About the Affordable Care Act

The Patient Protection and Affordable Care Act, often referred to as the Affordable Care Act, ACA or Obamacare, is a 2010 federal law establishing consumer protections for individuals with their health insurance coverage, standards for care by doctors and hospitals and an expansion of health coverage.  As of January 2014, every American must have health insurance coverage – through individual, employer-based, or government policies – or pay a penalty on their Federal income tax filing.

Most common health insurance coverage fulfills the requirement – for example, job-based private insurance, individual private insurance, public insurance such as Medicaid, military coverage, and veterans’ coverage.

It is important to note that individuals who use Medicare are not affected by the ACA and DO NOT HAVE TO CHANGE  their coverage.

State Exchanges for Individuals

Through a state-by-state marketplace called an Exchange, individuals are able to sign up for health insurance coverage. Open enrollment period for the 2019 marketplace will be from November 1, 2018 to December 15, 2018.

As mentioned above, individuals who have health coverage can keep their current policies.  Employees with coverage can keep their employer's plan or take the money their employer pays for health insurance and shop for a different plan in the State Exchange.  Individuals who do not have health coverage can sign up for government insurance through Medicaid (if they qualify based on income) or purchase it through the Exchange in their state.  There are subsidies and tax incentives available on a sliding scale for health insurance purchases in the State Exchanges.

Plans in the new State Exchanges will be offered by private health insurers, and every plan will cover a core set of benefits called essential health benefits.  These benefits include prescription drugs, mental health, substance abuse treatment, and rehabilitative services, among others. Individuals can compare their options based on price, benefits, quality, and other important features. 

Again, many people will qualify for tax incentives when purchasing private insurance coverage in the State Exchanges. Others will qualify for free or low-cost coverage through Medicaid or the Children’s Health Insurance Program (CHIP).  By filling out one State Exchange application, an individual will be referred to the appropriate program and incentives

Tax Credits

Tax credits will be offered to people (based on income) who purchase health coverage through the State Exchanges. For fiscal year 2018, individuals making between $12,060 and $48,240 annually, or a family of four making between $24,600 and $98,400 per year, are eligible for credits when filing their federal income taxes. Individuals or families that fall within the lower income levels will pay two percent of their income for a State Exchange plan, and those that fall within the upper income levels will pay 9.5 percent of their income.

Health Insurance Requirement

The requirement to purchase individual health insurance applies to anyone who has access to health coverage costing less than 8 percent of their income.  For comparison, in 2017, individual employees in the United States paid $1,213 on average annually towards the cost of an employer health insurance plan (Kaiser Family Foundation, 2017 Employer Health Benefits Survey). Health insurance premiums in the State Exchanges will vary by age and region within the state, but coverage cannot be denied due to preexisting medical conditions.

There are exemptions to the ACA’s health insurance coverage requirement for individuals:

Income-related and Hardship exemptions

  • Individuals who are not required to file federal income taxes are exempt.  Generally, this applies to individuals earning less than $10,400 per year ($20,800 for a family of four).
  • Individuals experiencing a general hardship or unusual circumstances – for example, a natural disaster – are exempt.
  • People who cannot find health coverage that costs them less than 8 percent of their (or their family’s) income – including an employer contribution and/or available tax credits – are exempt

Health coverage-related exemptions

  • People who are residents of a state that did not expand Medicaid and whose household income is below 138 percent of the federal poverty line are exempt.
  • Individuals can be without health coverage less than 3 months in a calendar year without triggering the fine.

Group membership exemptions

  • Individuals who are a part of a recognized religious sect that carries religious objections to insurance.
  • Members of Indian Tribes are exempt.

Other exemptions

  • An individual who is incarcerated, serving time in either prison or jail, is exempt.
  • U.S. citizens who are living abroad for at least 330 days of the year, certain noncitizens, and individuals who are not legally present are exempt.

Penalties

For the year of 2018, those who did not purchase health coverage and do not qualify for an exemption will face a fine of $695 per adult and $347.50 per child up to $2,085 for a family (or 2.5 percent of income, whichever is greater).

Under the current administration, the individual mandate has been repealed. As a result, individuals who DO NOT purchase health coverage for the year of 2019 will NOT have to pay a fine.