Affordable Care Act basics

September 28, 2013 

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Individual health plans - from Bronze to Platinum - are required to offer essential health benefits, including ambulatory and emergency services, hospitalization, maternity and newborn care, mental health and substance abuse services, prescription drugs and rehab, laboratory services, preventive and wellness care, and pediatric care.

SUSANA VERA — 2002 News & Observer file photo

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    Subsidies and discounts:

    The law includes subsidies, called tax credits, to offset the cost of mandatory insurance.

    Subsidies will offset the cost of monthly premiums. They will be available to individuals and families with household incomes at 100 percent to 400 percent of the federal poverty level (see below).

    Additional discounts will be available to offset the cost of deductibles and co-pays. They will be available for household incomes below 250 percent of federal poverty level (see below). To qualify for these benefits, one must purchase a Silver level plan.

    Subsidies are set on a sliding scale according to household income, as measured by the federal poverty level (FPL). Subsidies will cap the cost of premiums not to exceed the following limits:

    100-133% FPL2% of income

    133-150% FPL3-4% of income

    150-200% FPL4-6.3% of income

    200-250% FPL6.3-8.05% of income

    250-300% FPL8.05-9.5% of income

    300-400% FPL9.5% of income

  • 2013 federal poverty levels

    Family size100%250%400%
    1 person$11,490$28,725 $45,960
    2 people$15,510 $38,775 $62,040
    3 people$19,530 $48,825 $78,120
    4 people$23,550$58,875 $94,200

    In addition to premium caps, the Affordable Care Act also limits the amount individuals and families have to pay for out-of-pocket costs, such as deductibles, co-pays and co-insurance (this cap doesn't apply to out-of-network care). The annual cap is $6,350 for an individual, and $12,700 for a family.

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    Key terms:

    Your health costs will come from four primary sources.

    Premium: Fee for insurance coverage, typically paid monthly, but sometimes quarterly or yearly.

    Deductible: The amount you have to pay before your health plan begins to pay, anywhere from $250 to $5,000.

    Co-payment: Your share at the doctor’s office, hospital, pharmacy or other service provider, can be $15 or $25 a doctor’s visit, but can be 10 times more for a hospital visit.

    Co-insurance: Your share of a medical bill that’s not covered by insurance, typically between 10 percent and 40 percent of the provider’s bill, depending on the type of policy.

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    Fines:

    The law also includes a fine of $95, or 1 percent of annual income, whichever is greater, for those who qualify but fail to get coverage in 2014. The fine for children is half of what adults pay, or $47.50 per child in 2014. By 2016 the fine will be $695 or 2.5 percent of annual pay, whichever is greater. The dollar amount is paid for each individual or family member who's uninsured, while the percentage amount is paid by household, with certain limits. The fine is capped so that it does not exceed the cost of buying insurance. The fine will be taken out of tax refunds, and unpaid fines will be rolled over into future refund years, but currently there is no other mechanism to enforce it.

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    Exemptions:

    The Affordable Care Act includes exemptions from mandatory coverage for certain hardships.

    • If household income is below the federal income tax filing threshold, the insurance exemption is automatic, and that individual or family doesn’t need to apply for an exemption.

    • If an adult has income less than 138 percent of the federal poverty guidelines and lives in a state (like North Carolina) that opted not to expand Medicaid, that person can qualify for an exemption from the insurance marketplace but has to apply for the exemption through the marketplace to avoid a fine.

    • If the lowest cost health plan available exceeds 8 percent of household income, one can qualify for an exemption from the IRS when filing tax returns.

    Other exemptions:

    • Membership in a health care sharing ministry.

    • Incarceration, except incarceration pending the disposition of charges.

    • Membership in a federally recognized tribe, or eligibility for services through an Indian healthcare provider or the Indian Health Service.

    • Membership in a recognized religious sect that objects to health coverage.

    • Lack of insurance coverage for less than three consecutive months between months of coverage (“short coverage gap”).

    • Unlawful presence in the United States.

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    Information you'll need to start enrolling

    Basic information includes the following:

    Date of birth and Social Security Number (or document numbers for legal immigrants) for every applicant.

    Employer and income information (for example, from tax returns, pay stubs or W-2 forms – Wage and Tax Statements).

    Additional information may be required. For more details, go here:

    www.healthcare.gov/how-do-i-apply-for-marketplace-coverage/

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    North Carolina stats:

    How North Carolinians get their health insurance

    Through employers:4.6 million

    Medicare:1.6 million

    Medicaid:1.4 million

    Individual poli cies:435,000

    Uninsured:1.5 million

    Sources: U.S. Centers for Medicare & Medicaid Services, healthcare.gov, Kaiser Family Foundation, Kaiser Health News, N.C. Justice Center, N.C. Institute of Medicine, UNC Health Care, Independent Insurance Agents of North Carolina

• The Affordable Care Act will require that individuals and families purchase insurance in 2014, unless they qualify for an exemption. For most people, however, there will be no change, because they already have insurance through their employer, Medicare or Medicaid. Those immediately affected by the new law will be the uninsured as well as people who buy individual insurance policies.

• Individual health plans available under the Affordable Care Act will be classed as Bronze, Silver, Gold and Platinum. The levels differ in the way the plans distribute medical costs. The plan with the least expensive premiums, Bronze, will cover about 60 percent of medical costs, leaving 40 percent to the individual. The plan with the highest premiums, Platinum, will cover about 90 percent of medical costs, leaving 10 percent to the individual.

• The Affordable Care Act prohibits insurers from charging women higher rates than men, from charging older people more than three times what younger people pay, and from rejecting customers with pre-existing conditions. However, insurers will be able to charge people who use tobacco as much as 50 percent more than those who don’t smoke.

• The law also creates an option for “catastrophic” plans for people under 30 years of age. These plans will have lower premiums than Bronze plans, but they will cover just three doctor visits a year and have other limits.

• All the plans – from Bronze to Platinum – are required to offer essential health benefits, including ambulatory and emergency services, hospitalization, maternity and newborn care, mental health and substance abuse services, prescription drugs and rehab, laboratory services, preventive and wellness care and pediatric care.

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