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What do I need to know about health insurance?

Keep in mind...
  • With all of the recent legislative changes in health care requirements with the Affordable Care Act, you likely need to purchase health insurance to avoid paying a penalty when you file your taxes
  • If you need to sign up for health care, you will need to do so during an open enrollment period, which is between November 1, 2016, and January 31, 2017, unless you qualify for a special circumstance
  • The Affordable Care Act has placed restrictions on insurance companies so that they cannot discriminate against you if you have a pre-existing medical condition or based on your gender
  • Even though the Affordable Care Act created federal and state market exchanges from which certain health care plans can be purchased, you are still able to purchase a policy from a private provider
  • One crucial thing you need to look for with health insurance is the amount of your deductible so that you know what you will have to pay out of pocket before your coverage kicks in

You have probably heard of the Affordable Care Act (ACA), which is sometimes also referred to as ObamaCare, and that it now requires almost all Americans to purchase health insurance.

There are some exemptions from this requirement, but it is very likely that you will need to find a health insurance plan that makes the most sense for you and your family.

If you do not enroll in a health insurance plan, you will have to pay a penalty when you file your income taxes, unless there is a certain exemption that applies to you.

Enter your zip code above to start shopping for low-cost health insurance in your state!

The Requirement to Have a Health Insurance Plan

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The ACA mandates that all Americans have minimal essential coverage in order to avoid paying a penalty for every month that they go without any coverage. Whether you purchase a health care plan in the federal marketplace or through a private insurance company, you are likely getting at least the minimal essential coverage per the ACA requirements.

If you only have specific, limited coverage for a dental or medical plan, this likely does not count as minimum essential coverage. The same is true for a short term health care plan.

The current penalty for not having at least the minimal essential coverage in 2016 is

  • $695 for an adult
  • $347.50 for a child
  • $2,085 maximum per household

Alternatively, you could have to pay up to 2.5 percent of your annual household income. The amount you pay will be the greater of either of these two options. The penalty is intended to encourage as many Americans as possible to sign up for the required health care coverage.

You Do Not Have to Purchase a Health Insurance Plan Through the Federal Marketplace

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The ACA established a federal marketplace that allows consumers to shop for a health care plan with the minimal essential coverage. However, there are still other options for coverage from private insurance providers. You may also already have coverage through an employer-sponsored plan.

If you do not have health insurance through your work, then you can compare rates from many different providers by shopping around online for health insurance plans.

The major difference between working with an exchange navigator for the federal marketplace for health insurance and a private licensed agent is that an exchange navigator is only able to help you understand the difference between various government plans.

A private licensed agent can answer your questions about private plans outside of the federal marketplace for health insurance.

How Your Deductible Works for Health Insurance

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Your deductible is the amount that you are responsible for paying out of your own pocket when you have a medical expense. Each plan that you consider will have a specific deductible.

There is a maximum limit on your deductible per the ACA of $7,150 for individual plans and $14,300 for family plans. If your deductible exceeds that amount, then you will be able to get a subsidy.

Keep in mind that if you have an HSA, then the maximum deductibles are calculated differently. For an individual HSA, the minimum deductible is $1,300, and the maximum is $6,550. For a family HSA, the minimum deductible is $2,600, and the maximum is $13,100.

Remember that a deductible is different than a co-pay. Your co-pay is a set amount that you pay for specific medical services, such as a doctor’s visit. After you pay the amount of your co-pay, your health insurance coverage will take care of the remaining cost for that service.

Cost-sharing is another element of your health insurance plan that you will need to understand. If your plan has cost-sharing or coinsurance, this means that you would be responsible for some percentage of medical costs after your deductible has been met.

For example, once your deductible has been reached, you could be responsible for paying 20 percent of medical bills thereafter. While insurance companies are permitted to charge this, you are not responsible for paying any more than the out-of-pocket maximum amount, according to the ACA.

After you have reached this maximum out-of-pocket amount, the health insurance provider is responsible for paying all other medical related expenses during that calendar year.

Understanding the Medical Costs that are Covered by Qualified Health Plans

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According to the ACA, every health insurance plan must cover 10 essential benefits for subscribers, including:

  • Laboratory services
  • Emergency services
  • Prescription drugs
  • Mental health and substance use disorders
  • Maternity and infant care
  • Pediatric services, including dental and vision
  • Rehabilitative and habilitative services and devices
  • Ambulatory patient services
  • Preventative wellness services and chronic disease management
  • Hospitalization

Controlling the Cost of Your Premium for Health Insurance

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The ACA provides premium tax credits or subsidies to control how much you have to spend on health care coverage. The maximum amount that you are required to pay for your health care premium depends on your annual income mostly.

It is also based on the benchmark plan, which is considered the second-least expensive health care plan that is available in your state.

If your annual income is more than three times the federal poverty line, then you will not have to pay more than 9.5 percent of your monthly income for your health insurance. If your premium payment would exceed that amount, then the federal government will provide you a subsidy to be able to pay for the rest of the benchmark plan in your area.

Make Sure that You Enroll in the Open Enrollment Period

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In order to avoid paying a penalty for not having the required health insurance, you need to make sure that you enroll in a plan during the open enrollment period. This year, the open enrollment period goes from November 1, 2016, through January 31, 2017.

You may still be able to enroll in a health insurance plan even if the open enrollment period is not in effect. There are certain qualifying life events that would entitle you to enroll outside of this period. If one of these exceptions applies to you, then you have a 60-day window in which to make sure that you are enrolled in an appropriate plan. A qualifying life event would include:

  • Loss of health coverage because of a change in status with you or a dependent
  • A change in your family situation, such as marriage, divorce, childbirth or death
  • If you become a U.S. citizen
  • A government error that results in loss of coverage
  • If you become eligible for a government subsidy that you did not previously qualify for
  • If you move and are now in a new coverage area

The Bottom Line on What You Need to Know About Health Insurance

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Health insurance is now a requirement for almost every American since the ACA was passed. If you fail to get at least the minimal essential coverage, you will end up paying a significant penalty when you go to file your annual income taxes.

In order to avoid this, there are plenty of options available from private health insurance providers that meet the minimal essential coverage requirements and allow you the flexibility to choose the coverage that works best for you.

You will need to sign up for coverage during the open enrollment period, which typically runs from November to January each year. If you do not enroll during this period, you may be able to sign up for coverage at another point of the year if you qualify for a special circumstance exception.

Start comparing health insurance costs in your state now so you’ve got the best coverage possible come the next enrollment period. Enter your zip below to get started!

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