The act is a federal law that aims to increase the affordability of insurance

Published in the Oct. 16, 2013 issue of Morgan Hill Life

By Dan Newquist

Web-Dan-Newquist-1The Affordable Care Act has arrived in a cloud of controversy. Good, bad or indifferent, there are some basics that we should understand.

The Patient Protection and Affordable Care Act is a federal law enacted in 2010 aimed to increase the overall quality and affordability of health insurance, lower the number of uninsured by expanding public and private insurance coverage, and reduce the costs of healthcare for individuals and the government.

The consumer protection provisions include 10 essential policy benefits, prohibits exclusion of coverage for pre-existing conditions, prohibits gender based premiums, eliminates most lifetime caps on benefits and allows dependents to remain on parent’s policy through age 26.

The policy benefits are the minimum mandated insurance benefits that all qualified insurance policies issued under ACA must provide. They include ambulatory patient services, emergency services, hospitalization, maternity and newborn care, prescription drugs, laboratory services, pediatric care, including oral and vision, rehabilitation and habilitative services and devices, preventive and wellness services and chronic disease management, and mental health and substance use disorder services, and behavioral health treatment.

The health insurance options available in 2014 will be provided from the following: employer-based group insurance plans, exchange-based individual insurance plans (Platinum, Gold, Silver and Bronze), grandfathered plans (issued before March 23, 2010), off-exchange individual insurance plans, Medi-Cal (expanded coverage), and Medicare and supplemental policies.

Starting in January, individuals must obtain health insurance or face a $95 penalty or 1 percent of modified adjusted gross income, whichever is greater. By 2016, penalties rise to the greater of $695 or 2.5 percent of MAGI.

In January 2015, businesses with 50 or more full-time equivalent employees must offer insurance or pay penalties.

One of the core objectives of the ACA is to make health care more affordable in general. There are a number of provisions to address costs, including creating exchanges for improved buying power of individuals or small businesses, requiring insurers to spend a minimum of 80 percent of premium dollars on claims (or refund excess premium), provide increased review of proposed premium increases by the state insurance agency, provide incentives for wellness programs, provide incentives for administrative efficiency and modernization and aims to reduce the ‘hidden tax’ of $1,000 per year.

The California Exchange can be accessed at www.coveredca.com.

Individuals who meet the income limits and purchase policies through the state or federal exchange are eligible to receive a tax credit. Tax credits are available to families with incomes between 100 percent and 400 percent of the federal poverty guideline. At 400 percent, families’ maximum premium is capped at 9.5 percent of income.

The California Exchange initial enrollment period began Oct. 1, 2013 and ends March 31, 2014 for policies starting on Jan. 1, 2014. After this first year, the annual enrollment period for individual policies in the exchange will be Oct. 15 to Dec. 7 with coverage beginning Jan. 1.

If you have insurance provided through your employer group plan now, no action is required unless your employer informs you of any changes upcoming with their plan.

If your policy is not grandfathered, your insurance company should notify you of your options to continue coverage under a new qualified policy after Oct. 1. You may also choose to shop in the Exchange or off-Exchange for replacement coverage. If you have Medicare or Medi-Cal now, no action is required. This is intended for educational purposes only.

DAN NEWQUIST, CFP®, AIF® is a Principal Investment Advisor Representative with RNP Advisory Services, Inc., and can be reached at (408) 779-0699 or [email protected]. Investment advisory services offered through RNP Advisory Services, Inc. – a registered investment advisor. Securities offered through Foothill Securities, Inc., member FINRA/SIPC, an unaffiliated company.