As 2014 comes to a close, the open enrollment for 2015 will start again in just a few weeks. Open Enrollment will be November 15th through February 15th.
Let’s take a step back into 2014 for starters, were you able to be part of a Health Care Plan (group or individual) You will need to add that policy number to your tax return for this year. If you were not able to get into the health care plan and have a record of you trying to obtain coverage, you will need to have that as supporting documents to send in with the tax return.
On the flip side you did not want to or did not sign up for any health care plans and want to know what your tax penalty will be for you and your family. The annual individual shared responsibility payment is the GREATER OF:
1% of the tax payer’s household income that is above the tax return filing thus holds for the tax payers filing status.
The tax payer’s flat dollar amount which is $95.00 per adult and $47.50 per child, limit to a family maximum $285.00
For those people who took the tax subsidies or credits, you will receive an IRS 1099 form to claim as income on your tax return and, yes, you will be paying tax on the credits. This section did not change going forward.
Let’s move forward to 2015 and look at the Annual Individual Shared Responsibility of the payments for NOT having coverage in 2015.
2% of the tax payer’s household income that is above the tax return filing thus holds for the tax payers filing status.
The tax payer’s flat dollar amount which is $325.00 per adult and $162.50 per child, limit to a family maximum $975.00
Exemptions from the Individual Responsibility Requirement
Under certain circumstances, an individual may be exempt from the individual responsibility requirement. These circumstances include the following:
- The individual is uninsured for less than three months of the year
- The lowest-priced coverage available to the consumer would cost more than 8% of the consumer’s household income
- The individual does not have to file a tax return because his or her income is too low
- The individual is a member of a federally recognized tribe or eligible for services through an Indian health care provider
- The individual is a member of a health care sharing ministry
- The individual is a member of a recognized religious sect with religious objections to insurance, including Social Security and Medicare
- The individual is incarcerated, and is not awaiting the disposition of charges
- The individual is not lawfully present in the United States
- The individual has experienced a hardship (hardship exemptions will be covered later in this topic)
Some types of exemptions are available only through the tax filing process; some are only available through a Marketplace.
There are certain circumstances that affect an individual’s ability to purchase health insurance coverage and which may qualify an individual for a hardship exemption. To make the determination, the Marketplace considers whether an individual has experienced one of the following events:
- Becomes homeless
- Has been evicted in the past six months, or is facing eviction or foreclosure
- Has received a shut-off notice from a utility company
- Recently experienced domestic violence
- Recently experienced the death of a close family member
- Recently experienced a fire, flood, or other natural or human-caused disaster resulting in substantial damage to individual property
- Filed for bankruptcy in the last six months
- Incurred medical expenses in the last 24 months that resulted in substantial debt
- Experienced unexpected increases in necessary expenses due to caring for an ill, disabled, or aging family member
- Expects to claim a child as a tax dependent who has been denied coverage in Medicaid and CHIP, and another person is required by court order to give medical support to the child. In this case, the individual would not have to make a payment for the child
- As a result of an eligibility appeals decision, is determined eligible for enrollment in a QHP through a Marketplace, the premium tax credit, or cost-sharing reductions for a period of time during which he or she was not enrolled in a QHP through a Marketplace
- Was determined ineligible for Medicaid because his or her state did not expand eligibility for Medicaid under the Affordable Care Act
- Lost insurance coverage because his or her individual plan was cancelled and believes other available coverage options are unaffordable
- Experiences another hardship in obtaining health insurance
Only individuals under age 30 and individuals with hardship exemptions may purchase a catastrophic plan. Catastrophic plans typically have high deductibles, and mainly protect individuals from very high medical costs.
2014 Federal Poverty Level Chart*
- 2 of 15
The Department of Health & Human Services (HHS) issues poverty guidelines that are often referred to as the “federal poverty level” (FPL). Federally-facilitated Marketplaces will use the 2014 guidelines when making calculations for the insurance affordability programs starting November 15, 2014.
*Chart is for 48 contiguous states and the District of Columbia
The amount of the premium tax credit depends on the QHP that the individual or family selects. If the monthly premium for the selected QHP is greater than the monthly advance payments of the maximum premium tax credit, the individual or family will pay the difference in the monthly premium cost. If the premium for the selected QHP is less than the maximum advance payments, the individual or family may elect to receive the maximum advance payments of the premium tax credit, and have no additional monthly premium cost.
- Example 1: Family A is eligible for a maximum of $800/month for advance payments of the premium tax credit. Family A selects a QHP that costs $1,000/month. If they elect to receive the full amount of the premium tax credit as advance payments, $800/month will be paid directly to the QHP issuer, and Family A will pay the issuer the remaining $200/month premium.
- Example 2: Individual B is eligible for a maximum of $400/month for advance payments of the premium tax credit. Individual B selects a QHP that costs $350/month. If he or she elects to receive the full amount of the premium tax credit as advance payments, $350/month will be paid directly to the QHP issuer, and Individual B will not have a monthly premium payment.
