Rising
health care costs and lack of access to affordable health care for millions of
Americans have been a target of health care reform efforts for decades. The passage of the Affordable Care Act (ACA),
a.k.a. “Obamacare”, and the recent Supreme Court ruling that it is indeed
constitutional addressed the problem on a national level. Vermont’s own plans for its Green Mountain
Care universal health care system will not be implemented until 2017, so
compliance with the ACA required Vermont to take the interim step of
implementing a Healthcare Insurance Exchange by 2014. Vermont is one of several
states that decided to set up its own exchange instead of leaving it up to the
federal government. In this article I
will explain what the Exchange is and what the practical implications are for
Vermonters.
The ACA
requires that starting on January 1, 2014, all individuals must be covered by
health insurance, and businesses with 50 or more full-time equivalent employees
must offer health insurance coverage to their full-time employees. Federal tax credits are available both for
small businesses (less than 50 employees) and for individuals to meet these
requirements.
If a person
is not covered by an employer-sponsored plan or by a government-sponsored plan
like Medicare or Medicaid, he or she will have to purchase their insurance on
the open market or through the Exchange.
Only insurance purchased through the Exchange is eligible for federal
tax credits or subsidies. The Exchange
is a list of approved health insurance options that provide standardized health
care coverage at various levels of cost.
There are four benefit levels:
-
Bronze – 60% payment of covered medical expenses
- Silver – 70% payment
- Gold – 80% payment
- Platinum – 90% payment.
Annual
out-of-pocket payment of expenses cannot exceed $5,950 for individual coverage
and $11,900 for family coverage at all four benefit levels. Insurance premiums will vary by insurance
provider, amount of deductibles and co-pays, and benefit level.
Households
with income from 133% to 400% of the federal poverty level (FPL) will be
eligible for subsidized premiums.
Households with incomes less than 133% FPL will be covered by
Medicaid. The federal poverty level
(FPL) varies with household size: for an
individual it is an Adjusted Gross Income (AGI) of $11,496; for a household of
2, $15,516; for a household of 4, $23,556; and so on. 133% is 1.33 times those amounts and 400% is
4 times those amounts. So, a family of 4
with household income between $30,657 and $92,220 will be eligible for premium
assistance. The premium subsidy (paid directly to the insurance provider on
behalf of the buyer) will vary with income level and for 2014 will be based on
the 2012 tax return that is due on April 15th of this year. Adjustments for changes in a household’s
financial circumstances can be made on a monthly basis.
The penalty
for not carrying health insurance will be assessed on tax returns starting in
2014 and increasing each year through 2016.
For 2014 the penalty is the larger of 1% of household income or $95 per
individual household member without coverage up to a maximum of $285.
Vermont’s
implementation of the Health Insurance Exchange is called “Vermont Health
Connect”. Vermonters will be able to enroll in one of several plans offered
through the Exchange starting on October 1, 2013. More detailed information on Vermont Health
Connect can be found at http://hcr.vermont.gov/timeline/exchange.
