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Obamacare Rollout: Have You Tried the Exchanges?

Health and Human Services Secretary Kathleen Sebelius sits on a panel to answer questions about the Affordable Care Act enrollment, Friday, Oct. 25, 2013, in San Antonio. (AP Photo/Eric Gay)

Barely a month old, the Affordable Care Act has had a rocky start, to put it mildly.

Confusion, technical glitches and slow wait times have hampered consumers’ ability to enroll in plans. Contractors who worked on the government’s insurance marketplace testified before a U.S. House of Representatives oversight committee last week that the site was launched without sufficient system-wide testing. And this past weekend a data center supporting HealthCare.gov had an outage, which meant people trying to sign up couldn’t complete the process. As of Monday, the issues were resolved.

Secretary of Health and Human Services Kathleen Sebelius is set to testify before Congress on Wednesday and will acknowledge the difficulties so many consumers have experienced in signing up.  She will also ensure her team has been working to meet demand and address the existing sign-up issues, according to her prepared statement.

Adding yet more fuel to critics’ calls to push off implementation of the ACA, NBC News reported on Tuesday that, despite President Obama’s assurances in 2009 that Americans would be able to keep their health plans if they liked them, the administration knew many consumers would have their plans cancelled because their existing policies don't meet the standards mandated by the new law.

While the government works to improve HealthCare.gov and deal with the political fallout from its messy launch, we’re continuing to answer readers’ questions about the law and the exchanges, and we want to hear from you.

Have you tried shopping for a health plan on your state’s marketplace or HealthCare.gov? Tell us about your experience: Did you encounter technical problems? Were you successful in purchasing a plan? How do the costs compare? Email us at obamacarequestion@yahoo.com and check out our answers to readers’ questions below.

Q: Is turning 26 in 2014 and losing parental coverage considered a “qualifying life event” for plan enrollment later?

A: Once you lose eligibility as a dependent, you will qualify for a special enrollment opportunity, according to the Kaiser Family Foundation. You’ll then be able to apply for coverage and assistance through the marketplace, even though it will be outside of a regular open enrollment period.

Q: I retired January of this year. Currently receiving railroad retirement and a small annuity from my former employer; additionally I withdrew some funds from my 401k — are these considered part of MAGI?

A: Retirement income sources are generally counted as MAGI. Sometimes a portion of pension benefits or 401(k) distributions are not taxable (if some of the person’s retirement contributions while they worked were made with after-tax dollars), says Karen Pollitz, a senior fellow at the Kaiser Family Foundation, a health policy nonprofit. “The retirement plan should indicate which portion, if any, of the distributions were non-taxable when they send the 1099. Otherwise, it counts,” she says.

Q: My income is 120% of the federal poverty line. Can I choose to buy insurance on the exchange or do I have to go on Medicaid?

If you live in a state that expanded Medicaid, you should pick Medicaid, Pollitz says. You wouldn’t be eligible for subsidies through the exchange if you’re eligible for Medicaid, she says. But if your state hasn’t expanded Medicaid, you should enroll via your state’s exchange; you would be eligible for “extensive premium and cost-sharing subsidies,” she says. Click here to see if your state expanded Medicaid.

Q: I have employer-provided health insurance. My husband does not have insurance, [it’s] too expensive through my employer. Will my income be considered when he enrolls for coverage?  And even though pre-existing conditions are covered, does the coverage begin immediately or will the insured have to wait one year to get the pre-existing conditions covered?

A: If your household income is less than 400% of the federal poverty level, or FPL, (about $62,000 a year for a family of two), and if your employer prohibits you from enrolling dependents in the plan, your husband may qualify for subsidies. If your household income is greater than 400% of the poverty level, “you’re out of luck – it’s total household income that counts, not your husband’s personal income,” says Carrie McLean, director of customer service at eHealth, an insurance shopping site.

If your employer’s plan is open to dependents but the amount of money you contribute to your own coverage under your employer’s plan is less than 9.5% of your income, then the employer plan is considered “affordable” under the law, and your husband would not be eligible for subsidies, even if your income was under 400% of the poverty level. Even if the amount you would have to contribute toward your combined coverage under the employer plan is greater than 9.5% of your income, he won’t qualify for subsidies. This is a known glitch in the law but it’s not known when or if it will be addressed legislatively, says McLean.

