Happy November! We’ve successfully made it to Fall. This time of year means the changing of the leaves, pumpkin EVERYTHING, and for many of us, Open Enrollment for our benefits. Like me, many of your employer’s benefit plans begin on January 1st, which means that within a few short weeks, your employer will start to bombard you with emails, flyers, presentations, and fairs – all related to choosing your benefits for the upcoming year.
For some, this time is easy, perhaps you are still part of the group who can, thanks to President Obama, stay on your parents’ insurance until 26, or, you’re a dependent on your spouse’s or partner’s plan. For you, this time of year does not mean as much, although I encourage you to check out what your employer is offering. You may find that it’s a better option for you and your family. One of the things that I’ve found as both an in-house HR practitioner and as a consultant is that selecting your health insurance is a complicated and confusing process for many – even the smartest of us all. Therefore, over the next week, this blog will be devoted to Open Enrollment and to removing (hopefully) some of the intimidation from the process.
The first post in this series is related to health insurance and the Patient Protection and Affordable Care Act of 2010 AKA Obamacare.
If you read the paper or watch the news, you’ve heard of Obamacare. Obamacare, technically titled the Patient Protection and Affordable Care Act (ACA) is a law that was passed by President Obama in 2010. One of the main goals of the Affordable Care Act was to ensure that all citizens have access to quality, affordable health insurance coverage. In this political season, the ACA is something that we hear about almost daily, but I’ve found many people do not understand the law or how it relates to them. I hope this post will help to demystify the ACA and offer a better understanding.
5 Things you should know about the Affordable Care Act:
You may be thinking that affordability is relative. However, when it comes to health insurance, the ACA has defined it for us. Under the ACA, affordability is no more than 9.5% of your monthly salary. That is, your employer must offer you a plan in which your monthly contribution to the premium is not more than 9.5% of your monthly salary*. If your plan is not affordable, you may shop for a plan within the Marketplace, where if there no affordable plans, you may apply for an exemption.
*If your employer’s plan is not affordable, the company may be subject to IRS penalties.
2) The Marketplace
Typically, the term Marketplace would have a lovely connotation. I picture Etsy, with beautiful handmade jewelry, clothing, and other artistic flares. However, when referring to the Health Insurance Marketplace, it can seem a little intimidating – but it shouldn’t be. It is exactly how it sounds. A place where you can purchase the health insurance of your choice based on your and/or your family’s needs.
Why would you need to go to the marketplace if your employer offers benefits? There may be a few reasons 1) Your employer’s plan is not affordable (see definition above). 2) If you do not meet your employer’s eligibility 3) You are unemployed.
Some states have their own Health Insurance Marketplace, others, defer to the federal Marketplace. You can access your state or federal marketplace here.
3) Minimum Essential Coverage (MEC)
Minimum Essential Coverage is the coverage you will need in order not to receive a fee for lack of insurance. To be in compliance with the law you must maintain minimum essential coverage throughout the year, get an exemption, or pay a fee for each month you go without it (although you are allowed less than three months in a row each year without coverage, due to a coverage gap exemption). You’ll report minimum essential coverage on your Federal Income Taxes for each month you or a dependent had coverage.
4) No Cost Preventative Care
All health insurance plans must coverage certain preventative treatments at no cost. Therefore, procedures such as pap smears, annual physical, and mammograms are covered for free. This is an important part of the ACA to note. Many people choose their plans based on the co-pays, co-insurance, etc. However, if you’re a person who typically only uses insurance for annual check-ups, exams, and procedures, you may not have as many out-of-pocket costs as estimated.
5) The Law Holds Health Insurance Companies Accountable
To ensure premium dollars are spent primarily on health care, the law generally requires that at least 85% of all premium dollars collected by insurance companies for large employer plans are spent on health care services and health care quality improvement. For plans sold to individuals and small employers, at least 80% of the premium must be spent on benefits and quality improvement. If insurance companies do not meet these goals, because their administrative costs or profits are too high, they must provide rebates to consumers.
Did you receive a rebate from your health insurance provider last year? This could be why.
I hope this short list helped to take some of the mystery out of the Affordable Care Act. Of course these “5 things” are just a few highlights of the Affordable Care Act. If you’d like to read the law, you may do so here.
Next up in this series related to Open Enrollment: What’s a deductible, anyway?
More information related to the Affordable Care Act can be found at the Health and Human Services website. http://www.hhs.gov/healthcare/about-the-law/read-the-law/