The Patient Protection and Affordable Care Act (ACA) became effective in 2010, but some are still not sure what ACA means to them. There are hundreds of pages in this legislation, but here are the highlights:
- ACA requires most people to have health insurance. If you do not have a health insurance plan you may be charged a penalty at tax time (unless you qualify for an exemption).
- ACA requires health insurance plans to cover a specific list of 10 core healthcare services. These are called the minimum essential health benefits and they include preventive healthcare services at no cost to members.
- ACA ensures that no one can be denied health insurance because of a previous condition (either an illness or an injury). ACA also phased out the maximum lifetime limits that insurance companies used to set for their benefits.
- ACA required each state to make an online marketplace available for consumers to shop for health insurance. States could also use the Federal Health Insurance Marketplace (www.healthcare.gov) if they could not or would not develop their own marketplace.
- To make it easier to compare plans, ACA established four basic plans for the Federal Health Insurance Marketplace: Platinum, Gold, Silver and Bronze. In general, platinum health plans have the highest premium, but the out-of-pocket costs may be lower. As you would expect, the inverse is also true: the bronze plans have a lower premium point, but higher out-of-pocket costs (such as deductibles and copays).
- ACA provides for tax credits or subsidies for eligible people that purchase healthcare from their state or the Federal Health Insurance Marketplace.
Keep the following in mind when deciding where to purchase your health insurance plan:
- If you are eligible for an employer health plan (either through your parents’ plan or through your employer), and you choose to purchase healthcare on the state or Federal Health Insurance Marketplace, you are not eligible for tax credits or subsidies.
- If you are being claimed as a tax dependent on someone else’s tax return, you can purchase healthcare on the state or Federal Health Insurance Marketplace, but you are not eligible for tax credits or subsidies.
- The Federal government views these subsidies as income; you will be expected to pay tax on the subsidies you receive.
Source: United Health Care/Student Resources