One of the big selling points of Obamacare was that if you liked your current insurance plan you could keep it, even if it didn’t comply with the new mandates under the Affordable Care Act. As the law set new requirements for coverage and how insurance companies can treat and cover their enrollees, many plans changed, or were eliminated altogether.
At the time the law was enacted, anyone who was enrolled in a plan that didn’t meet the new requirements could keep it until 2015, at which point they would have to find new coverage. Changes implemented by the Department of Health and Human Services have dictated that plans that haven’t been “grandfathered” in or don’t meet the requirements may now still be sold to the general public through October 2016.
That means those plans would still be good up until October 2017. After that time, all health insurance policies will, by law, meet the requirements set by Obamacare.
In order to meet the requirements under Obamacare, every health insurance plan must meet certain minimum essential coverage limits. If you don’t maintain these minimums, then you are subject to penalties or you must obtain an exemption from carrying coverage to avoid paying a fee for every month that you are without a qualified plan. You may not be uninsured for more than three consecutive months per year.
The good news is that most any coverage that you obtain during open enrollment periods qualifies under the minimum essential coverage mandates. Some plans that you obtain during any qualifying events in which you are permitted to sign up outside of an open enrollment period will also be compliant.
Types of Minimum Essential Coverage Plans
To avoid paying any fees or penalties, you will need to maintain minimum essential coverage for the duration of the year. Most private insurance plans along with any plans issued through the Government or through an employer easily meet the minimum mandates.
Basically, any plans purchased from a major insurance provider either on or off the insurance marketplace, obtained via a public program, provided by an employer, or grandfathered plans that were granted an exemption through 2014 (and now extended to 2017) fall under the guidelines.
Here are the plans that are eligible under those regulations:
- Any coverage that has been purchased on the Health Insurance Marketplace by an individual
- Coverage provided by an employer, which also includes COBRA and coverage provided to retirees
- Medicare Part A and Medicare Advantage
- Most forms of Medicaid
- Children’s Health Insurance Program (CHIP) coverage
- Health plans offered by the Veterans Administration (VA)
- Coverage given to members of the Peace Corps
- Medical assistance given to refugees under the Administration for Children and Families
- Coverage provided by the Non-Appropriated Fund Health Benefit Program
- Coverage obtained by college students through their universities with a limit of commencement on or before December 31, 2014
- Plans provided through TRICARE
In contrast, there are a number of plans that do not qualify under the mandates set forth under the Affordable Care Act as they do not provide sufficient coverage. Keeping one of these types of plans could put you at risk of having to pay the fee for being uninsured. These include:
- Vision or Dental coverage only
- Plans that only cover a certain condition
- Discount medical service plans
- Workers compensation.
If you are carrying one of these types of plans exclusively, you need to find another insurance plan that provides minimum essential coverage.
Reasons Your Current Plan May Not Comply
The Affordable Care Act brings with it many rules and regulations that have been designed to make healthcare affordable and manageable for everyone. It also puts in place certain laws that prevent the insurance companies from denying coverage and charging exorbitant premiums. To meet these many requirements, most plans that were purchased prior to the Affordable Care Act being enacted into law do not meet the standards for which the law was created.
There are a number of reasons your current plan may be insufficient. Your insurance coverage must meet these essential Obamacare requirements:
- Insurers are not allowed to deny coverage or treatment or drop an individual due to pre-existing conditions
- Essential health benefits no longer have annual or lifetime limits
- Insurance companies may not drop you for any reasons other than fraudulent claims and those who are dropped are given an opportunity to appeal
- Providers may no longer charge higher premiums based on gender so women don’t pay more than men anymore
- Medical expenses are now capped so that individuals aren’t financially ruined by costs for care
- Preventive care and wellness visits are now provided free of charge.
Wait a minute, as mentioned before, one of the promises that came with the Affordable Care Act at the time of its enactment was the promise that “if you like your plan, you can keep it”. In reality, that didn’t exactly work out since insurance companies offered many plans before Obamacare was implemented that don’t rise to the standards that have been set forth under the new laws.
So if you like your plan, and it meets the requirements of the Affordable Care Act, then you can keep it. Otherwise, you will need to get new coverage.
If You Don’t Have Coverage
Those who don’t comply with the new mandates for carrying minimum essential coverage are subject to penalties. How much you will be expected to pay as a result can vary, but the reasons for having to pay that fine, known as the “individual shared responsibility payment”, are rather straightforward.
Any individual who is able to buy health insurance coverage and chooses not to must pay a fee for each month that individual, their spouse, and/or dependents do not maintain proper minimum coverage. The fee is paid at the time a federal tax return is filed for the year that coverage was not maintained. Those individuals who have an exemption from the insurance requirement do not have to pay the penalty.
For those who have to pay the fee, how much you owe is determined by two ways: You either pay 2.5% of your annual household income or the total yearly premium of a Bronze level health plan OR there are certain penalty amounts in place per person. Whichever amount is deemed the higher of these two penalty assessments is the one you’ll be expected to pay.