Health Insurance Legal FAQ
Below are three things to know about the legal requirement to have health insurance and how artists’ access to health insurance has expanded.*
1. There’s a legal requirement to have health insurance. As of January 1, 2014, Americans must have health insurance or pay an annual fine.
Who must have health insurance?
Most Americans will have to have health insurance or pay an annual fine, but there are some exempt from the requirement. You will not have to pay if you:
- Have a family income below the threshold requiring you to file a tax return.
- Would have to pay more than 8.13% of your family income for “adequate” health insurance, after taking into account any employer contributions or tax credits offered. Continue reading to learn more about what defines “adequate” health insurance.
- Are part of a religion that opposes the acceptance of benefits from a health insurance policy.
- Are an undocumented immigrant.
- Are incarcerated.
- Are a member of an Indian Tribe.
What health insurance must I have?
The government is using a new rating system to determine if your private health insurance plan provides “adequate” coverage to meet the requirement. Plans are rated Platinum, Gold, Silver or Bronze:
|Level of coverage||Plans typically pay this % of your covered healthcare costs*|
To have “adequate” health insurance coverage, you must either:
- Be enrolled in a public healthcare program (like Medicaid or Children’s Health Insurance Program)
- Have a Platinum, Gold, Silver or Bronze-level private health insurance plan (if you are 30 years of age or older)
- Have a catastrophic (high-deductible) private health insurance plan (if you are a young adult under 30 years old). In other words, young adults under 30 years old are allowed to satisfy the health insurance requirement with a plan rated lower than Platinum, Gold, Silver or Bronze.
As of 2014, all insurance plans sold to individuals and small employers are required to offer coverage for ten types of healthcare services; how much coverage will depend on your healthcare plan. For a full list of these required services, called “essential health benefits,” please click here. While you’re not required to have insurance coverage beyond these essential health benefits, your insurance plan may still cover other services (for example, public healthcare programs may include dental care for adults).
*The government rates plans Platinum, Gold, Silver or Bronze based on something called an “actuarial value.”This actuarial value is a combination of your deductible, co-payments, and co-insurance. So, a Silver plan with an actuarial value of 70% predicts that you’d pay 30% of your healthcare costs through a combination of your deductible, copays and coinsurance, and the insurance company is predicted to pay the remaining 70%. For more information on actuarial values, please click here.
What’s the annual fine for not having health insurance?
If you don’t document on your tax return that you had “adequate” health insurance, you’ll pay a fine back to the government. For 2016, the fine is $695 per adult and $347.50 per child or 2.5% of your family income (whichever is greater). The fine is pro-rated by the number of months without coverage, although you are allowed be without health insurance for one period of time, as long as it is less than three months is duration. Check out this infographic from Kaiser Health Reform for more info on the fines.
2. You have a new place to shop for health insurance. Each state has an online marketplace where individuals and small businesses can buy health insurance. For private health insurance, the deadline for coverage is the 15th of the month. For example, if you purchase insurance by March 15, coverage will start April 1. Open enrollment for private health insurance plans runs November 1, 2017 - January 31, 2018. Public health insurance plan enrollment is open year round.
Has eligibility for public health insurance expanded? Each state operates a Medicaid program that provides health coverage to lower-income people, families and children, the elderly and people with disabilities (in Minnesota, it’s called Medical Assistance). To learn more about your state’s Medicaid program, please visit http://www.medicaid.gov. All states do NOT have to expand their Medicaid program. However, part of the law includes funding for states that wish to expand their program to cover those who earn less than 138% of the “federal poverty level (FPL)” (approximately $15,500 for an individual and $32,000 for a family of four). Eligibility is simply based on income; there is no limit on assets. To find out more about your state’s decision to expand Medicaid, check out this map.
What’s a health insurance exchange?
