10 Things You Need to Know About the Affordable Care Act

Unless you are one of a very small percentage of Americans, the law applies to you. Here’s what you need to know.

With a few exceptions, legal residents of the U.S. must now maintain “minimum essential” health insurance or pay a penalty.

1. The “individual mandate” probably applies to you. Legal residents of the U.S. must maintain “minimum essential” health insurance or pay a penalty. The individual mandate applies to people of all ages, including children. The law allows exemptions for certain reasons, including short gaps in coverage (less than three months/year); if you cannot afford coverage; if you’re a member of a federally recognized tribe or recognized health care sharing ministry; if you belong to a recognized sect with religious objections to insurance, including Social Security and Medicare; and for hardships.
2. Some types of plans that cover health conditions do not count as “minimum essential” health insurance under the Affordable Care Act. Insurance plans that pay a set daily benefit (such as cancer or hospital indemnity plans) when you receive a diagnosis of an illness or become hospitalized do not count as acceptable health insurance under the Affordable Care Act. Neither do accident insurance plans. To qualify as acceptable coverage, a plan must cover “essential health benefits,” or items and services in these 10 categories: outpatient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.
3. Penalties will apply with your 2014 tax return. If you have a gap of three months or longer and no exemption (see Item #1) applies, you will have to pay a penalty. For 2014, the penalty will equal either 1 percent of your income, or $95 per adult and $47.50 per child, whichever is higher. In 2015, the penalty increases to $325 per adult and $162.50 per child (up to $975 for a family) or 2.0% of family income, whichever is higher.
4. You can only buy individual health coverage during open enrollment periods. The open enrollment period for coverage for 2014 ended on March 31. This means you cannot buy individual (non-employer) health coverage for the rest of 2014 unless you qualify for a special enrollment period. Special enrollment periods apply for people who experience a “qualifying life event” that affects their coverage needs. These include changes in family size (marriage, divorce, having/adopting a baby), moving to a new state or certain changes in income. Losing COBRA coverage also qualifies. You might also qualify if you faced a serious medical condition, natural disaster or domestic abuse that kept you from enrolling during the open enrollment period. Those who applied for coverage but failed to obtain it due to enrollment errors, system errors due to immigration status and certain other reasons might also qualify for special enrollment.

   The special enrollment period lasts 60 days from the “triggering event.” For example, if you lose coverage due to divorce, you must apply for new coverage within 60 days of the final divorce decree.

5. Bans on annual and lifetime limits apply only to “essential health benefits.” You might have heard that the Affordable Care Act prohibits insurers from putting annual and lifetime limits on what they spend for your health care. That’s partially true — the law prohibits plans from putting annual and lifetime limits on the essential health benefits listed in Item #2. However, they can put annual and lifetime limits on what they will spend on other covered benefits for you.
6. You should take advantage of your preventive services benefits. Plans opened after January 1, 2014 must cover certain preventive services, such as shots and screening tests, at no out-of-pocket cost to you. Although you’ll pay no copayment (per-visit charge) or coinsurance (percentage of covered services charge) when you access these services, your insurance premiums likely increased to cover the cost of these additional benefits. You’re paying for preventive benefits, so you might as well take advantage of them!
7. Using a network doctor can save you a lot of money. Although your plan might cover visits to healthcare providers who don’t belong to your plan’s network, you’ll usually have to pay a higher percentage of costs. Before scheduling a visit for a routine health matter, make sure the doctor, hospital, imaging center or clinic is in your plan’s network. You can find this information on your plan’s website, in your plan’s provider directory, or by calling the provider’s billing office. Office staff should be able to tell you if they accept your health plan.
8. Using formulary drugs can also save you money. Health plans and other plans that offer prescription drug benefits have formularies, or lists of prescription drugs covered by the plan. Many plans use tiered formularies, which means they offer higher reimbursements for some drugs, such as generics or drugs that have a strong record of effectiveness, to encourage plan members to use these drugs. Check your plan’s formulary to see whether any drugs you or covered family members regularly take are listed. If not, you can try to get your drug covered through an exceptions process. To do this, your doctor must explain to your insurer why you need this particular drug rather than alternatives listed on the formulary. Reasons can include effectiveness or side effects from alternative drugs.
9. The Affordable Care Act allows the use of Health Savings Account-based (HSA) plans.
   To open and contribute to an HSA, you must have health insurance coverage through a qualifying high- deductible health plan and no other health insurance coverage. Contributions you make to an HSA have triple tax advantages. You can contribute pre-tax dollars, reducing your current income tax liability. Your savings accumulate tax-free. And when you make withdrawals to pay for qualified health expenses, withdrawals do not count toward your taxable income.
10. The open enrollment period for coverage beginning on January 1, 2015 or later begins in November 2014.