The Affordable Care Act has left a lot of Americans questioning how the program works and what the minimum coverage requirements are. Read our Frequently Asked Questions (FAQ) guide for a quick look at some of the answers to the most common questions on this program.  

Q1: What programs meet the Minimum Coverage Requirements?
A1: There are several plans that meet these requirements. They include:

  • Plans purchased through Federal or State Exchanges
  • Veteran benefits, employer plans, and public programs such as Medicare and Medicaid
  • Grandfathered plans through employers
  • Self-insured plans

Contact your insurance provider or your human resources department to find out if your program meets the Minimum Coverage Requirements.

Q2: What will determine the price of insurance through the exchanges?
A2: There are four factors that will be used to determine the cost of your health coverage: 

  • Age
  • Premium Rating Area
  • The number of family members covered
  • Tobacco use

Q3: Are there different insurance plans available?
A3: There are four levels of coverage (Platinum, Gold, Silver, and Bronze). Each level has a different
amount of insurance premium and out-of-pocket expense. However, there is a maximum out-of-pocket expense determined by your income with each program. There are also catastrophic plans available that would cover you after you have reached your calculated annual limit.

Q4: What are Essential Health Benefits?
A4: Essential Health Benefits are items that are required to be covered by all health care plans. They include:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services
  • Prescription drugs
  • Rehabilitative and habilitative services
  • Laboratory Services
  • Preventive Services
  • Wellness Services
  • Pediatric Services

Q5: What is the penalty for remaining uninsured?
A5: The penalties will increase each year.  Please go to the irs.gov for the penalties chart.        

Q6: Is there any method to avoid paying the penalty?
A6:  There are exemptions from the penalty. They include:

  • Exempt non-citizens (illegal aliens)
  • Incarcerated individuals
  • Members of recognized religious sects (must have opted out of Medicare and Social Security)
  • Members of recognized healthcare sharing ministries
  • Low income taxpayers (below filing threshold)
  • Members of Native American tribes
  • Individuals with a hardship exemption
  • Individuals who cannot obtain coverage

Q7: What qualifies me for a hardship exemption?
A7: If you meet one of these qualifications:  

 

  • You were homeless
  • You were evicted in the last six months or were facing eviction or foreclosure
  • You received a shut-off notice from a utility company
  • You recently experienced domestic violence
  • You experienced a fire, flood, or other natural disaster that caused substantial damage to your property
  • You filed bankruptcy in the last six months
  • You had medical expenses you could not pay in the last 24 months
  • You experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member
  • You expect to claim a child as a tax dependent who’s been denied coverage in Medicaid and CHIP, and another person is required by a court order to give medical support to the child. In this case, you do not have to pay the penalty for the child.
  • As a result of an eligibility appeals decision, you’re eligible for enrollment in a qualified health plan (QHP) through the Marketplace, lower costs on your monthly premiums, or cost-sharing reductions for a time period when you weren’t enrolled in a QHP through the Marketplace.
  • You were determined ineligible for Medicaid because your state didn’t expand eligibility for Medicaid under the Affordable Care Act

Q8: What is the premium tax credit?
A8: The premium tax credit is a refundable tax credit intended to help eligible individuals with paying health care premiums.  If families get their health insurance through the Marketplace, it is possible they qualify for the premium tax credit. They can take this credit now as an advance that is paid directly to the health insurance companies or later when they file their 2014 return.

Q9: How do I get the premium tax credit?
A9: When you apply for health coverage through the marketplace, based on your income and family composition, the marketplace will estimate how much you will get as in advance towards the premium tax credit.  Based on this estimate you can decide to take the advance and have it go towards your health insurance premium or you can choose to take the credit on your 2014 return.

Q10: Who is eligible for the premium tax credit?
A10: You are eligible for the premium tax credit if you meet all the following requirements:

 

  • Purchase coverage through the Marketplace
  • Have household income that falls through a certain range (see question 11)
  • Are not able to get affordable coverage through an affordable employers plan
  • Are not eligible for coverage through a government program, like Medicaid, Medicare, Chip or TRICARE
  • File a joint return if married
  • Cannot be claimed as a dependent by another person

Q11: What are the income limits for the premium tax credit?
A11: Individuals and families whose income is within 100% to 400% of the national poverty level may qualify.  If they meet the income requirements they must also meet all the requirements in question 10. The income thresholds for 2013 are:

  • $11,490 (100%) up to $45,960 (400%) for one individual.
  • $15,510 (100%) up to $62,040 (400%) for a family of two.
  • $23,550 (100%) up to $94,200 (400%) for a family of four.

Note: The income thresholds above are for residents of the 48 contiguous states and include Washington D.C. Health and Human Services (HHS) post federal poverty limits annually in three federal poverty guidelines, one for residents of 48 contiguous states and D.C., one for Hawaii residents, and one for Alaska residents.  You can find this information at HHS website.

Q12: Will I have to file a federal income tax return to get the premium tax credit?
A12: If you receive the advance on the premium credit or plan on claiming the credit you will need to file a tax return for that year.  You will need to reconcile your tax return with any advance premium credit payments made on your behalf.  This filing requirement remains whether or not you would have otherwise filed a tax return.  In order to get the premium tax credit if you’re married, you need to file jointly.

Q13: If I get insurance through the Marketplace how will I know what to report on my federal return?
A13: The Marketplace will send a statement of the amount of the premium credit advance by January 31st of the following year.

Q14: How is the amount of the premium tax credit calculated?
A14: The law bases the size of your premium credit on a sliding scale - the lower your income, the higher the advance payment.  On your tax return reconcile your actual credit against the amount of advance you received.  If the difference is that the credit is more than the advance, then you may be due a refund or you will owe fewer taxes to the IRS. If your advance is more than the actual credit, then you will owe back the difference.

If you have more questions on the Affordable Care Act, ask them in the comment section below. Or contact your business service provider, such as ATBS, and they can answer your questions on the Affordable Care Act and how it will affect you, your family, and your business. 

*Sources:  IRS: Questions and Answers on the Premium Tax Credit

Comments (5)

Brett Ohlen

Senior Tax Accountant, ATBS

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NOW I CAN SEE THROUGH THE FOG!! THANKS ALOT..

May 13, 2014 13:00:53 PM

This is the first good, clear information I have seen on this program! Thank you!

December 30, 2013 10:01:33 AM

This has helped. Any information is good information. There's still quite a bit of confusion out there.

December 26, 2013 13:40:35 PM

This has helped. Any information is good information. There's still quite a bit of confusion out there.

December 26, 2013 13:40:26 PM

This is good information. If you do not have insurance then this is important. Ignore the media messages and consider your family's security and act accordingly under this law. Good luck!

December 26, 2013 11:03:27 AM