverage through my agent?
Exchanges are the central mechanisms created by the health reform bill to help individuals and small businesses purchase health insurance coverage. On October 1, 2013, an Exchange in every state will begin enrolling individuals and small businesses into qualified health plans.
The Exchange, operated by the federal government or by the state, will provide information to consumers about their coverage options and what assistance is available to them. The Exchanges will also administer the new health insurance subsidies and facilitate enrollment in private health insurance, Medicaid, and the Children's Health Insurance Program (CHIP).
The federal law does not require anyone to purchase health insurance through the Exchange, though subsidies will only be available for plans sold through the Exchange. You will be able to purchase this coverage right on the Exchange’s website or through your agent if he or she is approved to sell Exchange plans. If you would rather buy other health insurance through an insurance agent or broker, you will be free to do so.
5. How do I choose a plan?
There are four categories of Marketplace insurance plans: Bronze, Silver, Gold and Platinum. All plans must design their cost-sharing (deductibles, copays, coinsurance) to fit into specific levels of coverage. The levels are defined as follows:
- Bronze Level – The plan must cover 60% of expected costs for the average individual
- Silver Level – The plan must cover 70% of expected costs for the average individual
- Gold Level – The plan must cover 80% of expected costs for the average individual
- Platinum Level – The plan must cover 90% of expected costs for the average individual
The differences among categories affect monthly premium costs, the portion of bills paid for hospital visits and prescription medications and total out-of-pocket costs.
6. What does Marketplace insurance cover?
All Marketplace insurance categories offer the same set of essential health benefits and do not reflect the quality or amount of care the plans provide.
Certain plans might cover additional coverage, but essential health benefits include at least the following items and services:
- Ambulatory patient services (outpatient care you get without being admitted to a hospital)
- Emergency services
- Hospitalization (such as surgery)
- Maternity and newborn care (care before and after your baby is born)
- Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
- Prescription drugs
- Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services
7. How do I begin the enrollment process?
You can prepare to enroll by learning about types of health coverage, researching your questions and figuring out what you need to know before you start your application.
- Obtain your options and information. If your state runs its Marketplace, you can use your state’s website to apply for coverage, compare your options and enroll. If the federal government runs your state’s Marketplace, you can use the website www.healthcare.gov.
- You can sign up for e-mail or text updates about the Marketplace so you receive new information and timely reminders.
- Gather basic information about your household income. Most people using the Marketplace will qualify for lower costs on monthly premiums or lower out-of-pocket costs. In order to find out how much savings you’re eligible for, you’ll need to provide information similar to that included on your W-2, pay stubs or tax returns.
- Develop a budget. Because there are different types of health plans that meet different needs and budgets, you might need to figure out how much you want to spend on premiums each month.
- Make sure you understand how coverage works, including things like premiums, deductibles, out-of-pocket maximums, copayments and coinsurance. These details will play a big factor when you’re looking for health insurance.
- Learn about the different types of health coverage so you can be better prepared to choose the best health plan for you.
8. What if I have job-based insurance?
Ask your employer if it plans to offer health insurance in 2014. If not, you may need to get insurance through the Marketplace or from other sources in 2014.
If you have health insurance through your job, you can keep it. Job-based health plans qualify as minimum essential coverage. You don’t have to change to a Marketplace plan in order to avoid the fee that uninsured people might have to pay in 2014. Also, if your job-based coverage is considered affordable and meets minimum value, you won’t be able to get lower costs on premiums or out-of-pocket costs in the Marketplace, regardless of income and family size. Your employer can tell you whether the insurance plan it offers meets minimum value and can provide you with information to determine if the plan is considered affordable to you.
9. What if someone doesn’t have coverage?
If someone who can afford health insurance does not have coverage in 2014, they may have to pay a fee. They also have to pay for all of their health care. The fee in 2014 is one percent of your yearly income or $95 per person for the year, whichever is higher, and the fee increases every year.
