When key parts of the Affordable Care Act (new health care law) take effect in 2014, there will be a new way to buy health insurance: the Health Insurance Marketplace (the ‘Marketplace’). The Marketplace is designed to help individuals find health insurance that meets their needs and fits their budget. The Marketplace offers one-stop shopping to find and compare private health insurance options. In some cases individuals may be eligible for a new kind of tax credit that lowers their monthly premiums.
Open enrollment for health insurance coverage through the Health Insurance Marketplace begins October 2013 for coverage starting as early as January 1, 2014. Open enrollment closes March 31, 2014.
Some individuals may qualify to save money and lower their monthly health insurance premiums, but only if their employer does not offer coverage, or offers coverage that does not meet certain standards. These premium savings will depend on an individual’s household income.
Employer Health Coverage affects an individual’s eligibility for premium savings through the Marketplace; if an individual has eligible coverage from their employer that meets certain standards they are NOT generally eligible for a tax credit through the Marketplace. However in some cases an individual may be eligible for a tax credit that lowers their monthly premium, or a reduction in certain cost sharing if their employer does not offer coverage, or does not offer coverage that meets certain standards. If the cost of a plan from an employer that would cover the employee (not including coverage for other family members) is more than 9.5% of the employee’s household income for the year, or if the coverage the employer provides does not meet the ‘minimum value’ standard set by the Affordable Care Act, an individual may be eligible for a tax credit. An employer-sponsored health plan meets the ‘minimum value standard’ if the plan’s share of the total allowed benefit costs covered by the plan is no less than 60% of such costs.
If an individual purchases a health plan through the Marketplace instead of accepting health coverage offered by their employer, then the individual may lose the employer contribution (if any) to the employer offered coverage. Also this employer contribution as well as the employee contribution to the employer’s offered coverage is often excluded from income for purposes of Federal and State income taxes. All payments made by an individual for coverage through the Marketplace are made on an after tax basis.
Individuals can obtain help from the Marketplace to evaluate their coverage operations, including any eligibility for coverage through the Marketplace and its cost. For more information, including an online application for health insurance coverage and a Health Insurance Marketplace in your area, visit www.HealthCare.gov.