Cigna Local Plus PPO Network (on & off exchange)
2014 Cigna Copay Plans
Other Cigna (limited Copay or Non Copay plans)
2014 Humana National POS Plans (off-exchange)
Aetna Plan Options (on and off exchange)
Health Insurance Marketplace Annual Enrollment Period FAQs
Starting in 2014, health insurance companies’ will be prohibited from denying coverage to people in the individual health insurance market because of a pre-existing condition. But, there’s a catch. Consumers can only enroll in guaranteed issue health insurance during annual enrollment periods.
The health insurance marketplaces will be providing an: Initial open enrollment period, and annual open enrollment period. The initial open enrollment period begins October 1, 2013 and extends through March 31, 2014.
For plan years beginning on or after January 1, 2015, the annual open enrollment period begins October 15th and extends through December 7th of the preceding calendar year.
Starting in 2014, the health insurance marketplaces must provide a written annual open enrollment notification to each enrollee no earlier than September 1st, and no later than September 30th.
Special enrollment periods: The health insurance marketplaces must also provide special enrollment periods throughout the year for those individuals and families who meet certain requirements and must allow individuals / enrollees to enroll in or change from one plan to another as a result of the following triggering events:
1) An individual or dependent loses minimum essential coverage.
2) An individual gains a dependent or becomes a dependent through marriage, birth, adoption or placement for adoption.
3) An individual, who was not previously a citizen, national, or lawfully present individual gains such status.
4) A qualified individual’s enrollment or non-enrollment in a plan is unintentional, inadvertent, or erroneous and is the result of the error, misrepresentation, or inaction of an officer, employee, or agent of the Health Insurance Marketplace or HHS, or its instrumentalities as evaluated and determined by the Health Insurance Exchanges.
5) An enrollee demonstrates to the Health Insurance Marketplace that the plan in which he or she is enrolled substantially violated a material provision of its contract in relation to the enrollee.
6) An individual is determined newly eligible or newly ineligible for advance payments of the premium tax credit or has a change in eligibility for cost-sharing reductions, regardless of whether such individual is already enrolled in a qualified health plan (QHP). For example, the marketplace must permit individuals whose existing coverage through an eligible employer-sponsored plan will no longer be affordable or provide minimum value for his or her employer’s upcoming plan year to access this special enrollment period prior to the end of his or her coverage through such eligible employer-sponsored plan.
7) A qualified individual or enrollee gains access to new QHPs as a result of a permanent move.
Unless specifically stated otherwise, an individual or enrollee has 60 days from the date of a triggering event to select a plan.
Why are there annual enrollment periods? Annual enrollment periods ensure that individuals and families don’t wait until they get sick to enroll in coverage, or switch to more comprehensive coverage when they are about to have an expensive medical procedure.
Individual Health Insurance Premium Subsidies in State Exchanges
The Patient Protection and Affordable Care Act (PPACA) contains’ provisions to lower individual health insurance premiums for those with household incomes below 400% of the federal poverty line (FPL). Starting in 2014 there will be significant health insurance subsidies provided under PPACA for people purchasing individual health insurance coverage through the new public health insurance exchanges.
New rules give states the option of extending coverage in Medicaid to most people with incomes under 133% of the FPL. For households with higher incomes (up to 400% of the FPL), PPACA will provide tax subsidies, reducing premium costs. These tax subsidies will begin in 2014.
Households with income between 100% and 400% of the FPL who purchase coverage through a state health insurance exchange are eligible for a tax subsidy to reduce the cost of their coverage. In states without expanded Medicaid coverage, people with incomes less than 100% of poverty will not be eligible for exchange subsidies, while those with incomes at or above the FPL will be.
Households offered coverage through an employer are also not eligible for premium tax subsidies unless the employer plan does not offer “qualified” coverage or unless a household’s share of the premium for their employer’s group health insurance plan exceeds 9.5% of their income.
The amount of the premium subsidy that a household will receive is based on the premium for the second lowest cost “silver plan” in the individual state health insurance exchange. The silver plan provides the essential benefits as defined by the PPACA. The amount of the subsidy varies with income where the premium a household would have to pay for the second lowest cost silver plan is capped as a percentage of their income as follows:
Income Level Premium as a Percent of Income
Min Income Max Income Min Premium Cap Max Premium
(% of FPL) (% of FPL) (% of Income) (% of Income)
0% 133% 0% 2%
133% 150% 3% 4%
150% 200% 4% 6.3%
200% 250% 6.3% 8.05%
250% 300% 8.05% 9.5%
300% 400% 9.5% 9.5%
The Federal Poverty Level (FPL) was $11,170 for an individual and $23,050 for a family of four through early 2012.
