by Barbara Rassi
To many students, the Affordable Care Act (ACA) may be intimidating. That is why this post attempts to show that the ACA is not as daunting as it seems by providing a brief overview of what students should know about the ACA.
In an effort to expand health insurance coverage to more Americans, the ACA originally required all states to expand Medicaid coverage to anyone under 65 years old whose household income was less than or equal to 138% of the federal poverty level. The United States Supreme Court, however, in National Federal of Independent Business v. Sebelius, 132 S. Ct. 2566 (2012), held that it was unconstitutional to make this expansion mandatory. Thus, the expansion is now only optional. To date, only 31 states have expanded Medicaid. Florida is not one of them. This means that Floridians who do not currently qualify for Medicaid and are not otherwise insured may have to pay a penalty.
To avoid paying a penalty, individuals must have minimum essential coverage all year. This includes qualified health insurance purchased directly from a health insurance company and health insurance purchased through the federal Health Insurance Marketplace. Although some people have opted to pay the penalty in lieu of buying healthcare in the past, that may not be such a good idea anymore because the penalty has doubled each year. In 2014, the penalty was $95; in 2015, it more than tripled to $325; and in 2016, it will double to $695.
Despite not having minimum essential coverage during the entire year, a person may avoid paying the penalty if he or she qualifies for an exemption. Exemptions include not having coverage for less than three consecutive months during the year, being a resident of a state that did not expand Medicaid (e.g., Florida), and having a household income under 138% of the federal poverty level, among other exemptions.
Another aspect of the ACA that students may not know about is that they may qualify for subsidies to help pay for their health insurance. The premium subsidy subsidizes the monthly premium amount you pay. This subsidy is paid directly to the insurance company. In 2015, subsidies paid an average of 72% of premium costs for those who qualified for the subsidies. A person may qualify for this subsidy if he or she makes 400% or less of the federal poverty level. There is also a cost sharing subsidy that has the same requirements as the premium subsidy, but the cost sharing subsidy has yet to be appropriated by Congress.
The ACA also reformed health insurance in various ways. For one, it imposed minimum loss ratios, which requires that a minimum percentage of the premiums paid for health insurance must be used to pay for benefits for those who are insured. The ACA also allows people up to and including 26 years old to remain on their parents’ insurance policies. In addition to other reforms, the ACA also requires minimum essential coverage to include mental health parity. This means that mental health benefits must be the same as medical health coverage (i.e. if the plan provides for $55 coinsurance to see a medical doctor, the plan must also provide for $55 coinsurance to meet with a psychiatrist).
Moreover, the ACA standardized the insurance plans available on the exchanges into four standard plans. First, the bronze plan is expected to cover on average 60% of the healthcare costs of its enrollees per year, the silver plan covers about 70%, the gold plan covers about 80%, and the platinum plan covers about 90%. Open enrollment for these plans on the federal Health Insurance Marketplace ends on January 31, 2016.
Barbara Rassi is an Articles/Comments Editor at the FIU Law Review. Ms. Rassi can be reached at brass001@fiu.edu.