- Calculating Cost-sharing Reductions
- 8 of 15
- Cost-sharing reductions limit the out-of-pocket costsfor essential health benefits (EHB) for individuals and families with MAGI between 100-250% of the FPL, and certain American Indians/Alaska Natives enrolled in a Silver level QHP through the Individual Marketplaces. Federal regulations set the reduced maximum annual limitation on cost sharing for individuals and families eligible for cost-sharing reductions based on income, however, reductions on cost-sharing for specific benefits and services may vary based on a QHP issuer’s specific plan design.
- Under federal regulations, a family can only enroll in the most generous plan for which all members of the family are eligible. For families that want to maximize each family member’s ability to access cost-sharing reductions, the Marketplace provides separate initial enrollment groups for each family member(s) eligible for different levels of cost-sharing reduction.
Calculating Cost-sharing Reductions, continued
- 9 of 15
Reduction in Maximum Annual Limitation on Cost Sharing for 2015
(from 70% AV Silver Plan)
|Income Range for Individual*||Individual Out-of-Pocket Maximum
(standard 2015 limit: $6,600)
|Income Range for Family of Three*||Family Out-of-Pocket Maximum
(standard 2015 limit: $13,200)
|94% AV Silver Plan Variation
(for households with a MAGI between 100-150% of FPL )
|$11,670- $17,505||$2,250||$19,790- $29,685||$4,500|
|87% AV Silver Plan Variation (for households with a MAGI between 150-200% of FPL)||$17,505- $23,340||$2,250||$29,685- $39,580||$4,500|
|73% AV Silver Plan Variation (for households with a MAGI between 200-250% of FPL)||$23,340- $29,175||$5,200||$39,580- $49,475||$10,400|
American Indians/Alaska Natives with MAGI below 300% of FPL enrolled in a zero cost sharing plan variation have all cost sharing eliminated for EHB. American Indians/Alaska Natives with MAGI above 300% of FPL enrolled in a limited cost sharing plan variation have cost sharing eliminated for any EHB item or service that is furnished directly by the Indian Health Service, an Indian Tribe, Tribal Organization, Urban Indian Organization, or through referral under contract health services.
*Please review the 2014 Federal Poverty Chart in the Resources tab to find dollar ranges for the different percentages of FPL.
To determine eligibility, the Marketplace verifies applicant information using data from key federal agencies and other sources.
Depending on an individual’s specific circumstances, the Marketplace may verify information from the following sources to conduct the verification process:
- Social Security Number (SSN) (Social Security Administration [SSA]) (An individual does not have to provide an SSN if he or she does not have one.)
- Citizenship status (SSA and Department of Homeland Security [DHS])
- Immigration status (DHS)
- Household size (IRS)
- Household income (IRS, SSA, consumer reporting agency, potentially other sources)
- Access to other coverage (Medicaid, CHIP, Medicare, TRICARE, Department of Veterans Affairs, Peace Corps, other State-based Marketplaces, Small Business Health Options Program (SHOP), and potentially other sources)
If a Marketplace needs additional information regarding SSN, citizenship, or immigration status, it establishes eligibility based on the individual’s attestation in those areas for a period of 90 days, during which it will use the individual’s attestation to establish eligibility. If the consumer is otherwise eligible for a QHP, the premium tax credit, cost-sharing reductions, Medicaid, or CHIP, during this time, he or she can enroll and obtain coverage. The individual just needs to resolve the issue by the close of the period to continue his or her eligibility for health care coverage.
If a Marketplace needs additional information regarding a criterion of eligibility other than SSN, citizenship, or immigration status, whether it establishes eligibility for health insurance coverage while the inconsistency is resolved depends on what the information that the applicant provided indicates that he or she is eligible for. If the applicant’s income and other eligibility information are consistent with eligibility for enrollment in a QHP with or without the premium tax credit, a Marketplace establishes eligibility for enrollment in a QHP, the premium tax credit, and cost-sharing reductions, as applicable, based on the applicant’s attestation during the 90-day inconsistency period, as long as the applicant attests that he or she understands that advance payments of the premium tax credit are subject to tax reconciliation. If the applicant’s income and other eligibility information are consistent with eligibility for Medicaid or CHIP, the applicant will not be able to access Medicaid or CHIP until the open verification items are resolved.
The 90-day inconsistency period may be extended if the applicant demonstrates that he or she has made a good faith effort to obtain the required documentation. This can be done through the Marketplace call center. After the inconsistency period expires, the Marketplace issues a final eligibility determination.
When Enrollments Take Effect During the Initial Open Enrollment Period
4 of 22
The date that an individual’s QHP health insurance coverage takes effect is based on the date the Marketplace receives his or her enrollment selection. The effectuation standards for the open enrollment period are as follows:
November 15- December 15 Effective Date January 1, 2015
December 16- January 15 February 1, 2015
January 16 – February 16 March 1, 2015