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Understanding the Affordable Care Act (ACA) and the Health Insurance Marketplace

Beginning in January 2014, the ACA requires every American to have health insurance. The health insurance policies must meet established minimum standards and the insurance companies cannot discriminate against consumers for preexisting conditions. For those consumers who are not offered coverage by an employer, the Health Insurance Marketplace helps uninsured individuals and families find affordable health coverage with a Qualified Health Plan (QHP).
Private health insurance plans cover essential health benefits, pre-existing conditions, and preventive care. The cost of these plans is generally based on your household size and income. Many people who apply will qualify for lower costs.
The Health Insurance Marketplace can also assist families with limited income to see if they qualify for Medicaid or the Children's Health Insurance Program (CHIP). If it looks like you qualify, the Marketplace will share information with your State agency and they will contact you. Note, however, that not all States have expanded Medicaid.
Who can apply for coverage through the Health Insurance Marketplace?
  • Individuals and families that are not offered insurance through their employers
  • Individual self-employed consumers
  • Individuals who are offered job-based coverage that is not offered to their dependents
  • Small business owners and their employees can apply for The Small Business Health Options Program (SHOP)
In addition to the above guidelines, eligible individuals and families must:
  • Live in the United States
  • Be a US Citizen or National, or be lawfully present
  • Not be currently incarcerated
*Public programs such as Medicaid and CHIP may have additional eligibility requirements
Factors that may affect the cost of the insurance premium:
  • Age
  • Family composition
  • Geographic area
  • Tobacco use
*Gender and medical history of a consumer cannot affect cost of premiums

Qualified Health Plans (QHPs)

To be certified as a Qualified Health Plan (QHP), a plan must meet the following criteria:
  • Sold by an insurance company that is licensed and in good standing in the State where it is sold
  • Offers at least 1 silver and 1 gold plan (plans are classified by the percentage of cost paid by the insurer, see below for more details)
  • Includes a minimum set of Essential Health Benefits (EHB, see below for more details)
  • Meets no discrimination and network adequacy requirements
  • Available inside and outside of the Marketplace at the same cost

Essential Health Benefits (EHB)

In order to be offered in the Marketplace or through Medicaid, a health plan must include items and services from the following 10 categories:
  • Ambulatory patient services (care you receive without being admitted to the hospital)
  • Emergency services (e.g., ambulance, first aid, rescue)
  • Hospitalization
  • Maternity and newborn care
  • Mental health care and substance use disorder treatment, including behavioral health treatment
  • Prescription drugs
  • Rehabilitative and habilitative services and devices (e.g., therapy sessions, wheelchairs, oxygen)
  • Lab work
  • Preventive and wellness services and chronic disease management (e.g., blood pressure screening and immunizations)
  • Pediatric services including dental and vision
The Actuarial Value (AV) is the percentage of the total average cost for covered benefits. The Qualified Health Plan (QHP) insurer pays an average for the cost of EHB:
  • Bronze 60% of AV
  • Silver 70% of AV
  • Gold 80% of AV
  • Platinum 90% of AV
Consumers who choose Gold or Platinum plans will pay higher premiums, but lower deductibles and copays.

Advanced Premium Tax Credit

The Affordable Care Act provides a new tax credit to help you afford health coverage purchased through the Marketplace. Advance payments of the tax credit can be used right away to lower your monthly premium costs.
Your application is based on your projected income for the year. If your income is higher than projected that year, a payment adjustment will be made through that year's taxes. If it is lower than projected there are additional Federal tax credits available. Premium Tax Credits are available for consumers whose income is up to 400% Federal Poverty Level (FPL).
Sample income qualifications:
1 person - $ 45,960
2 people - $ 62,040
4 People - $ 94,200

Cost Sharing Reduction

This is a discount that can lower the amount you have to pay out-of-pocket for deductibles, coinsurance, and copayments.
To qualify:
  • Have a household income less than 250% FPL
  • Receive tax credit
  • Enroll in silver level plan or higher
The Health Insurance Marketplace will determine if someone qualifies for a Premium Tax Credit or Cost Sharing Reduction when they apply.