In order to avoid the fee, you need insurance that qualifies as minimum essential coverage. You won’t have to pay a penalty if you’re covered by any of the following in 2014:
- Any Marketplace plan, or any individual insurance plan you already have
- Any employer plan (including COBRA), with or without “grandfathered” status.
- The Children's Health Insurance Program (CHIP)
- TRICARE (for current service members and military retirees, their families and survivors)
- Veterans health care programs (including the Veterans Health Care Program, VA Civilian Health and Medical Program (CHAMPVA) and Spina Bifida Health Care Benefits Program)
- Peace Corps Volunteer plans
10. How will my benefits be impacted by the law?
Every plan sold or renewed in the individual and small group market after January 1, 2014, must include all the benefits in a “benchmark” plan – a plan chosen for the state based on coverage currently available in the state – and will cover services in the following categories:
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance abuse disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
11. How will my out-of-pocket costs be impacted?
All plans sold or renewed in 2014, must limit the out-of-pocket exposure of consumers to approximately $6,000 for individual and $12,000 for families. These limits will be indexed to average premium growth in future years. In addition, the deductible for plans in the small group market will be limited to $2,000 for individuals and $4,000 for families in 2014, also indexed to average premium growth in future years.
12. How can I get lower costs on coverage?
You can save money in the Marketplace in the following ways:
- You may be able to lower costs on your monthly premiums when you enroll in a private health insurance plan. These plans all cover essential health benefits and pre-existing conditions.
- You may qualify for lower out-of-pocket costs for copayments, coinsurance and deductibles.
- You or your child may get free or low-cost coverage through Medicaid or the Children's Health Insurance Program CHIP. Some states will be expanding Medicaid eligibility in 2014, so you may qualify even if you have been turned down for Medicaid in the past.
13. Will insurers be able to charge me more because of my age?
Yes, though they may not charge older individuals a premium that is more than 300% of the premium charged a younger individual. Currently, rates can vary based on age as much as 700 percent in some cases. In addition, insurers may not vary rates based on health, claims, genetic information, or any other health-related factors. Insurers may only vary rates in a state by age (within limits), tobacco use, geography and the number of family members covered.
14. When can my adult child be added to my plan?
The health reform law requires that insurers and employers that provide dependent coverage to children make that coverage available to adult children of enrollees up to their 26th birthday. This requirement became effective for “plan years” beginning September 23, 2010, so parents will be able to enroll a child in group coverage during the next open enrollment period. Children can be added to an individual policy when it is renewed.
Of course, adding an adult child to the plan will likely increase your premiums. If the child is 19 or older, the insurer may exclude coverage of pre-existing conditions for a period of time, as allowed by existing state and federal law, until the prohibition on preexisting condition exclusions takes effect in 2014.
15. When can I enroll my child who has a pre-existing condition?
The law and subsequent regulations prohibit insurers from denying coverage for children based on health status or excluding coverage of their pre-existing conditions if otherwise covered under the policy. This protection became effective after September 23, 2010. A child can be added to an existing policy under the enrollment rules of the policy. If you are seeking a child-only policy, you will need to inquire whether child-only coverage is available in your state. If you are covered under a group plan, you may add your child to your policy at the next open enrollment period.
16. I have been denied coverage because I have a pre-existing condition. What will this law do for me?
Subsidized coverage is now available in every state to individuals with pre-existing conditions who have been uninsured for at least six months through the Preexisting Condition Insurance Program. This program, either run by the federal government or the state, provides coverage that immediately covers preexisting conditions at premiums that are capped at the average cost of private coverage in your state's individual market.
Beginning January 1, 2014, insurers will be prohibited from discriminating against individuals with pre-existing conditions in offering or pricing health insurance policies. In addition, for those with qualifying incomes, subsidies will be available to reduce premiums and cost-sharing for plans purchased through the Exchange.
17. If my employer does not subsidize my family’s health insurance and we cannot afford it on our own, what will the new law do to make coverage more affordable?