To answer your other question: Coverage of pre-existing conditions can start right away for new plans in 2014. Please note that, for individually purchased plans with coverage starting before January 1, 2014, you may still be declined due to a pre-existing medical condition.

Q: I have a question about how to define household income for Obamacare. My husband is retired and on Medicare, so he won't be applying. I am applying for myself and our two young kids. I don't have insurance through my employer because I only work part time. Because I am applying for myself and my two kids, not my husband, I am wondering if I have to use our combined income for our household income or can my Obamacare application be based on my income alone? We file our taxes jointly and we do receive Social Security.

A: This answer is similar to the preceding question: In your case, household income includes the MAGI (modified adjusted gross income) of the taxpayer (you) and also any individuals for whom a taxpayer claims a personal exemption on the federal tax form. So your husband’s income would be included in the determination of household income even though you’re not seeking insurance for him, says Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting.

Q: What happens if our estimated income for 2014 changes, to either higher or lower than expected?

We assume you’re asking about how a change in estimated income might affect your subsidy eligibility. The Kaiser Family Foundation recommends reporting any income changes you experience to the marketplace during the year, as they occur. Otherwise, if you claim a tax credit during the year and your actual 2014 income edges over 400% of the federal poverty level, you’ll need to pay back the full credit amount. To avoid that – and if you estimate your 2014 income will be close to 400% FPL – you could consider waiting until you file your 2014 taxes to take all or a portion of the credit on your tax return instead of receiving advance payments, the KFF says.

Q: I work, and get coverage through my employer. My husband is a student and he has zero income. My employer offers coverage for my husband, but it costs a fortune. We are a family of 2, and we make about $57,000. Is my husband eligible for coverage through the exchange, and does he qualify for any tax credits? 

Similar to a previous question, you can shop for insurance on the marketplace, but if your husband is eligible for coverage through your employer, he can only qualify for premium subsidies if the employer’s plan is unaffordable. Coverage is considered unaffordable if the cost of coverage for you (alone) under your employer’s plan is more than 9.5% of your income. So if your health plan costs you, say, $5,000 a year, that’s less than 9.5% of your $57,000 income ($5,415), which means it’s not considered unaffordable, according to the law.

Since your husband is a student, he may be able to enroll in a health plan offered through his university.

Q: My question is: Do any of the tax subsidies and credits apply to individuals enrolled in a private plan (either on their own or through their employers) but NOT through an exchange? I've seen a lot of concerns about providers raising premiums and I'm wondering what assistance the government is providing to those who may see their premiums increase even though they remain enrolled in the same plan as before.

A: Subsidies are only available to consumers who buy plans on the exchanges.

Q: I am on SSD [Social Security disability] and have Medicaid for insurance. Do I need to apply for the new health system or does this not have an impact on my current insurance?

A: If you get insurance through Medicaid, the health exchanges don’t affect you. Note that under the ACA, Medicaid eligibility is expanding in many states, so more people will qualify for Medicaid starting in 2014 https://www.healthcare.gov/do-i-qualify-for-medicaid/.

Q: I currently have COBRA and would like to switch over to Obamacare to reduce my medical cost. How do I go about doing that? Should I apply for open enrollment now and cancel my COBRA in the meantime?

You can drop your COBRA coverage and buy a plan on the marketplace during the open enrollment period, which ends March 31, 2014. You’ll have to drop your COBRA effective on the date your new health coverage begins. Check your state’s exchange or HealthCare.gov for application information and to see if you qualify for subsidies.
Note that, after open enrollment ends, if you voluntarily drop COBRA or stop paying premiums, you won’t be eligible for a special enrollment opportunity and will have to wait until the next enrollment period. Only exhaustion of your COBRA coverage triggers a special enrollment opportunity, says KFF.

Q: If I leave one job for another job and the new job has a 90-day waiting period for their insurance to start, should I pay for COBRA for that 90-day period or get coverage through the marketplaces for that 90-day period?

It depends. If you think you’ll qualify for subsidies, it might make sense to buy a plan on the marketplace. You could apply for a subsidy, but your eligibility would end once the waiting period at your new employer ends and you can enroll in an insurance plan, says Pollitz of Kaiser Family Foundation. (Just note that, if you do buy a plan on the exchange, there’s generally about a two-week delay from the time of purchase to the time you’re actually covered.) If you’re not eligible for subsidies, COBRA might make sense; there’s no change in your provider network and you wouldn’t need to restart the annual deductible as you would if you switched plans, Pollitz says.

