A set of rules that take effect Jan. 1, 2014, will make shopping for health insurance a completely different experience for those who buy it on their own—or are uninsured today. These are the biggies:
Guaranteed issue. This is the most popular part of health reform: Health plans must sell coverage to everyone, regardless of pre-existing conditions, and can’t charge more based on health or gender.
Health insurance marketplaces. By Oct. 1, 2013, every state will have an insurance exchange—an organized marketplace where individuals and small-business owners can select from among all the qualified private health plans available in their area.
It’s expected that most consumers will shop on their state’s marketplace online, but they can also shop by phone, through brokers, or with the personal assistance of trained helpers called Navigators. There will also be help available for consumers who don't speak English. (To see what a health insurance marketplace looks like, visit the Health Connector run by Massachusetts, which has had a mandate since 2007.
Individual subsidies. Afraid you won’t be able to afford insurance? If you buy on your state's marketplace as an individual, you may qualify for a subsidy if your household income is between 100 percent and 400 percent of the federal poverty level. The subsidy will be a new kind of tax credit that you can use right away to lower your premium costs. (The tax system already subsidizes people who have coverage through a job by excluding the cost of their health plan from income taxes.)
For instance, a family of four with an income of 200 percent of poverty, or about $46,000, will pay no more than $235 a month for health insurance. People with household incomes of less than 250 percent of poverty will also get subsidies to reduce their out-of-pocket costs, such as deductibles and coinsurance. You’ll learn whether you qualify for a subsidy when you shop on your marketplace, and if you do, the amount you have coming to you.
Individual mandate. Everyone will be required to have health insurance or pay a penalty. Almost any sort of legitimate coverage will satisfy the mandate: private insurance obtained on your own or through a job, Medicare, Medicaid, CHIP, Veterans Affairs, the Indian Health Service, or Tricare.
Penalty. If you don’t have health insurance, you’ll have to pay a tax penalty, starting at $95 per individual, $285 per family, or 1 percent of income, whichever is greater, for 2014. (That rises to $695 per individual, $2,085 per family, or 2.5 percent of income in 2016.)
Because the vast majority of people will already have qualifying health insurance, few will confront the choice of buying a plan or paying a penalty. Moreover, you won’t have to pay it if you make too little money to file a federal tax return or would have to spend more than 8 percent of your household income on the cheapest qualifying plan, even including subsidies. Americans living abroad, and those in prisons, are exempt from the mandate and associated fines.
Medicaid expansion. The health care law was intended to expand the government-run health program for low-income Americans to cover up to 16 million more people with household incomes up to 133 percent of the poverty line ($14,856 for an individual and $30,657 for a family of four). That includes many at or below the poverty line who aren’t currently eligible. Read more about how to navigate Medicaid.
However, the decision on whether or not to expand Medicaid in this way was handed back to the states as part of the Supreme Court's 2012 ruling upholding the constitutionality of the health reform law as a whole. While many states have announced they will go ahead with the Medicaid expansion, others are still deciding and some have definitely turned down the expansion (although any state can change its mind at any time). In states that decline to expand Medicaid, households with incomes below the poverty line may be left without a source of health coverage. Households between 100 percent and 133 percent of the poverty line will be allowed to purchase coverage, with significant subsidies, on their state's marketplace.