Frequently Asked Questions about the Health Insurance Marketplace Q. 1 ‐ Where can I find information on the Health Insurance Marketplace? A. 1 ‐ Each state was given the option of establishing its own Marketplace (formerly referred to sometimes as an “Exchange”) for its residents. Many states, including Florida, elected not to set up their own Marketplace. For each state that doesn’t have its own Marketplace, the federal government is establishing what is referred to as the FFE – Federally Facilitated Exchange. Information on the plans offered on the FFE for Florida will be available no later than October 1, 2013, when the Marketplace begins accepting enrollment applications (for coverage that will generally begin on January 1, 2014). Further information on the Marketplace for each state can be found through the website https://www.healthcare.gov/, or by calling 1‐800‐318‐2596, 24 hours a day, 7 days a week. (TTY: 1‐855‐889‐4325). Q. 2 – What does “minimum value” health coverage mean? A. 2 ‐ In order to avoid paying a penalty under the Affordable Care Acts (ACA), employers must make available to full time employees “minimum value” coverage. This means that the plan must pay at least, on average, 60% of the costs of medical care. This may mean a higher percentage payment for some services and a lower percentage payment for other services, but overall, the plan is calculated to pay at least 60% of overall costs. Many employers offer coverage that is richer than the 60% coverage needed to provide minimum value. Your employer provides its full time employees minimum value coverage. Q. 3 ‐ What does “affordable” health coverage mean? A. 3 ‐ In order to avoid paying a penalty under the Affordable Care Acts (ACA), employers must make available to full time employees “affordable” coverage. Essentially, a full time employee’s monthly cost to purchase employee only coverage cannot exceed 9.5% of that employee’s monthly income. Safe Harbor guidelines have been published that employers may use to make sure they meet the affordability test. Your employer provides its full time employees health insurance coverage that is (intended to be) affordable pursuant to an affordability safe harbor. The affordability test for the employer is different than the affordability test for assessment of a tax penalty to an individual under the “Individual Mandate” – please see Question 8 for more information on the Individual Mandate. Q. 4 ‐ Are health insurance plans on the Marketplace similar to the health insurance I can get through my employer? A. 4 ‐ The plans offered on the Marketplace will cover many of the same medical care costs as you might get covered through your employer provided plan, but they will likely have a more limited list of providers (doctors, hospitals, laboratories, etc.) available. Additionally, not all insurance carriers (ex: Blue Cross, Aetna, Cigna, United Health Care, Avmed, Humana, etc.) are expected to be available in all areas. Another thing to consider is that premiums paid for an employer sponsored plan are deducted from your pay pre‐tax which means that you do not pay income or social security taxes on these premiums. This may result in substantial savings. For example, an employee who is in a 20% tax bracket and pays $500 per month, deducted on a pre‐tax basis through payroll, to purchase health insurance for their spouse effectively pays $361.75 for that coverage, when taking into consideration the corresponding tax savings ($500 less $38.25 FICA/Medicare tax savings at 7.65%, less $100 federal income tax savings at 20%). Q. 5 ‐ Can I buy health insurance for my family through the Marketplace and qualify for a premium tax credit or subsidy? A. 5 ‐ Generally, an employee offered “minimum essential, minimum value coverage” through their employer does not qualify for a premium tax credit for themselves and any other family members, eligible dependents, including children and spouses. Please note that individuals who receive a premium tax credit for months in which they were not qualified to receive a credit will be expected to pay back the erroneously received amount with the filing of their tax returns and may be subject to penalties. Part time and seasonal employees not eligible for the group health plan may qualify for premium tax credits and cost sharing reductions based on household income and number of dependents. Additional information may be found at https://www.healthcare.gov/, or call 1‐800‐318‐2596, 24 hours a day, 7 days a week. Q. 6 ‐ Can I still buy health insurance through the Marketplace if I am offered insurance through my employer’s group health plan? A. 6 ‐ The Marketplace is intended to be a place where Americans can shop for insurance. You can still buy insurance on the Marketplace even if your employer offers group health plan coverage but you and/or your dependents will probably not qualify for tax credits to help pay for that coverage. (Note that starting in 2014, the Summary of Benefits & Coverage you receive for your selected insurance plan will note on page 6, or on a cover letter, if the plan offers minimum essential coverage and minimum value coverage.) Additionally, should you elect not to participate in your employer’s group health plan, you would lose the tax advantage 1 | P a g e 16081655v.2
