The Affordable Care Act (ACA) aims to make sure all Americans have health insurance coverage.
The federal governmentâ€™s health insurance marketplace, also called the â€śexchange,â€ť is the only place you can get lower-cost insurance based on your income.
Thereâ€™s a limited window of time to buy insurance every year, however. This is called the open enrollment period. Open enrollment begins November 1 and closes December 15.
Keep reading to learn about six of the most misunderstood aspects of the ACA.
#1: The cost of the penalty
The health insurance penalty, which ends in 2019, might be the ACAâ€™s most misunderstood element. From 2014 to 2018, people who can afford health insurance are required to buy it or pay a penalty fee.
For 2018, the fee rose to whichever of the following amounts is higher (without exceeding $2,085):
- 2.5 percent of your household income
- $695 per adult, and $347.50 per child plus cost of living allowance
You pay the fee when you file your taxes. There are no criminal penalties for not paying the fee, but it can be taken out of your tax refund.
In 2019, there will be no more penalty.
#2: Penalty eligibility
Thereâ€™s a lot of media coverage about the fee, but you might not have to pay it in 2018.
Thereâ€™s no penalty if:
- you go three consecutive months or less without insurance in any year
- you have income low enough that you cannot afford insurance, even with lower premiums or tax deductions
- your income is low enough that you arenâ€™t required to file a tax return
- you qualify for the expanded Medicaid program but canâ€™t take advantage of it because your state hasnâ€™t expanded their Medicaid program
2018 is the last year that the penalty applies.
#3: Effect on employer-based health insurance
You donâ€™t need to buy insurance if your employer provides an insurance plan that meets the ACAâ€™s minimum requirements.
If your employer doesnâ€™t provide the health insurance you require, you can apply for health insurance on the exchange. You wonâ€™t receive any tax credits or financial assistance if you drop your employer-provided health insurance and buy your own.
Itâ€™s a good idea to consider all the possible costs before switching from your employer-provided insurance.
#4: The cost
There are four areas of cost:
- premium, which is your monthly payment
- deductible, which is the amount you pay before your insurance covers costs
- copay, which is the amount you pay for each office visit or prescription medicine
- coinsurance, which is the percentage of each service your insurance pays
You have to be a smart shopper. Some plans offer lower premiums, but they usually have higher deductibles and sometimes higher copays.
On the other hand, plans with lower deductibles tend to have higher premiums.
#5: Who gets financial assistance?
Youâ€™ll find out if youâ€™re eligible for any of these cost-reducing options once you apply for health insurance through the exchange.
The federal government helps you pay for insurance through tax credits, reduced premiums, and cheaper plans.
You might be eligible for an advanced tax credit. The amount of this credit is based on your income. You can use this credit to pay for part or all of your insurance when you buy it. You donâ€™t have to wait until you file your taxes.
You may be eligible for lower-cost health insurance options or lower-cost premiums if your income is under certain levels. Individuals and families with lower income may also qualify for Medicaid.
#6: Can you be denied for a preexisting condition?
Before the ACA was passed in 2010, insurance companies could refuse to cover you if you had a health problem. Even if you could buy health insurance, it might not have covered treatments related to your preexisting illness.
With the ACA, this is generally no longer the case. However, thereâ€™s one exception.
If you already have a health insurance plan and choose to keep it rather than purchase a new plan on the exchange, your insurance company can continue to deny you coverage for a preexisting condition.
If you would like a preexisting condition covered, you should apply for and purchase coverage on the exchange.
What do you need to know?
You and your family need health insurance, but the ACA can be complicated. It may sometimes seem difficult to understand the rules and options.
Keep the following things in mind:
- Enroll during the open enrollment period for 2019, which ends December 15, 2018.
- Understand all the costs.
- Think twice before turning down your employerâ€™s plan. You wonâ€™t qualify for financial assistance if you do.