The Affordable Care Act (ACA) introduced new changes that greatly benefit individuals and individual health insurance. There are four key things all small business owners and their employees need to know about how the ACA impacts individuals and families.
Tip: This article is an excerpt from our new eBook “Affordable Care Act 101.” Download the free guide here.
1. There Is An Individual Shared Responsibility Fee for Not Being Covered
If you do not have health insurance coverage you will likely pay a penalty at tax-time, called the Individual Shared Responsibility Fee. The ACA rule started in 2014. Coverage can include employer-sponsored health insurance, individual health insurance, or insurance through a government program such as Medicaid or Medicare.
The penalty for not having “minimum essential coverage” is either a flat fee or a percentage of household income, whichever is greater. The penalty increases over the first three years.
2. There Are Health Insurance Marketplaces
There are new options for purchasing health insurance through the Health Insurance Marketplaces. The Health Insurance Marketplaces are websites where you can shop, compare, and enroll in an individual health insurance plan.
Each state has a Marketplace that is either run by the state (ex: CoveredCA.com), or the federal government (HealthCare.gov). The Marketplaces are intended to make shopping for health insurance easier and give you access to the premium tax credits. Look up your state’s website here.
In addition to purchasing health insurance through the Marketplace, you can also buy health insurance from a licensed health insurance agent or broker or directly from an insurance company. But remember, to access the health insurance discounts (premium tax credits), you need to purchase a plan offered on your state's Health Insurance Marketplace.
3. There Are Discounts Called Premium Tax Credits
Most employees are eligible for significant discounts on health insurance, called premium tax credits. In addition, Medicaid eligibility has expanded in many states. You are eligible for a premium tax credit if you meet certain income requirements and do not have access to affordable health insurance through an employer or government program such as Medicaid or Medicare.
The discounts help many people buy more affordable individual or family health insurance coverage through the new state Health Insurance Marketplaces. The health insurance tax credits are "advanced-payable" meaning they can be applied toward your premium when you purchase health insurance coverage.
4. Individual Health Insurance Has New Advantages
While individual health insurance plans are not new, the ACA creates new advantages that make individual health insurance just as good – if not better – than traditional group health insurance. The new advantages are:
Coverage for a pre-existing condition (you cannot be denied coverage or charged more because of a medical condition).
Coverage of essential health benefits (a core set of health benefits and services).
You may keep your policy when you switch jobs.
You can choose the policy that best fits your needs, including the network of providers and level of coverage.
Individual health insurance costs less, and you may be eligible for a premium tax credit to assist you with the cost of your monthly health insurance premiums.
For more on the advantages of individual health insurance, see this quick reference guide.
These ACA changes make individual health insurance a better and more affordable way to insure yourself, your family, and your employees.