Q: I am self-employed and have income that can vary wildly, from month to month and year to year.  Can you tell me exactly what formula is used to determine the income requirements for subsidies and penalties?  Is it the current year's annual income, the prior year's annual income, or something else?

A: This can get tricky, especially for self-employed folks whose income fluctuates as yours does. If you overestimate your 2014 income, you may not qualify for subsidies, and if you underestimate what you’ll make, you risk a bill from the IRS asking you to pay back your subsidy. The way to avoid this – and get the most accurate tax credit amount – is to report income changes to the marketplace during the year as they happen, Kaiser Family Foundation advises. The marketplace will calculate enrollees’ household incomes using MAGI, which includes income sources such as wages, salary, foreign income, interest, dividends and Social Security. You can also check out KFF’s subsidy calculator here.

Q: As a non-immigrant with a 3 year work visa, does this act apply to people with such visas? I do have a SS # and pay taxes and am legally in the country, but am considered a temporary worker. Do I need to have insurance? There are thousands of people in the country on visas. What does this act mean for them?

A: The Affordable Care Act (ACA) requires people with H-1b visas to obtain insurance. You can get coverage through your employer if it’s offered and affordable. If that’s not possible, you’d be eligible to purchase coverage through insurance exchanges and may qualify for subsidies.

Q: I have 2 children, ages 19, 20. They are not under my insurance at work because I cannot afford it. They do not work; will they be penalized if they do not get insurance? If so, how are they supposed to pay for it with no job or income?

A: Your children are most likely exempt from the mandate, says Janet Coffman, adjunct professor at the University of California, San Francisco’s Department of Family and Community Medicine. People whose income is below the threshold for filing federal income taxes (in 2013, $9,750 if you’re single and under age 65) are exempt from the requirement to have insurance. If you live in a state that is expanding its Medicaid program, your children may be eligible to enroll in Medicaid, and they wouldn’t have to pay premiums to enroll. At most, they’d have to make small copayments when they visit doctors, fill prescriptions, or obtain other health-care services, Coffman says. Enrolling in Medicaid would protect your children financially if they have a major illness or injury. (Check here to find out if your state is expanding Medicaid.)

Q: I would like to know if a person is unemployed and unable to work — how will this affect them? If this person is physically unable to work and has applied for disability and been denied and hoping and praying that someday they will get assistance what are they to do in the meantime.
You’re still eligible to purchase coverage through the health exchange. Depending on your state, you may also be eligible for Medicaid.

Q: I recently became unemployed from a job that paid $180K. As a result I have no health insurance. I also have pre-existing conditions. I am a resident of S.C. What can I expect in terms of being able to purchase health insurance?
A: You will be eligible to purchase coverage through the federally-facilitated health insurance exchange that will go into effect on January 1, 2014 (South Carolina decided not to establish its own exchange). All health plans sold through the exchange will be required to cover you for both new and pre-existing medical conditions.

Q: My 27-year-old daughter is a full-time student. She has purchased some very basic health insurance through her university. Will universities be allowed to continue offering this to their students, or will the students now have to pick one of the exchanges under Obamacare?

A: Colleges and universities will be able to continue offering health insurance to their students provided that the coverage conforms to regulations governing student plans, says Coffman. Your daughter should contact her university to find out whether it will continue to offer health insurance to students and whether that insurance meets the law’s requirement for the minimum “essential benefits.” If so, she can remain on her university’s plan. But she might want to explore other options to determine whether the university’s plan is the most affordable option (including the plan premium out-of-pocket expenses). If the university’s insurance doesn’t meet the ACA’s standards, Coffman says, she’d need to obtain insurance elsewhere, unless her income is below the threshold for filing federal income taxes (which in 2013 is $9,750 for a single person) or if the lowest-priced coverage available would cost more than 8% of your daughter’s income. If her income is between 100% and 400% of poverty ($11,490 to $45,960 for a single person) she will be eligible to purchase subsidized coverage through the exchange. If her income is below 133% of poverty ($15,800 for a single person) and she lives in a state that is expanding Medicaid, she’ll be eligible to enroll in Medicaid.