Frequently Asked Questions about the Health Insurance Marketplace of premiums being deducted from your pay on a pre‐tax basis, as well as any contribution your employer pays toward the cost of your health insurance coverage. Q. 7 ‐ Can my employer help answer questions regarding the Marketplace? A. 7 ‐ Your employer is not trained to answer questions about the Marketplace, but there are people who are being trained to help consumers. These include Navigators, Certified Application Counselors, and Application Assisters. These trained people will be reaching out into the community and you may see them at malls, at local events, or through advertisements. You can also call the Marketplace directly for assistance – the number is 1‐800‐318‐2596, 24 hours a day, 7 days a week. (TTY: 1‐855‐889‐4325). Q. 8 ‐ Why is having insurance for me and my dependents important in 2014? A. 8 ‐ Starting January 2014, all people are required to have minimum essential coverage for themselves and their dependents, or pay a penalty on their tax return for each uninsured person. This requirement has been referred to as The Individual Mandate. Employer provided group health coverage is considered minimum essential coverage, as is health coverage through Medicare, TRICARE, Medicaid, CHIP, and various other governmental programs. Individuals can also purchase separate individual health plans that offer minimum essential coverage, or be covered under their spouse’s or parent’s employer group health plan to avoid this penalty. Several groups are exempt from the requirement to obtain coverage or pay the penalty, including: people who would have to pay more than 8% of their income for health insurance, people with incomes below the threshold required for filing taxes (in 2012, $9,750 for a single person and $26,000 for a married couple with two children), those who would have qualified for Medicaid except their state did not expand the program, those who qualify for religious exemptions, members of Indian tribes, undocumented immigrants, and people who are incarcerated . The penalty for people who forego insurance is the greater of $695 per year (up to $2,085 for a family) or 2.5% of income (income is defined as total income in excess of tax filing thresholds). These penalties are phased in over time at $95 in 2014, $325 in 2015, and $695 beginning in 2016 (with annual increases after that) and 1% of income in 2014, 2% in 2015, and 2.5% starting in 2016. Q. 9 ‐ If I drop my group coverage offered through my employer during the Open Enrollment period so that I can purchase coverage through the Marketplace, then decide I do not want to purchase coverage individually or through the Marketplace; can I then re‐enroll in my employer’s group health plan? See response to Q.10. Q. 10 ‐ If I am a participant in my employer’s group health plan currently, and decide to purchase an individual health insurance plan through the Marketplace, will I be able to drop coverage under my employer’s group health plan during the plan year? A. 9 & 10 ‐ There are only specific instances in which an employee who has not elected coverage in the employer’s group health plan can join the plan during the plan year, or terminate their elected coverage during the plan year (at a time other than during the open enrollment period). These “qualifying events” (birth of a child, divorce, marriage for example) are outlined in your employee benefits highlights booklet. Accordingly, an employee who does not experience a qualifying event is generally not allowed to change their enrollment participation status in a group health plan during the plan year. In limited instances, your employer may permit an election change to enroll in exchange coverage or enroll in the employer’s group health plan to avoid the individual mandate. Please contact your employer to see whether this might apply to your coverage. This document entitled Frequently Asked Questions about the Health Insurance Marketplace is intended to provide the recipient supplemental information only. It is not intended to be legal, tax, or consulting advice, and should not be relied upon as such. Please contact your tax professional or call the federally managed group responsible for responding to inquiries about the Marketplace at 1‐800‐318‐2596, available 24 hours a day and 7 days per week. Additional information can also be found at www.healthcare.gov. 2 | P a g e 16081655v.2