Health Care Reform Beginning in 2014 - Articles

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Posted by: Barry Kolar on Dec 11, 2013

How will the new TBA Health Insurance Exchanges work?

The TBA Health Insurance Exchange went online December 10, 2014. A Health Insurance Exchange is a way for all people to shop for the most competitive prices on health insurance through one source.

What are my options going to be?

• Medicaid:

If you are at or below approximately $15,000 of annual income as an individual or $31,000 per year as a family of four, you will be eligible for Medicaid and you would not be required to pay a premium.

State or Federal Exchange (Public Exchange):

In Tennessee, you will have access to an Exchange administered by the Federal Exchange. Four different options, called “Metal Plans” (Bronze, Silver, Gold, and Platinum) will be offered through this Exchange. Subsidies will be available based on your age, your income, and your geographic location. Subsidies will not be available for singles that make over approximately $47,000 per year and for families that make over $94,000 per year. All plans offered through the Exchange require some premium to be paid by the applicant. All Metal Plans will be ACA compliant and will include coverage for pre-existing conditions, Essential Health Benefits (EHB), and will be Qualified Health Plans (QHP), which simply means you will not be required to pay a tax penalty if you have a Metal Plan.

• Private Exchange:

The private Exchanges work very much like the Public (State and Federal) Exchanges; however, they will offer more options outside of the “Metal” Plans. These plans will be required to have pre-existing condition coverage and Essential Health Benefits. They also must be QHP and Affordable Care Act compliant. These plans do not have any subsidies available, but could potentially provide lower cost options than the State and Federal “Metal” plans. The Private Exchanges may be a better option for individuals and families that do not qualify for any premium subsidies. These plans are also QHP and you will not have to pay a tax penalty if you purchase one.

• Non-Qualified Health Plans (NQHP's):

These plans are not major medical plans. They also are not ACA compliant and would require a tax penalty if you purchase one. However, the premiums could cost as much as 50% less and even more in some cases.

What is a Qualified Health Plan (QHP)?

A Qualified Health Plan is a plan that must include all ACA mandates, including coverage for pre-existing conditions and Essential Health Benefits (EHB). They additionally must contain both deductible and out of pocket maximums which are compliant with the Affordable Care Act (ACA). You are not subject to the tax penalty as long as you have a QHP compliant plan.

• What are Essential Health Benefits (EHB)?

Essential Health Benefits are certain amounts of coverage that must be included in any ACA qualified plan (QHP) and must contain maternity benefits, substance abuse, and mental health coverage. We may see additional coverage mandates from the Federal government and also additional mandates from different States.

What is the tax penalty for not having QHP (Qualified Health Plan) insurance?

The tax penalty for an individual not having health insurance is 1% of your income in 2014, 1.5% in 2015, 2% in 2016, and 2.5% of your income in 2017.

What determines whether or not I will receive a premium tax subsidy?

Several factors are taken into consideration including age, geographic area of the US, tobacco use, and income.

What figure do I use for my income to determine if I qualify for a subsidy?

Start with your gross income which includes wages, unemployment, pensions, Social Security, retirement accounts, capital gains, rental income, dividends, interest, and several other factors. You may then take some deductions like alimony, student loan interest, car or truck expenses, insurance, depreciation, employee wages, contract labor, repairs and maintenance, commission taxes and licensing. (Note: This list is not all inclusive and other provisions may apply.)

Will the tax subsidies be paid to me or the insurance company?

If you qualify for a premium tax subsidy, the amount the government pays will be paid directly to the insurance carrier you are enrolled with.

Will I be able to deduct the premium I have to pay?

If you are self-employed, you can deduct premiums from income for Federal and State tax (not FICA) each year on Page 1 of 1040. You may be able to use an IRS Section 105 Plan (HRA) if you have a spouse or at least one full-time employee. This will then enable you to take a Federal, State, and FICA deductions. If you are not self-employed, it does not appear you will be able to deduct premiums at this time and premiums must be paid with after tax dollars.

How do I go about applying for coverage?

You may visit th TBA Health Insurance Exchange website for information and rates for the Private (available now and rate lock until the end of 2014) and Non QHP plans (available now). Public plans are not yet available.

Many aspects of the Affordable Care Act (ACA) are still being determined at this time. The Department of Health and Human Services (HHS) continues to release updates on the ACA, sometimes on a daily basis. The TBA posts these updates on the website below. TBA members in 2014 will be able to access all four of the options that are listed above through the Tennessee Bar Association Member Services Health Insurance Exchange.

How can I avoid the Health Care Cliff and higher premiums?

Beginning now and lasting through December of this year (2013), TBA members can purchase a health insurance plan and lock in both the plan and the rate until the end December of 2014. In other words you can avoid these higher premiums and mandated plans by purchasing early and not having to worry about it for at least a year and in many cases well over a year. By locking your plan today, you could save thousands in 2014.

For more information on Health Care Reform, to lock in your plan and rate until the end of 2014, to see which option(s) might be best for you, to see if you qualify for any premium tax subsidies or for any additional questions, please visit the TBA Health Insurance Exchange website or call 866-907-2763.

Views expressed in this article are those of the JLBG and do not necessarily represent those of the TBA.

TBA Members Insurance Solutions has more resources to meet your professional liability, disability or life insurance needs. Learn more now or contact TBA Membership Director Kathy Prescott.