Q: The enrollment for Obamacare lasts until March 31, 2014. What happens if I lose my employer coverage in July 2014? Can I sign up for the exchanges in July 2014 or do I have to wait to sign up in October 2014?

A: If you leave your job for any reason and lose your job-based coverage, you can buy coverage through the marketplace. Job loss is considered a “qualifying life event,” which allows you buy through the exchange outside the official open enrollment period, which ends on March 31, 2014.
Q: Under what circumstances must small employers with less than 50 employees offer health care coverage, if at all?

A: Small businesses with fewer than 50 full-time employees aren't required to provide coverage under the ACA. (The law defines full-timers as those who work, on average, at least 30 hours a week.) But all companies, no matter what size, were required to notify their employees about the marketplaces by Oct. 1, the day of the exchanges’ launch.

If you do decide to offer employees coverage, you can do so through the small-business exchange in your state, and choose one plan for all workers. For 2014, the SHOP marketplace is open to employers with 50 or fewer full-time employees. Click here for more information about SHOP.

Q: Will the insurance cover dental and vision? Is there a maximum amount covered on either or both?

A: Under the ACA, dental insurance is treated differently for adults and children 18 and under. Dental coverage for children is considered an “essential health benefit,” which means it must be available to you as part of a health plan or as a free-standing plan. But insurers don’t have to provide adults with dental coverage. You’ll be able to see which plans include dental benefits on the exchange, and the premium shown for the plan covers both health and dental benefits. That goes for vision coverage, too.

Q: How will yearly wages be determined? Will it be based on actual yearly wages from my W2 only or will I have to include my earnings from stocks and bonds?

A: To qualify for the subsidy or “premium assistance credit” on the exchange, your household income must fall between 100% ($23,550 for a family of four) and 400% of the federal poverty line ($94,200 for a family of four). The exchanges will calculate your household income using Modified Adjusted Gross Income, or MAGI, which includes “such income sources as wages, salary, foreign income, interest, dividends, and Social Security. MAGI calculation does not include income from gifts, inheritance, and Survivors Benefits, and some other income sources are partially excluded,” according to the Kaiser Family Foundation.

Q: Why is an expat, i.e., an American citizen who does not reside within the territorial domain of the United States of America, required to purchase medical insurance which he cannot possibly use? The insurance is not valid outside the USA. Is there an exemption? How do you get it?

A: Actually, U.S. citizens living in a foreign country are not required to get health coverage under the ACA. Additionally, if you're uninsured and living abroad, you don't have to pay the penalty for not having insurance.

Q: Do I still need to purchase health insurance from the exchange even if I have employer-provided insurance?

A: You do not. The biggest changes coming from the law impact consumers who don’t already have insurance. For the more than two-thirds of Americans who have insurance through their employer or another person’s employer, the best option is to stick with it. If your employer offers coverage, you can still shop for insurance on the exchange, but you may not qualify for a subsidy; check out HealthCare.gov for more information about eligibility.

Q: How much of my Social Security payments are included in the MAGI? It is extremely confusing. Is it all of it, only half of it, etc.?

A: Whether you’re eligible for a subsidy is based on your expected 2014 income (which will be verified with documentation from your most recent tax return), according to the Kaiser Family Foundation. The exchanges will calculate enrollees’ household incomes using Modified Adjusted Gross Income, or MAGI. And yes, MAGI does count (all) Social Security benefits as income, as well as wages and unemployment benefits.

Q: What are the repercussions for failing to purchase health insurance and refusing to pay the “fine,” “tax," “penalty” or whatever it’s being called now?

A: If you don't have insurance in 2014 (and you’re not exempt from the mandate), when it comes time to file your taxes in 2015, you’ll have to pay a fine of $95 or 1% of your taxable income, whichever is greater. That fine goes up over several years — by 2016, the penalty increases to $695 per adult, or 2.5% of your income.

Some details about how individuals will report the payment on their 2014 tax returns are not yet known. More is expected on that from the IRS later, says Mark Luscombe, principal analyst at Wolters Kluwer Tax & Accounting. We do know that individuals will be expected to pay that amount with their 2014 tax returns.  If individuals fail to pay the penalty on their 2014 tax returns, “the IRS may not file levies or liens for that amount, but they may offset any refund due by the amount of the shared responsibility payment,” says Luscombe. “The IRS will have access to information from employers and insurance carriers as to who has health coverage.”