Minimum Essential Coverage (MEC)

A person must have MEC through the Marketplace, job, or public coverage. If they do not have coverage, they will have to pay a fee, unless they qualify for an exemption.
The fee for not having health insurance in 2016 & 2017 is calculated two different ways – as a percentage of your household income and per person. You’ll pay whichever is higher.
  • Percentage of income
    • 2.5% of household income
    • Maximum: Total yearly premium for the national average price of a Bronze plan sold through the Marketplace
  • Per person
    • $695 per adult
    • $347.50 per child under 18
    • Maximum: $2,085
Beginning in 2014, consumers that had insurance less than a year will be required to pay monthly fees for the months they did not have insurance. They will be required to pay 1/12 of the annual fee for each month that they were not covered.
There are certain exemptions that can be made through the Internal Revenue Service (IRS) or Health and Human Services (HHS). Reasons for exemptions include:
  • Hardship, including lack of affordable coverage based on projected income
  • Lack of insurance for less than 3 consecutive months (short coverage gap)
  • Lack of affordable coverage based on income
  • Having income based below tax filing threshold
  • Unlawful presence in the United States
  • Membership in healthcare in the sharing ministry
  • Membership in a federally recognized tribe or eligibility for Indian Health Services (HIS)
  • Membership in recognized religious sect that objects to health care
  • Incarceration
To enroll in an insurance plan or file for exemption, apply:
Call 1-800-318-2596 to get the location closest to you.
The application process:
  • Consumer submits application
  • Marketplace *verifies consumer's personal information (see below)
  • Eligible consumer enrolls in QHP or public insurance

Verification process

Step 1: Applicant provides personal information
Step 2: Marketplace will verify the following information:
  • Social Security number
  • Citizenship or lawful presence in the United States
  • Incarceration status
  • Is the applicant an American Indian?
  • Monthly household income (for public plans)
  • Annual household income for eligibility of tax credits and cost sharing reductions
  • Access to other coverage
Step 3: The Marketplace has access to information from the IRS, Social Security Administration and (SSA) and Homeland Security. All information must match before the applicant is determined eligible. If personal information is found and verified, no additional information is needed. If the information is not consistent, the applicant must provide accurate information within the designated timeframe or request an extension. (*If you applied online you will receive this notice online.)
Step 4: Applicant has 90 days to provide additional documentation.
Step 5: When the verification process is complete, applicant moves to final determination or is referred to their State Medicaid or CHIP program.
Marketplace determines eligibility for:
  • QHP enrollment
  • Premium tax credit
  • Cost sharing reductions Public health coverage, if the marketplace determines the applicant is eligible, she will be referred to State Medicaid and/or CHIP for final determination.
Beginning in September of each year, consumers will be automatically reassessed for eligibility, which will be effective January 1 of the following year. The Marketplace will send a notice summarizing your eligibility for the coming year.
The Marketplace will let you know the effective date of coverage but premiums must be paid before coverage begins. You are required to report any change within 30 days from the date of that change.
Unless you are facing special circumstances, you can only sign up for insurance once a year through the Marketplace. Special circumstances include:
  • Moving to a new State
  • Change in household income
  • Change in family size due to changed marriage status, the birth of a child, or adoption
  • Loss of minimal essential coverage
  • Termination of job-based coverage
  • Enrollment error
  • Change in citizenship
  • Violation of a contract by a health plan
  • Gain or loss of eligibility for premium tax credits or cost sharing reductions, or change in level of cost sharing reduction
  • Change in status as an American Indian or Alaska Native
  • Occurrence of other exceptional circumstances
  • The need to purchase Consolidated Omnibus Budget Reconciliation Act (COBRA)
If you are applying for Medicaid or in some cases Medicare, you can apply at any time but for CHIP there may be open enrollment periods depending on individual State budgets.
Medicare and Medicaid use a system called Federal Data Services (HUB). The HUB is a single secure connection that verifies info between State and Federal systems. It is a database and does not store any information.

