Quick Answers to FAQs - Health Insurance Exchanges

What are Health Insurance Exchanges?

 The Health Insurance Exchanges (HIX) are State specific online marketplaces where individuals and small businesses (under 100 full time employees - larger firms can use the HIX starting in 2016) can shop for Federally regulated, subsidized health insurance using side-by-side price and benefit comparisons. Customers will also be able to access the exchanges using the phone, by mail or at certain locations in person.

 Who cannot use the HIX to buy insurance?

Persons who qualify for Medicaid, who have insurance through work, who are a large firm (over 100 full time employees), who are in the country illegally, or who are incarcerated, CANNOT use the exchanges to purchase health insurance (other limitations may apply).

When do the HIX start?

HIX open on October 1st, 2013 and continue enrollment until March 31, 2014.  Coverage does not begin until January 1, 2014.

Must uninsured individuals buy insurance through HIX?

No.  Uninsured individuals can buy insurance in the private market.  However, uninsured persons must be covered by at least basic health insurance plan (Bronze plans in the HIX) by January 1, 2014.  To buy the required level of insurance through the HIX, that insurance must be purchased during this open-enrollment period to obtain coverage in 2014 (a person with a life-changing event such as the loss of a job, death of a spouse or birth of a child, would be eligible for special enrollment within 60 days of the event).

What will happen to uninsured individuals who chose to NOT buy insurance at all?

Those individuals will pay a penalty.  The tax penalty for not having insurance is paid on their taxes at the end of the year (if their taxable income is below 133% of the FPL, they are exempt from this tax) and is the highest between a percentage or a set amount, as follows:

2014 = $95 per person per year or 1% of their Income

2015 = $325 per person per year or 2% of their Income

2016 = $695 per person per year or 2.5% of their Income

2017 = Tax Penalty will increase by the rate of inflation going forward, or 2.5% of their Income

In any event, the total penalty for the taxable year cannot exceed the national average of the annual premiums of a bronze-level plan offered through the HIX.

What kind of subsidy will uninsured individuals get for buying insurance on the HIX?

Those making over 400% of the federal poverty level (FPL) (individuals earning over $46,021 or families of 4 earning over $93,700) will NOT receive subsidies (tax credits or discounts).

Those making under 400% of the FPL (see above) will receive subsidies (tax credits or discounts) which are directly related to their gross adjusted income.  The subsidies will paid directly by the government to the carrier from whom insurance is bought.

Persons buying on the exchange will be required to enter information about their income, such that the price they are quoted on the exchange will reflect the subsidies.  Be prepared to provide:

• Last year’s tax information for them and their family

• Projected incomes for this year

• Medical history - the law does away with pre-existing conditions and gender discrimination so these factors will no longer affect the cost of insurance. Smoking, weight and age still all affect cost.

• Social Security Numbers (or document numbers for legal immigrants)

• Employer and income information for every member of your household who needs coverage (for example, from pay stubs or W-2 forms—Wage and Tax Statements)

• Policy numbers for any current health insurance plans covering members of the household.

• A completed Employer Coverage Tool for every job-based plan someone in the household is eligible for. (This form needs to be filled out even for coverage for which person is eligible even if they are not enrolled in it.)

• Any other important information that could affect your health insurance premium or coverage options. Better safe than sorry!

Here is an example of the health insurance exchange application form for individuals.

Here is an example of the health insurance exchange application form for families.

Are employers required to provide insurance privately or through the HIX by January 1, 2014?

Yes, but only if they employ more than 50 full time employees.  Failure to do so will trigger fines beginning in 2015.  However, only employers with less than 100 employees can shop on the HIX.  All other employers will have to comply with their obligation to provide insurance through the private market place.

Note that an employer's failure to provide required insurance does not excuse the individual from his obligation to seek insurance on his own.  Recall that individuals who don't get insurance through their work are required to get their own insurance at least at the Bronze level by January 1, 2014.