Per the Affordable Care Act, individuals must have health insurance coverage in 2015 or pay a penalty to the IRS of either 2% of income, or $325 per adult ($162.50 per child) – whichever is higher.
Middle-income people who are not eligible for coverage through their employer, or who do not meet the eligibility requirements of Medicaid or Medicare may be eligible for individual coverage through a health insurance exchange. The application period for coverage is between Nov. 15, 2014 and Feb. 15, 2015, which is referred to as the “open enrollment period.” When applying, individuals may seek tax credit subsidies and cost-sharing reductions available through the state exchanges.
In 2014, Rhode Island, Massachusetts and New York, among other states, operated state-based insurance exchanges. As of April 2014, in Rhode Island, 28,485 people or 40.6% of the estimated number of possible enrollees (70,000) selected a plan through HealthSourceRI. In Massachusetts, 31,695 or 12.2% of the estimated number of possible enrollees (259,000) selected a plan through the Health Connector. In New York, 370,451 or 29.3% of the estimated number of possible enrollees (1,264,000) selected a plan through the NY State of Health, according to The Henry J. Kaiser Family Foundation. Other states, like Florida, offer individual coverage through the federal insurance exchange HealthCare.gov.
In addition to individual market exchanges, the Small Business Health Options Program (SHOP) exchange helps small businesses provide health coverage to their employees. The SHOP exchange is open to employers with 50 or fewer full-time equivalent employees. In the SHOP, small employers control the coverage they offer and how much they pay toward employee premiums. Employers with fewer than 25 employees may qualify for a Small Business Health Care Tax Credit worth up to 50% of the employer’s premium costs. Rhode Island, Massachusetts and New York all have a SHOP marketplace, and HealthCare.gov will operate a SHOP marketplace beginning Nov. 15, 2014.
So-called “private exchanges” have also started to emerge as an option for (mostly large) employers. Employers can set up their own exchange, generally in partnership with an exchange platform technology player, and allow employees to choose from a number of plans from multiple insurers.
Exchanges are the new marketplace for purchasing health insurance and it’s likely you’ll encounter one in the near future. If you have a question about exchanges or would like to speak to a member of the Health Care Team, please call Jillian Jagling at 401-824-5100 or email [email protected]. We welcome your comments, questions and suggestions.