Each state has its own health insurance exchange, whether it’s run independently or through healthcare.gov. Don’t be fooled by the word “exchange.” In realty, it’s just an online store where individuals, families and small businesses* can compare and purchase health insurance. Minnesota’s exchange is named MNsure . To locate your state’s exchange, click here. Besides private plans from insurers like Aetna, you’ll also be able to see if you qualify for, and enroll, in public healthcare programs like Medicaid and the Children’s Health Insurance Program (CHIP). Please note this this is NOT the place you’ll go to enroll in Medicare for adults aged 65 and older. Check out this video from the MNsure (Minnesota Health Insurance Exchange) to learn more.
If you’re uncomfortable using the online system or would like additional assistance, brokers, agents and other assisters are available to help enroll you in a plan that’s available on the exchange.
You must use your own state’s exchange. So, residents of Minnesota use MNsure (Minnesota’s exchange); residents of Wisconsin use the Wisconsin exchange.
*The definition of small businesses is based on state law. Minnesota defines small businesses as having 50 employees or less, whereas many other states define small businesses as 100 employees or less.
PLEASE NOTE: The exchange is sometimes compared to the travel booking websites Orbitz or Travelocity. You use travel booking sites like Orbitz to purchase a hotel room, but do not stay at an Orbitz brand hotel. Similarly, you use the health insurance exchange to purchase insurance, but the health insurance exchange is not your insurance provider. The health insurance exchange is just a middleman, or liason, between you and an insurance provider.
Do I have to purchase health insurance on the exchange?
Individuals, families and small businesses must purchase health insurance via the exchange in order to get tax credits or enroll in public healthcare programs like Medicaid. If you’re uncomfortable using the online system or would like additional assistance, you’ll still be able to get the tax credits you’re eligible for by having a broker, agent or other assister help enroll you in a plan that’s available on the exchange. Others not receiving tax credits or enrolling in public programs like Medicaid can still get insurance through:
- An employer
- An insurance plan purchased on your own (not via the exchange) that is at least at the Bronze level (ages 30+) or a high-deductible health insurance plan (for young adults under 30 years old)
- A grandfathered plan in existence before the health reform law was enacted
- TRICARE for military personnel and the veteran’s health program
3. You have new legal rights and may have access to tax credits. Insurance companies will no longer be able to deny you, limit your benefits or charge you more for premiums because of a pre-existing condition (your health status). Tax credits are available to help subsidize the cost of health insurance premiums.
Do employers have to offer health insurance?
As of January 1, 2016, employers that have 50 or more FTE (full-time employees), or an equivalent combination of full-time and part-time employees, will be penalized for failing to offer “adequate” coverage to their full-time employees. A FTE is defined as a person who works, on average, 30 hours a week or more. Insurance is deemed “inadequate” if the coverage:
- Is less than a Bronze-level plan for employees aged 30+
- Is less than a catastrophic (high-deductible) insurance plan for employees less than 30 years old
- Costs the employee more than 9.69% of their household's income for their own health insurance (for self-only coverage). This does not take into consideration how affordable spouse and dependent coverage is, and is a known glitch in the law.
The Obama administration released a statement that these “employers must also offer coverage to dependents under 26 years of age (who do not have insurance offered through their own employer).” However, as of now, coverage for dependents is not subject to the same standards, listed above, concerning “adequate” coverage. There is also no employer requirement to cover spouses. Please stay tuned for more information on this!
What tax credits am I eligible for?
For individuals and families: If your employer does not offer “adequate” health insurance (please see the previous question for definition of “adequate”), you may be eligible for a tax credit to purchase health insurance on the exchange. The tax credit is advanceable, so it can lower your premiums each month instead of at the end of the year when you claim it on your tax return.
The easiest way to determine your eligibility is to go to your state’s health insurance exchange, type in info about your income and household, and see what you qualify for.
