Open Enrollment is fast approaching for those who will buy their own health insurance for 2015 in order to comply with the Affordable Care Act (ACA), also known as Obamacare.
To have health insurance in 2015, those buying qualified individual or family health plans on their own must enroll during Open Enrollment, which runs from November 15, 2014 through February 15, 2015.
[Incidentally, next year Open Enrollment for 2016 will only run from October 7 through December 15, 2015.]
The ACA allows for many people who will buy their own health insurance to be eligible for financial assistance. This assistance, called a subsidy, lowers what you pay for your health care coverage. It is not a government handout but rather a kind of tax credit.
There are two kinds of subsidies: the Advanced Premium Tax Credit (APTC), which can be applied to your monthly premium or used as a credit when you file taxes, and Cost Sharing Reduction (CSR), which lowers your annual out-of-pocket health care costs.
What is an Advanced Premium Tax Credit?
The APTC is a tax credit that can help you afford coverage bought through the Marketplace, which is an exchange set up to showcase available health insurance plans. These tax credits can be applied to your monthly premiums. You can apply it to Bronze, Silver or Gold health insurance plans. If you qualify, you may choose how much advance credit payments to apply to your premiums each month, up to a maximum amount. If the amount of advance credit payments you get for the year is less than the tax credit you’re due, you’ll get the difference as a refundable credit when you file your federal income tax return.
What is Cost Sharing Reduction?
CSR is a discount that lowers the amount you have to pay from your own pocket for deductibles, coinsurance, and copayments. You can get this reduction if you get health insurance through the Marketplace, your income is below a certain level, and you choose a health plan from the Silver plan category (See Health Plan Categories at HealthCare.gov).
Some people will qualify for both the APTC and CSR, while others will only qualify for the APTC. If your income is 400% or above the Federal Poverty Level (FPL), you won’t qualify for either.
What is a Qualifed Health Plan (QHP)?
Plans offered on the Marketplace must be QHPs. That is, they must at least offer the following ten minimum essential benefits (and may offer additional coverage):
- Ambulatory patient services (outpatient care you get without being admitted to a hospital)
- Emergency services
- Hospitalization (such as surgery)
- Maternity and newborn care (care before and after your baby is born)
- Mental health and substance use disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
- Prescription drugs
- Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services
If you don’t qualify for a subsidy, you may purchase health insurance off the exchange, such as by calling an insurance company or agent directly. Just make sure the plan you purchase is a QHP; otherwise, you may not have the coverage you need, and you may have to pay a penalty. There are, however, many QHPs available off-exchange, including the plans that may be seen at the Marketplace, or on-exchange.
Find out if you qualify for assistance:
The Kaiser Family Foundation has a tool that illustrates health insurance premiums and subsidies for people purchasing insurance on their own in health insurance exchanges, also known as Marketplaces, created by the ACA. With this calculator, you can enter different income levels, ages, and family sizes to get an estimate of your eligibility for subsidies and how much you could spend on health insurance. As premiums and eligibility requirements may vary, contact your state’s Medicaid office or exchange with enrollment questions. The Marketplace determines eligibility.
Click here for the Kaiser Family Foundation Subsidy Calculator.