As of March 23, 2010 the Patient Protection and Affordable Care Act (PPACA) was signed into law. Starting January 1, 2014 several significant laws go into effect that will change health care as we know it.
Under the new law...
- There are 5 levels of qualified coverage
- Penalties for the uninsured will being in 2014
- Income based tax credits and subsidies are available to reduce the cost of health care premiums
Levels of Coverage
Bronze Level - 60% Actuarial Value*
Silver Level - 70% Actuarial Value*
Gold Level - 80% Actuarial Value*
Platinum Level - 90% Actuarial Value*
Catastrophic Coverage** - High Deductible Plan. Essential Health Benefits (EHB) are only covered after the out-of-pocket maximum is reached ($6,400 for individuals and $12,800 for a family)
*The percentage of health care costs covered by an insurance company for the average enrollee. For example, if a plan has an actuarial value of 70 percent, on average, a patient would be responsible for 30 percent of the costs of all covered benefits.
** Catastrophic plans are only offered to individuals who are under 30 years old OR have received a certification from an Exchange that they are exempt from the individual mandate because they do not have an affordable coverage option or because they qualify for a hardship exemption.
Adult - $95
Child - $47.50
Family - $285 or 1% of family income, whichever is greater
Tax Credit and Subsidies
Tax credits will be available to U.S. citizens and legal immigrants who purchase coverage in the new health insurance Exchanges and who have income up to 400% of the federal poverty level (about $11,490 - $45,960 for individuals; $32,500 - $94,125 for a family of 4).
In addition, people with incomes between 100% - 250% of the federal poverty level (about $11,490 - $28,725 for individuals; $32,500 - 58,800 for a family of 4) may qualify for cost-sharing subsidies that will bring down their deductible, copayments and coinsurance.
Individuals who receive a tax credit have two options:
- Claim the tax credit when they file their income taxes
- Receive an advanced tax credit. In this case, the health insurance Exchange will estimate the tax credit and send it directly to the insurer. When an individual files their taxes, the IRS will reconcile the amount of the advance payments sent to the insurer with the taxpayer's actual income.
People who qualify for cost-sharing subsidies won't face the same financial risk. The federal subsidies, will be paid directly to the insurer.