Answer: Most of the benefits of Obamacare are available to anyone who buys health insurance.
But, if you want a subsidy (premium tax credit) to help pay for your health insurance, these are the requirements:
- Must live in the U.S.
- Be a U.S. citizen or national, or be lawfully present in the U.S.
- Have a household income between 133% and 400% of the Federal Poverty Level (FPL)
- Cannot be currently incarcerated
If you don’t qualify for a subsidy, you can still apply for health insurance and get all of these benefits from the Affordable Care Act:
- Medical Loss Ratio requirements and rebates
- Preventive care services, without cost-sharing
- More mandatory coverage for women’s health care (Pap smears, birth control, etc.)
- Children can stay on parents’ health plan until age 26
- No lifetime dollar limits on health insurance for covered benefits
- In 2014, applications for health insurance cannot denied because of a pre-existing conditions.
Question 2: Am I required to have health insurance in 2014?
Most people will have to have major medical health insurance in 2014. If you don’t, you’ll probably have to pay a tax penalty to help offset the costs of caring for uninsured Americans.
Households with incomes above 400% of FPL will be exempt from paying tax penalties if insurance in their area costs more than 8% of their taxable income, after taking into account employer contributions or tax credits.
The tax penalties start small in 2014 and increase over time.
- In 2014, the penalty will be the greater of 1.0% of taxable income or $95 per adult and $47.50 per child (up to $285 per family).
- In 2015, the penalty will be the greater of 2.0% of taxable income or $325 per adult and $162.50 per child (up to $975 per family).
- In 2016, the penalty will be the greater of 2.5% of taxable income or $695 per adult and $347.50 per child (up to $2,085 per family).
- After 2016, the penalty will be increased annually by the increase to the cost-of-living.
Question 4: Can you explain how subsidies work?
If you meet residency requirements for subsidies, then your total household income has to be between 100% and 400% of the Federal Poverty Level (or FPL) in order to qualify for a “premium tax credit,” or subsidy, to limit what you pay for your health insurance.
These subsidies are set on a sliding scale so that what you spend each month is limited to a defined percentage of your income, to the second least expensive silver-level plan available in your area.
If your monthly income is 133% of FPL, you would be earning about $1,273 per month in 2013. If you wanted to buy the second least expensive silver plan available in your area, here is how that would work.
At that income level you would have to spend no more than 3% of your income – about $38 per month – to buy that second least expensive plan. The government subsidy pays the rest of your monthly premium.
As your income increases, so does your share of the cost for the monthly premium.
So, if your income rises to 400% of FPL – about $3,832 per month in 2013 – you could spend no more than 9.5% of your monthly income – about $364 – for that same plan; the second least expensive silver plan.
So, if the second least expensive silver plan available in your area costs $300 a month, and you earn 400% of FPL, you do not get a subsidy.
But, if the second least expensive silver plan available in your area costs $500 a month, the government would pay the difference between the $500 plan and your $364 cap.
In that scenario you would pay $364 per month for your health insurance plan, and the value of your subsidy would be $136; $500 minus your $364 cap.
Now, if there also happened to be a bronze plan available for $400 a month, you could enroll in that plan and get the same $136 subsidy. In that case, your plan would cost you $264 per month.
Or, if you wanted a gold plan that cost $600 per month, you would – once again – apply your $136 per month subsidy and pay $464 per month for your insurance policy.
The answer is no. Under the Affordable Care Act, businesses with fewer than 50 full-time employees (or the equivalent in part-time workers) are not required to provide health insurance to their employees. And, on July 2, 2013 the mandate for employers with more than 50 employees was postponed for one year.
And, those employers will not face tax penalties if they decide not to offer their employees health insurance.