Frequently Asked Questions about thel Affordable Care Act
1. Can an employer require an employee to enroll in their employer-sponsored plan?
Generally, an employee or dependent may decline an employer's offer of coverage. However, an employee who declines an employer's coverage is required by federal law to either buy individual coverage or to pay a tax penalty (unless he or she is exempt from the penalty). An employee who chooses to buy individual coverage rather than enroll in the employer-sponsored plan may be eligible for federal premium subsidies if they purchase the plan through the federal Marketplace and the coverage offered by the employer does not meet federal standards.
An individual with access to an employer-sponsored plan will not qualify for federal premium subsidies if the employer's coverage meets federal minimum value requirements, and the employee's premium for the lowest-cost option for single coverage would cost less than 9.5 percent of the employee's household income. Federal minimum value requirements dictate that an employer-sponsored plan must cover an average of at least 60 percent of the cost of the health services the plan covers. For more information about minimum value, visit healthcare.gov/glossary/minimum-value/.
2. What are the consequences for an individual who chooses not to purchase health insurance?
Individuals who do not have health coverage will generally be subject to a tax penalty, which is enforced by the IRS. Some individuals are exempt from the coverage requirement because they are:
- Members of a recognized religious sect (in existence since 1950) with a conscientious opposition to the acceptance of medical care and related insurance benefits
- Members of a qualifying health care sharing ministry
- Not lawfully present
The penalty will not be imposed on individuals who:
- Lack access to affordable coverage (cost exceeds 8% of household income)
- Have a household income below the tax filing threshold ($9,750 for 2012)
- Are members of Indian tribes
- Lack coverage for a continuous period of less than three months
- Obtain a hardship exemption certification issued by the federal Marketplace.
For those subject to the penalty, the amount individuals will owe will ramp up from 2014 to 2016. For more information on the penalties visit HealthCare.gov.
3. What are the consequences for a small business that chooses not to offer health coverage?
Small businesses, those with fewer than 50 full-time, plus full-time-equivalent employees, (where full-time is defined as 30 hours per week and one full-time-equivalent employee is counted for every 120 hours per month worked by part time employees), are not subject to the employer mandate or associated tax penalty. Note that small businesses obtaining coverage through the federal Marketplace might be eligible for a tax credit of up to 50 percent of what they contribute to premiums.
For more information, visit www.irs.gov/Affordable-Care-Act/Employers/Small-Business-Health-Care-Tax-Credit-and-the-SHOP-Marketplace.
4. What are the consequences for a large business that chooses not to offer health coverage consistent with federal standards?
Large businesses, those with 50 or more full-time plus, full-time-equivalent employees, (where full-time is defined as 30 hours per week and one full-time-equivalent employee is counted for every 120 hours per month worked by part time employees), are subject to the employer mandate. In general, large businesses that do not offer affordable coverage with minimum value are subject to the tax penalty. The federal law defines "affordable" as the employee share of the premium for self-only premium not exceeding 9.5 percent of the employee's income. The federal law defines "minimum value" as the plan covering at least 60 percent (on average) of the cost of the health services that are covered under the plan.
Federal regulators have delayed implementation of the large employer mandate for one year. Instead of taking effect January 1, 2014, the large employer mandate will be effective January 1, 2015.
5. Will child-only health plans be offered?
Federal law requires any carrier that sells policies in the individual market in 2014 (on or off of the federal Marketplace) to offer child-only plans. Carriers generally may not exclude any individual from coverage based on age, health, or any other factor.
6. HealthCare.gov lists ten categories of essential health benefits. What sort of maternity benefits must now be included?
The maternity benefits required under the essential health benefits requirement are defined by the coverage in Texas' benchmark plan, which defines the benefit to include care and services provided for treatment of the condition of pregnancy. Coverage includes prenatal office visits and hospital delivery services. Plans must cover a minimum hospital stay of 48 hours following an uncomplicated vaginal delivery or 96 hours following an uncomplicated delivery by caesarian section. Complications of pregnancy must also be covered.
7. What is the primary function of navigators, and how do I know if someone is an official navigator?
The function of navigators is to provide information to consumers about their coverage options in the federal Marketplace and to help consumers enroll in qualified health plans and apply for premium tax credits, if applicable.
