The Affordable Care Act, officially called the Patient Protection and Affordable Care Act, PPACA or ACA (and informally, Obamacare), has been around in full force for the past several years. Despite this there is still considerable misunderstanding about it. In this brief article I seek to clarify the major points.
Perhaps the biggest point of confusion is the very nature of the Affordable Care Act. Simply put, it is legislation which seeks to give otherwise uninsured people an opportunity to get quality health coverage at an affordable rate. The law sets a minimum standard for health insurance plans, in order to protect people from being under-insured or uninsured.
It is not government health insurance. All the plans offered in New Jersey for 2017 come from two major private carriers: AmeriHealth New Jersey and Horizon Blue Cross Blue Shield of New Jersey. There are a variety of plans designed to fit a variety of budgets. The plans offered cover single people, couples and families.
In addition to making individual plans available to people who otherwise do not have access, people in New Jersey may qualify for NJ FamilyCare. NJ FamilyCare is New Jersey's publicly funded health insurance program, which includes Children’s Health Insurance Program (CHIP), Medicaid and Medicaid Expansion. CHIP is designed to provide health insurance for children of families who do not qualify for Medicaid. Medicaid and Medicaid Expansion provide health insurance for families and individuals who have low incomes. Qualifying for CHIP, Medicaid and Medicaid Expansion does not require a person to take this insurance.
There are two ways that the ACA seeks to make individual health insurance more affordable. One is a premium tax credit (PTC) and the other is cost-sharing reductions (CSR). A premium tax credit is money made available to an insured person or family to reduce the premium of the health insurance plan. Qualification for a premium tax credit and the amount of it is based on reported income. The insured may take all, some or none of the premium tax credit to use for payment of the premium. Reconciliation is made when a person files a tax return. If a person did not take the full amount offered, it can be used to pay anything owed to the IRS or included in a tax refund.
If a person qualifies for cost-sharing reductions, the co-payments, percentages (called “coinsurance”) and/or deductibles for a plan are reduced, sometimes considerably. The means that the costs associated with the plan are lower than what the plan states.
The way to get individual health insurance and to qualify for NJ FamilyCare, a premium tax credit or cost-sharing reductions is through the Marketplace. A person does not have to use the Marketplace, but cannot qualify for NJ FamilyCare, a premium tax credit or cost-sharing reduction outside of the Marketplace. The Marketplace is also where a person can change or renew plans during the Open Enrollment Period and update their record anytime. Plans generally do not have to be renewed annually, but it is best to check with the insurance company.
Applying for health insurance primarily takes place during the Open Enrollment Period. This period runs from November 1, 2016, to January 31, 2017, for the 2017 insurance period. All applications for plans to start January 1 must be submitted through the Marketplace by December 15. After January 31 the Open Enrollment Period is closed. However, people can also sign up for health insurance at other times, if they qualify for a special enrollment. Special enrollment generally involves a life-changing event, such as marriage, birth of child or loss of other insurance.
It is important to know that people who qualify for other health insurance, e.g., a group health plan or Medicare, are not eligible for an individual health plan under the ACA. Plans offered under COBRA are an exception, especially if it can be shown that the payments for a COBRA-based plan are higher than a plan through the Marketplace.
As I promised at the beginning I have covered a main points of individual health insurance offered under the ACA. There is a lot involved. I recommend people who are seeking individual health insurance to get guidance. The principal source for guidance is healthcare.gov, which is also the access point to the Marketplace for people in New Jersey.
Scott Bennett is a licensed agent who focuses entirely on individual health coverage, both for people who are not in Medicare and those in Medicare. He is also an active layperson at the Church of the Saviour, Denville, and in the Diocese of Newark, especially in the Senior Ministries.
