Dec. 23, 2013 Enrollment Required for Jan. 1, 2014 ACA Coverage

We started our series on health care exchanges under the Affordable Care Act (ACA) just a little more than two months ago. It seems like a lot longer! As virtually anyone who follows the news knows, what first seemed like technical glitches in the federal healthcare.gov website turned out to be greater systemic problems, which in turn generated not just more political animosity about the ACA but various substantive changes and proposals, including the following:

• Extension to Dec. 23, 2013 (from the original date of Dec. 15) of the signup date for exchange coverage that will begin Jan. 1, 2014

• Extension to March 31, 2014 (from the original date of Feb. 15) of the signup date that will allow individuals to avoid a potential tax penalty for 2014

• A delay in the ability of small businesses to enroll for coverage via the healthcare.gov website until Nov. 2014, for coverage beginning in Jan. 2015. The coverage options and related tax provisions of the Small Business Health Options Program (SHOP) remain in place, but those who choose to enroll currently must do so through means other than the website, such as through an insurance broker.

• In Wisconsin, a likely “freeze” in BadgerCare (Medicaid) coverage through Mar. 31, 2014. Assuming this happens, those who would have originally become ineligible for BadgerCare effective Jan. 1, 2014, and, thus, would have had to seek coverage on the exchange would remain eligible through March 31; a group of single adults who would have become eligible for BadgerCare effective Jan. 1, 2014, would remain ineligible through Mar. 31.

Despite these changes (and some others that may be in the works), the essential “bones” of the ACA, including those governing health care exchanges, remain in place. This is because most of the ACA rules come from the statute enacted by Congress and the Administration in 2010.

Several readers of prior articles submitted questions, and we attempt to answer most of them here. Many of the answers are more technical and detailed than space permits, however, and we urge readers to obtain more information from healthcare.gov and other sources.

Q: What happens if I don’t sign up for a health care plan?

A: Besides having no insurance for medical expenses you may incur, you may have to pay a “penalty” – technically known as an “individual shared responsibility payment” – if you have no health care coverage whatsoever (exchange, employer-provided, Medicare, etc.) and don’t qualify for an “exemption.” For 2014, this payment is one percent of your yearly income or $95 per person, whichever is higher; it goes up in subsequent years. The payment is generally “made” when you file your federal income tax return for the year in which you don’t have coverage. Various exemptions apply, including one for those whose income is low enough that they don’t have to file a tax return.

Q: I’m a seasonal resident. Will Door County plans cover treatment in other states?

A: It depends upon the particular plan selected. Some plans have broader geographic reaches, in terms of the doctors, hospitals and other medical providers they will pay for. This is an important question to research when looking at different plan options.

Q: Is preventive care free before I meet my deductible?

A: Under the ACA, exchange plans and many others must provide certain types of preventive screenings and shots free, before an individual’s deductible is met (and without charging a co-payment or co-insurance). Generally, to be free, the service must be provided by an in-network provider. The services characterized as “preventive” are different for adults and children.

Q: If I’m below the 100 percent federal poverty level and eligible for BadgerCare, do I still have to be uninsured for six months before I’m eligible to sign up?

A: It doesn’t appear such a six-month wait will be required; BadgerCare law authorities should be consulted, however.

Q: My income changes seasonally. Will that factor into my subsidy?

A: Subsidies are generally based on annual “modified adjusted gross income” so, if your income fluctuates during the year, so will any subsidies you may qualify for. When applying for coverage on the exchange, you estimate your annual income for the year, and then you “true up” on your tax return for that year, based on your actual annual income (that is, you may have to pay more tax if you underestimated your income or less if you overestimated). But, even before you get to your tax return, it’s possible that adjustments may be made in what you pay if you file income or family size changes with the exchange.

Q: I’m seeking individual health insurance but am confident my income is sufficiently high that I won’t qualify for any ACA subsidies. Do I nevertheless have to use the healthcare.gov website to purchase my insurance?

A: No. You can use the healthcare.gov site, and probably will want to, directly or with the help of an ACA-credentialed navigator or other adviser, if there’s any possibility you’ll qualify for subsidies. But you also can seek insurance through more traditional means, such as through an insurance agent. Some insurance companies will also permit you to deal directly with them. Because of ACA provisions, most individual insurance policies purchased off the healthcare.gov website will generally contain the same provisions regarding matters such as nondiscrimination for pre-existing medical conditions, coverage for “essential health benefits,” and free preventive services as those purchased on the website.

Q: What happens if I lose my job or employer insurance in July? Do I have to wait until the end of the year to sign up for a new plan?

A: In most cases, loss of employer coverage because of loss of a job is a “qualifying life event” that enables a person to enroll for individual coverage, even though it’s mid-year. (There’s no such opportunity if a person voluntarily drops his or her employer coverage, however.) You also may be able to continue your employer insurance, upon losing a job, through what’s called “COBRA” continuation coverage. The costs and benefits of the alternatives should be investigated.

Q: Does debt affect my income level as far as subsidies go?

A: Generally what you owe in debt doesn’t help you qualify for subsidies, but there may be a few exceptions. For example, in some cases, student loan interest may lower the “adjusted gross income” used when calculating subsidies. (Note: Loan proceeds, such as what’s received in a student loan, car loan, or home mortgage, aren’t income.)

Q: I’m waiting to see if I qualify for a disability. What should I do in the meantime?

A: We’re not sure what disability benefits you may be waiting for but, in general, Social Security and private insurance benefits for disability are substitutes for income you would earn on a job and are separate from the health insurance that covers medical expenses. So we would suggest you still investigate health insurance while waiting.

Q: How does Governor Walker’s refusal to accept increased Medicaid funding affect the assistance that low-income residents might receive?

A: We are unable to comment on the direct effects of refusing the federal money. But, as noted previously, some low-income residents will be transitioned from Medicaid (in Wisconsin, BadgerCare) to ACA exchange coverage (or other private insurance), and others (generally, single adults) will become newly eligible for this state program. It’s likely the changes will become effective April 1, 2014.

Q: Aren’t the high deductibles people will have to pay a really important factor in peoples’ costs for ACA coverage?

A: In making decisions about purchasing a plan on the ACA exchange (or in the private insurance market outside of the exchange), people need to look at a variety of factors, including premiums and out-of-pocket costs: deductibles, co-payments, and co-insurance. Generally, the lower the premium, the higher the deductibles and other out-of-pockets. Some plans do have high deductibles, although they may not be terribly shocking for those who have purchased or tried to purchase insurance in the individual insurance market during the last few years. The deductibles will likely appear more expensive to those who have had large employer-provided insurance, where employees’ deductibles and other out-of-pocket costs have been going up in recent years but generally haven’t been as high as they have been in the individual market.

Linda Laarman has practiced law for almost 35 years. A key area of practice has been advising employers on employee benefits and compensation matters.

Karen Nordahl has worked in the medical industry for more than 20 years, with a focus on providing educational resources and strategic support to providers and manufacturers on the topics of health policy, economics and reimbursement.