In-Person Assistance in the Health Insurance Marketplace

With all these eligibility requirements, assistance programs, levels of care, and options, navigating the insurance marketplace can be overwhelming. There are trained professionals available to serve you. Some consumer assistance roles have been established by federal or state agencies, while others work for insurance companies, or can be hired by individual consumers. Below, you will find information on Navigators, Non-navigators, Certified Application Counselors, Brokers, and Agents, all of whom can help you find and understand your best and most affordable health insurance option.

Navigators

The Affordable Care Act requires Marketplaces to establish a Navigator program to assist consumers in understanding new coverage options and find the most affordable coverage that meets their health care needs. There are two types of assistance:
Navigators, State and Federally funded, shall:
  • Provide education about QHP
  • Distribute fair and impartial information
  • Facilitate enrollment in QHP
  • Provide referrals to health insurance ombudsman or state agency for grievance
  • Provide information that is culturally and linguistically appropriate to the needs of the population
Non-Navigators, State Funded, shall:
  • Provide education for QHP
  • Distribute fair and impartial information
  • Facilitate enrollment in QHP
  • Provide referrals to health insurance ombudsman or state agency for grievance
  • Provide information that is culturally and linguistically appropriate to the needs of population
The primary differences between the standards for Navigator and Non-Navigator assistance programs and the standards for certified application counselors relate to conflict of interest standards, eligibility requirements and prerequisites, culturally and linguistically appropriate services (CLAS), and disability access standards.
For example, this rule, at 45 CFR 155.225(d)(4), requires certified application counselors ‘‘to act in the best interest of the applicants and enrollees assisted.’’ In contrast, 45 CFR 155.210(e)(2), which applies to Navigators in all Exchanges, requires them to ‘‘provide information and services in a fair, accurate and impartial manner.’’ This rule extends the same requirement to non-Navigator assistance programs in State Partnership Exchanges, and to non-Navigator assistance programs in State Exchanges funded by federal Exchange Establishment grant funds. Navigators and non-Navigator assistance programs must provide culturally and linguistically appropriate services, but certified application counselors are not required to comply with Certified Applications Counselors (CAC) Agent and Brokers.
A Certified Application Counselor will provide "information on insurance affordability programs and coverage options, (help) individuals complete an application or renewal, (gather) required documentation, (submit) applications and renewals to the agency, (interact) with the agency on the status of such applications and renewals, (assist) individuals with responding to any requests from the agency, and (manage the) case between the eligibility determination and regularly scheduled renewals.” Furthermore, CACs may be certified to do some or all of the permitted assistance activities.

Agents and Brokers

Brokers act on behalf of the consumer. The consumer can compensate them or the broker can receive compensation from an insurance company.
Agents are loyal to an insurance company and sell, solicit, or negotiate insurance on behalf of the insurer. An “independent agent” is affiliated with more than one company. A “captive agent” is an in-house agent that works for or on behalf of one insurance company.

Assistance Roles

For a comparison of the types of services provided see Comparison of Assistance Roles (PDF Document 8 KB).

What is included as an Essential Health Benefit (EHB)?

Dental Coverage?

Dental Coverage is not usually covered in the EHB, but offered as a stand-alone service that can be purchased separately from health insurance.
The Marketplace will only offer QHPs that include stand-alone dental plans that cover pediatric dental care. Each State has a benchmark plan that determines which services a QHP must cover as EHB. If a state’s benchmark plan lacks pediatric dental or vision coverage, it must be supplemented with the Federal Employee Dental and Vision Insurance Program (FEDVIP) or CHIP plan benefit if it exists.

Pediatric Services?

Pediatric Services are a category of EHB and may be offered in the Marketplace as a QHP or stand alone service. Pediatric services are required for kids 19 and under, but in certain circumstances states can choose to provide these services for older consumers.

Prescription Drug Coverage

Prescription Drug Coverage is an EHB category. For chronic health conditions that require regular medications, it is best to select the plan with the lowest possible prescription copay. Different QHPs will have different drug tiers. Make sure to look at the drug tiers in the plan to ensure you get the QHP that covers the prescriptions you need.

