In 2014, major pieces of health care reform take full effect. As a result, individuals and small business owners will want to understand the following terms:
Affordable Care Act
Affordable Care Act (abbreviated as ACA) is the administration's preferred name for the health care law. The actual title is the Patient Protection and Affordable Care Act, or PPACA.
The employer mandate refers to the new federal requirement, effective January 1, 2014, that companies with 50 or more full-time equivalent workers pay a tax penalty to the government if 1) the company does not offer coverage and/or 2) one or more of the company's employees obtain subsidized coverage through a health insurance exchange.
The individual mandate refers to the new federal requirement, effective January 1, 2014, that American citizens pay a tax penalty to the government if they fail to purchase health insurance through an employer, a government program or on the individual market. There are special exemptions for financial hardship and religious objections.
Essential Health Benefits
Essential health benefits represent 10 categories of benefits that health insurance plans must cover starting in 2014. They include office visits, emergency services, hospitalization, rehab care, mental health and substance abuse treatment, prescriptions, lab tests, prevention, maternal and newborn care, and pediatric care.
Health Insurance Exchange
A health insurance exchange is an online health insurance marketplace in each state where consumers can get private health insurance, subsidized by the government. Open enrollment starts October 1st, 2013 for coverage taking effect January 1, 2014.
New rules give states the option of extending coverage in Medicaid to most people with incomes under 133% of poverty.
The metal levels, bronze, silver, gold, and platinum, represent four levels of coverage available through exchange plans. Bronze plans feature the lowest monthly premiums, but cover only 60 percent of average costs. Platinum plans cover 90 percent of average costs.
A pre-existing condition is a condition or diagnosis which existed (or for which treatment was received) before coverage begins. Starting January 1, 2014, insurers will no longer be able to use pre-existing conditions to deny, restrict, or up-rate coverage.
For households with incomes up to 400% of the federal poverty level, PPACA provides tax subsidies that reduce premium costs. The premium tax subsidies will begin in 2014. Households with income between 100% and 400% of FPL who purchase coverage through a state (individual) health insurance exchange are eligible for a premium tax subsidy to reduce the cost of coverage.