Q: I am 75, retired and have been paying for a supplemental health care plan in addition to Medicare. How will I be impacted by Obamacare?

A: If you’re already enrolled in Medicare, you can ignore the exchanges. “The benefits they have are not part of that law, and the Centers for Medicare & Medicaid Services says it is illegal for someone to sell them a health plan if they have Medicare,” says Bonnie Burns, a policy consultant at California Health Advocates.

And your Medicare benefits aren’t changing. “No matter how you get Medicare, whether through Original Medicare or a Medicare Advantage Plan, you’ll still have the same benefits and security you have now, and you won’t have to make any changes,” the CMS says. Also note that Medicare’s open enrollment period — which is Oct. 15 through Dec. 7 — is separate from the exchange’s enrollment, which begins Oct. 1. 

Q: My tax professional told me that my employer-paid health care plan will now be taxed as part of my income. Is this true?

A: Employer-provided insurance, in general, is still not included as taxable income, says Mark Luscombe of Wolters Kluwer Tax & Accounting. There have been some exceptions — one example is health insurance for domestic partners up until the recent Supreme Court decision overturning Section 3 of the Defense of Marriage Act. There have been some tax reform proposals to eliminate the exclusion for employer-provided health insurance, but they have not been enacted as of yet.

Q: How long will it take to be able to access and use the insurance you pick after signing up October 1st or thereafter?
A: Consumers can sign up starting Oct. 1; plans and prices will be available then. If you enroll in a plan by mid-December, your new coverage will begin Jan. 1, 2014. During the rest of open enrollment, if you enroll between the 1st and 15th day of the month and pay your premium, your coverage begins the first day of the next month. So if you enroll on February 10, 2014, your coverage begins March 1, 2014.

Q: I am unemployed and currently pay for COBRA coverage. Since I'm paying $750/month for COBRA coverage, I would like to take advantage of Obamacare health plans being offered in my state. What is the rule, if any, regarding those in my situation (of having EXPENSIVE COBRA coverage) but wanting to drop it [and join] a plan through Obamacare?

A: If you have COBRA coverage, you can buy a plan in the marketplace, where you’ll likely find cheaper options. In fact, some expect the health exchanges to all but replace COBRA coverage, which allows ex-employees to stay on their company’s plan if they pay the (full price) premiums. An August survey by the National Business Group on Health found that about 41% of employers believe former employees on the company’s plan under COBRA would find the exchanges to be the most cost-effective option.

Q: I currently have private health coverage through my company. Will I be able to compare coverage and rates with policies offered under ACA, or is this only for people without insurance?

A: You can check out plans on the exchange, but be aware that you may not qualify for a subsidy (tax credit) — even if your income would otherwise make you eligible. You’d only qualify if you earn less than 400% of the federal poverty level and your employer’s plan covers less than 60% of allowed medical expenses or costs more than 9.5% of your household income.

Q: Will any of the companies selling through the exchange sell to out of state customers? [Does] Georgia allow residents to buy across state lines?

A: No. Existing law does not allow companies participating in the health exchanges to sell policies across state lines, says Janet Coffman, adjunct professor at University of California, San Francisco’s Department of Family and Community Medicine.

Q: I am 63 years old, currently uninsured because I have sleep apnea and have been refused. Will I be able to get health insurance under Obamacare? Any idea what it will cost?

A: One key change under health reform is that, beginning in January, insurers will no longer be able to refuse coverage to consumers — regardless of their health status — a big benefit to those with pre-existing conditions. Cost really depends on your particulars: age, state, income and what kind of coverage you want. Once you have insurance, the plan can't refuse to cover treatment for pre-existing conditions. The only exception is for grandfathered individual health insurance plans — the kind you buy yourself, not through an employer — which don’t have to cover pre-existing conditions.

Q: Will annual physicals and/or annual gynecological exams be covered free of charge regardless of the plan I choose on the exchange?

A: Most health plans must cover a set of preventive services at no cost to you, and this includes plans bought on the exchanges. All plans available on the exchange (as well as most other plans) must cover a set of services for adults — and another set for women specifically — without charging a copayment or coinsurance (even if you haven’t met your yearly deductible), according to HealthCare.gov. These services include mammography screenings every one to two years for women over 40, cervical cancer screenings, colonoscopies and gynecological exams, as well as others.