Eligibility for a tax credit is based on your annual individual or household income and where it falls in relation to the government’s definition of the “federal poverty line (FPL).” You may be eligible for a tax credit if your income is between 100% and 400% of the FPL (in 2013, this was $11,490 – $45,960 for individuals; $23,550 – $94,200 for a family of four) and if you do not have access to other “adequate” coverage via an employer or public healthcare program (like Medicaid). To learn where your annual income falls on the FPL, check out this table from Families USA. Even though you meet income guidelines, it’s possible you may be denied a tax credit if you have access to group insurance through an employer, union, school, etc (this could access on your own or through a spouse or parent). For more on this rule, which is often referred to as the “family glitch,” please click here.
The tax credit works by covering any premium costs that exceed a certain percentage of your family income. While you do NOT have to purchase a Silver level plan to get the tax credit, this chart provides an example of how the tax credit works. For those purchasing the 2nd lowest cost SILVER-LEVEL PLAN (referred to as the “benchmark plan”):
|Your income as a percentage of the federal poverty level (FPL):||You may be eligible for a tax credit to cover 2nd lowest priced Silver-level premium costs that go beyond this percentage of your income:|
|100 – 133%||2.04%|
|133 – 150%||3.06 – 4.08%|
|150 – 200%||4.08 – 6.43%|
|200 – 250%||6.43 – 8.21%|
|250 – 300%||8.21 – 9.69%|
|300 – 400%||9.69%|
So how does the tax credit lower your premiums? You may either receive an advance on the tax credit (which lowers your premiums every month) or receive the whole tax credit, in the form of a rebate, when you file your taxes. If you choose to get an advancement on the credit, it’s based on your projected income; if you received an advance on the tax credit and your income was less than what was projected, you would get a rebate; if you got an advance on the credit and your income is more than what was projected, you must pay the difference back.
For small businesses: Small employers with less than 25 employees can get a tax credit if 1) they pay more than 50% of health insurance premiums for their employees and 2) if their employees have average wages of less than $50,000 a year. These credits are available at 35% (for non-profits) to 50%. Click here for more info and to claim the credit. Small businesses must get coverage through their state’s health insurance exchange to get the tax credit.
How much will I pay for health insurance on the exchange?
Insurers are able to charge premiums based on your age, family composition and if you use tobacco. As of 2014, insurers are NOT allowed to vary premiums based on pre-existing conditions, pregnancy, disability or gender. Your premium cost will still depend on the type of health insurance plan you qualify for, such as Medicaid or private health insurance, as well as your eligibility for tax credits. Just like today, you’ll also typically pay more for plans with lower deductibles that cover more of your healthcare costs.
The easiest way to know how much you’ll pay is to login to your state’s health insurance exchange, enter information about your household and income and see what options you have.
Once you have health insurance, the law prohibits dollar limits on your yearly and limetime spending for most healthcare services that are covered under your plan. For more information on lifetime and annual limits, please click here.
What else should I know about this law?
In March 2010, the government passed the Patient Protection and Affordable Care Act (PPACA), often referred to as the “Affordable Care Act” or “Obamacare.” One of the law’s many provisions is the individual health insurance requirement, but other parts of the law have already gone into effect. These include:
- Insurance providers must offer preventive healthcare free-of-charge, as recommended based on gender and age.
- Insurance providers can no longer deny health insurance (or limit benefits) for children under 19 because of pre-existing conditions.
- Dependents can stay on their guardian’s health insurance plan until age 26.
We strongly encourage you to learn more about the law via these resources:
Kaiser Family Foundation
MNsure (The Minnesota Health Insurance Marketplace/Exchange)
*Springboard for the Arts is not a provider, agent, advisor or consultant of healthcare or health insurance. By using this service, you understand and agree that the information contained herein is not intended nor implied to be, and you will not use it as, a substitute for professional legal, tax, insurance or healthcare advice. This webpage is an online information service provided solely as a non-partisan source of information. The information contained herein has been compiled thanks to Kaiser Family Foundation, healthcare.gov, the Journal of the American Medical Association, Families USA, The Advisory Board Company, The Artists Health Insurance Resource Center, The New York Times and the state of Minnesota.