Low- and moderate-income individuals and families whose employers do not subsidize health insurance coverage will be eligible for subsidies that enable them to purchase coverage through the Exchange in their state. The amount of these subsidies, which will reduce premiums and out-of-pocket costs for deductibles, copayments and coinsurance, will depend upon the size of your family and your household income.
18. What if I’m self-employed?
If you’re self-employed with no employees, you’re not considered an employer. You can use the individual Marketplace to find coverage that fits your needs. Starting in 2014, you may qualify to get lower costs on your monthly premiums when you buy private health insurance in the Marketplace.
When you fill out a Marketplace application, you'll learn if you qualify for these lower costs. Depending on your income, you may also qualify to for lower out-of-pocket costs, so you won't have to pay as much for deductibles, copayments and coinsurance.
19. What should I do if my insurance company rescinds my coverage?
If your insurance company “rescinds,” or retroactively cancels, your health insurance coverage, it is now required to provide advance notice of its intention to do so, and may only do so if you committed fraud or made an intentional misrepresentation of an important fact. If your insurer notifies you that it wants to rescind your policy, and you have not done either of these things, request more information from the company. If you are not satisfied with their explanation, immediately contact your state Department of Insurance to file a complaint.
20. Can I still have a Health Savings Account (HSA)?
Yes. Nothing in the legislation would infringe upon the ability of an individual to contribute to a Health Savings Account (HSA), or discourage an individual from doing so. The minimum level of coverage required to meet the individual mandate was specifically designed to allow for the purchase of a qualified high deductible health plan that would complement the HSA.
21. Will my health insurance premiums continue to go up?
Health care spending is likely to continue rising faster than general inflation well into the future, resulting in higher premiums. While some individuals and families with health problems may see their premiums decrease significantly under the new rating rules, for most Americans, premiums will continue to increase from year to year. However, the new regulations are designed to prevent unreasonable and unexpected spikes in premiums and, over time, to slow the growth in health care spending.
22. What is the new small business tax credit and how do I know if I am eligible?
The Small Business Tax Credit has been available since the 2010 Tax Year. Businesses with fewer than 25 full-time equivalent employees (FTE) and average annual wages less than $50,000 per employee may qualify. To receive the tax credit, an employer must have a group health plan and must pay at least 50% of the premium.
23. I have fewer than 50 employees. Will I be required to provide insurance for my employees?
No. The employer responsibilities under the health reform bill do not apply to employers with fewer than 50 employees. However, you will be able to enroll your employees in coverage through the Exchanges beginning in 2014, if you choose to do so.
24. I have more than 50 employees. Will I be required to provide insurance for my employees?
Yes. An employer that fails to offer “minimum essential coverage” to its employees will be subject to a penalty of $2,000 for each of their employees beyond the first 30. If you have 75 employees, the penalty would be $2,000 x (75-30) = $90,000. Employers that do offer minimum essential coverage will be assessed a penalty of $3,000 per employee that is eligible for, and receives, a subsidy through the Exchange because their share of the premium for the employer’s group health plan exceeds 9.5% of their household income. This penalty may not exceed $2,000 times the number of employees, disregarding the first 30 employees.
25. What new options will be available to me as a small employer?
Through the small business (SHOP) exchange, small employers will have the option of choosing a level of coverage and then allowing each employee to select their own insurer and plan. The exchange can also collect the employer and employee contributions and direct those payments to the chosen insurers.
26. Will I be required to drop my current coverage?
No. Group health plans in effect as of March 23, 2010, are grandfathered under the law and will be considered “qualified coverage” that meets the mandate to have health insurance that begins January 2014. Employees and dependents can be added to the policy without losing grandfather status; however, other substantial changes, such as an increase in the percentage of premium an employee must contribute, may cause your plan to lose its grandfathered status.
27. Must I go to the Exchange to purchase insurance, or can I continue to purchase coverage through my insurance agent?
The federal law specifically states that businesses are not required to purchase through the small business Exchange.
28. Can I continue to provide assistance to my employees through flexible spending accounts?
Yes. Nothing in the new health care law would eliminate these options or discourage them.