Presumptive Eligibility

Starting January 1, 2014, hospitals that accept Medicaid can begin making "presumptive eligibility" decisions by giving temporary Medicaid benefits to uninsured children, pregnant women, parents, and qualifying adults.
Temporary eligibility will be based on assessment of:
  • Gross family income
  • State Residency
  • Citizenship
  • Social Security number

Medicaid Benefits

States establish and administer their own Medicaid programs and determine the type, amount, duration, and scope of services within broad federal guidelines. States are required to cover certain "mandatory benefits," and can choose to provide other "optional benefits" through the State Plan in their Medicaid program.

Mandatory Medicaid benefits:

  • EPSDT (Early and Periodic Screening, Diagnostic, and Treatment for children)
  • Health Screenings for children
  • Inpatient Hospital
  • Outpatient Hospital
  • Nursing Facility
  • Home Health
  • Family Planning
  • Nurse Midwife
  • Certified Pediatrician and Family Nurse Practitioner
  • Freestanding Birth Center Services
  • Transportation to Medical Care
  • Tobacco Cessation for Pregnant Women

Optional Medicaid benefits:

  • Prescription Drugs
  • Clinic services
  • Physical and Occupational therapy
  • Speech, hearing, and language disorder services
  • Respiratory care services
  • Podiatry services
  • Optometry services (can include eyeglasses)
  • Dental Services (can include dentures)
  • Prosthetics
  • Chiropractic services
  • Other practitioner services
  • Private Duty Nursing
  • Personal Care
  • Hospice
  • Case Management
  • Long term care and home and community based services
  • Employer Shared Responsibility

SHOP

The Small Business Health Options Program (SHOP) Marketplace helps businesses provide health coverage to their employees. In many States at least 70% of employees of small businesses who are offered coverage must enroll in order to buy insurance through SHOP. People considered in this calculation are employees who buy their own individual insurance. Employees that have Medicaid, Medicare or Military are not considered in the calculation.
In SHOP, Businesses choose a QHP. They will set their percentage to contribute and how their employees pay their portion.

To qualify for SHOP, a business must:

  • Be located in a geographical area- usually a State
  • Offer health insurance to all employees who work 30 hours or more per week
  • Have at least 1 eligible employee on the company's payroll
  • Have fewer than 50 employees
  • Part-time employees can be counted toward eligibility, but seasonal employees (those working fewer than 120 days a year) cannot be counted.
  • 2 part-time employees count as 1 FTE (full-time employee)
  • Employers cannot discriminate, but can choose not to provide coverage for part-time employees.

Tax Credits for Small Businesses

Some small businesses participating in SHOP may be eligible for tax credits up to 50% of their contributions toward employees’ premium costs, and up to 35% for tax-exempt employees.

Qualifications

The business must have an average of fewer than 25 FTE’s (full-time employees) based on 40 hours a week, excluding business owners and family. They must pay an average of annual employee wages below $50,000, and pay the same percentage—at least 50% of the cost—for each employee.
Usually, the smaller the business, the higher the tax credit. Tax credits are highest for companies with fewer than 10 FTE’s who are paid an average of $25,000 or less.
Some business can’t afford high premiums because of the risk pool. The Marketplace makes employee insurance more affordable for small businesses because all small businesses are calculated together, making the risk pool smaller.
In many states, at least 70% of employees of small businesses who are offered coverage must enroll in order to buy insurance through SHOP.
There are many options and opportunities for healthcare insurance coverage. For more information on the Affordable Care Act check out the Health Insurance Marketplace (HealthCare.gov).

Resources

Information & Support

For Parents and Patients

Health Insurance Marketplace (HealthCare.gov)
Sometimes known as the health insurance exchange, the new Health Insurance Marketplace helps uninsured people find health coverage that meets their needs and budget. Part of the Affordable Care Act.

Authors

Author: Tina Persels - 7/2014
Reviewing Author: Gina Pola-Money - 7/2014
Content Last Updated: 7/2017