To locate a navigator in your community visit HealthCare.gov or by call the federal Marketplace at 1-800-318-2596 (TTY: 1-855-889-4325). Navigators in Texas are selected, trained, and regulated by the federal Marketplace.
Navigators are funded through federal grants and should not request any money from you, nor will they receive a commission from an insurance company for helping you purchase coverage.
8. Recent changes to state and federal laws are confusing - am I considered a small employer or a large employer?
The general answer is that until 2016 a small employer is one that has 50 or fewer employees. However, there are some complicated issues about how employees are counted if you have part time employees. For purposes of whether an employer purchases a plan in the small group market or the large group market, and which rate and benefit requirements apply, federal law defines employer size by counting all employees, regardless of the number of hours they work. For tax purposes and for eligibility to purchase small employer coverage through the federal Marketplace, however, federal law takes hours into account so that two 20 hour a week employees count as one "full-time equivalent" employee.
9. Will TDI approve policies for the federal Marketplace? Will TDI have any authority regarding rate increases?
Policies may not be sold in Texas, in or out of the federal Marketplace, without TDI approval of the policy form. TDI reviews the rates of individual and small group plans for compliance with Texas law; however, TDI does not have authority to approve or disapprove health insurance rates. Federal regulators will also review Texas rates and forms for individual and small group plans for federal requirements in and out of the federal Marketplace. Ultimately, federal regulators decide which TDI-approved policies may be sold on the federal Marketplace.
10. Will Texas have store front marketplaces or will everything be done via a call center?
The federal Marketplace will accept applications online, through the mail, or via telephone. Navigators and consumer application counselors will also be available to help consumers apply. TDI does not know whether navigators will establish physical locations for consumers to visit.
11. What, if anything will happen with limited health insurance plans, like cancer policies, and health discount plans as related to the new federal laws?
The new federal laws generally only regulate comprehensive health insurance policies. Products like cancer-only policies and discount plans are not likely to be affected.
12. Do insurance companies outside the federal Marketplace have to comply with new requirements, like the essential health benefits?
Yes. Whether they are sold on or off of the federal Marketplace, all individual and small group health insurance plans must include the essential health benefits package and comply with other federal requirements. Other types of insurance that only provide limited benefits may still be available, but such insurance will not qualify as minimum essential coverage sufficient to avoid a tax penalty. Essential health benefit requirements do not apply to large employer plans.
13. Does the ban on preexisting condition exclusions also prohibit waiting periods for preexisting conditions?
Yes. Waiting limits and any other limitations or exclusions imposed due to preexisting conditions are prohibited under federal law beginning in 2014. Plans can include a general waiting period of up to 90 days before an individual or employee becomes eligible for coverage, but they cannot charge a premium during this time. Also, note that while individuals cannot be denied a plan due to preexisting conditions, they cannot wait until they get sick to enroll. Individual plans will generally only be available during open enrollment periods.
14. How do federal subsidies for individual coverage in the federal Marketplace work?
For information on how subsidies will work visit HealthCare.gov.
15. Do the new federal rules apply to self-funded employee health plans offered by employers?
Self-funded plans are not subject to the federal regulations on premium rates or essential health benefits, but they are subject to many other federal requirements, including:
- required access to emergency coverage, regardless of network
- required access to pediatrician as primary care provider for children
- required access to ob-gyn for women without a referral
- required appeals process
- annual limitation on out-of-pocket maximums
- coverage of preventive services without cost sharing
- extension of dependent coverage to age 26
- required provision of the Uniform Glossary and Summary of Benefits and Coverage
- prohibition of preexisting condition exclusions
- prohibition of establishing eligibility rules or variations in premiums based on health status-related factors or genetic information
- prohibition of the imposition of a waiting period in excess of 90 days
- prohibition of annual and lifetime dollar limits on essential health benefits
16. Will dental insurance be subject to the "guaranteed issue" requirement in 2014?
Yes and no. Dental insurance will be available in the federal Marketplace on a guaranteed issue basis. If you buy individual medical insurance outside the federal Marketplace, federal regulations require your carrier to ensure that you have dental coverage for any covered children. Outside of these circumstances, carriers can choose to deny you dental coverage.
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Last updated: 11/08/2016