For a single person, here’s the actual income levels and premiums based on the 2012 FPL:
Min Income Max Incom Min Premium Cap Max Premium Cap
(Annual) (Annual) (Monthly) (Monthly)
$11,170.00 $14,856.10 $0.00 $24.76
$14,856.10 $16,755.00 $37.14 $55.85
$16,755.00 $22,340.00 $55.85 $117.29
$22,340.00 $27,925.00 $117.29 $187.33
$27,925.00 $33,510.00 $187.33 $265.29
$33,510.00 $44,680.00 $265.29 $353.72
For a family of 4, here’s the actual income levels and premiums based on the 2012 FPL:
Min Income Max Income Min Premium Cap Max Premium Cap
(Annual) (Annual) (Monthly) (Monthly)
$23,050.00 $30,656.50 $0.00 $51.09
$30,656.50 $34,575.00 $76.64 $115.25
$34,575.00 $46,100.00 $115.25 $242.03
$46,100.00 $57,625.00 $242.03 $386.57
$57,625.00 $69,150.00 $386.57 $547.44
$69,150.00 $92,200.00 $547.44 $729.92
A person or household that wants to purchase a plan more expensive (than the second lowest cost silver plan) would have to pay the full difference between the cost of the second lowest cost silver plan and the plan that they wish to purchase.
Example – Steve, a 45-Year-Old Single: He has as an annual income that is 250% of the FPL ($27,925 in 2012). Let’s assume the cost of the second lowest cost silver plan in Steve’s state individual health insurance exchange is $5,733 per year (or $477.75 per month). Since Steve is purchasing coverage in the individual health insurance exchange, Steve would not be required to pay more than 8.05% of income, or $2,248 per year (that’s $187.33 per month), to enroll in the second lowest cost silver plan. The tax subsidy available to Steve would be $3,485 ($5,733 premium minus the $2,248 cap on what Steve is required to pay).
Premium tax subsidies are both refundable and advanceable. A refundable tax subsidy is one that is available to a person even if he or she has no tax liability. An advanceable tax subsidy allows a person to receive assistance at the time that they purchase insurance (i.e. in advance) rather than waiting to be reimbursed after they file their annual income tax return.
Health Care Reform Checklist for Individuals & Families
Whether you are uninsured, or just want to explore new options, the new health insurance marketplace will give you and your family choices. Starting October 1st, 2013, you will be eligible to enroll in health insurance via the new health insurance marketplaces (for coverage starting January 1st, 2014). Here’s step-by-step check list to ensure you are prepared for the October 1st, 2013 open enrollment.
Step 1 – Find out whether your employer will offer group health insurance post-2014!
There are two primary categories of health insurance to choose from:
- Individual health insurance,
- Group health insurance.
1) Individual Health Insurance
Individual health insurance plans are purchased by individuals to cover themselves or their families. Anyone can apply for individual health insurance. In 2014, insurance companies will no longer be able to decline individuals for health insurance based on a pre-existing medical condition. Also, in 2014, there will be new special tax incentives available to businesses and employees when employees purchase individual health insurance.
2) Group Health Insurance
Group health insurance plans are a form of employer-sponsored health coverage. Costs are usually shared between the employer and the employee. Coverage can also be extended to dependents.
Many small businesses (those under 50 employees) are expected to terminate group health insurance (in favor of individual health insurance) in 2014.
Step 2 – Learn about different types of health insurance!
Whether you’re looking at individual health insurance or group health insurance, there are several different types of health plans available. The three you should know are:
- PPO Health Insurance Plans,
- HMO Health Insurance Plans,
- HSA-Qualified Health Insurance Plans, and
The plan type that is best for you and your employees depends on what you and your employees want, and how much you are willing to spend. Here’s a brief review of these popular types of health insurance plans:
1) PPO Health Insurance Plans
PPO or “Preferred Provider Organization” plans are the most common. Employees covered under a PPO plan need to get their medical care from doctors or hospitals on the insurance company’s list of preferred providers (in-network providers) in order for claims to be paid at the optimal level.
2) HMO Health Insurance Plans
HMO stands for “Health Maintenance Organization.” These plans offer health care services through a network of providers that contract exclusively with the HMO. Employees participating in HMO plans will typically need to select a primary care physician (“PCP”) to provide most of their health care and refer them on to HMO specialists as the need arises.
3) HSA-Qualified Health Insurance Plans
HSA-qualified plans are a unique type of PPO plan that is designed specifically for use with Health Savings Accounts (HSAs). An HSA is a special bank account that allows participants to save money pre-tax, and can be used specifically for medical expenses in the future. Health Reimbursement Arrangements (HRAs) can also be used by employers in place of HSAs due to their tax advantages for employers.
Step 3 – Familiarize yourself with health insurance terminology!
When shopping for a health insurance plan, one of the challenges people face is understanding health insurance terminology. Here are five key health insurance terms you and your employees need to understand:
- “Premium” – The amount you pay to the health insurance company each month to maintain your health insurance.
- “Copayment” – Your copayment, or “co-pay,” is the specific dollar amount you may be required to pay up front for a specific type of service, such as doctor or specialist visits.
- “Deductible” – Your annual deductible is the amount you may be required to pay out-of-pocket before the insurance company will begin paying for your covered medical claims.
- “Coinsurance” – The amount that you are obliged to pay for medical services after you’ve satisfied any copayment or deductible required by your health insurance plan.
- “Max Out-of-Pocket (OOP) Costs” – sets a limit to your annual financial liability for any given year.
Some questions you might want to ask include:
- Can I stay with my current doctor?
- Will this plan cover my health costs when I’m traveling?
- Will I be eligible to contribution to an HSA ?
- How will this cover my pre-existing condition?
Step 4 – Gather basic information about your household income!
Beginning 2014, individuals will have access to tax subsidies to purchase private health insurance through the public health insurance exchange. The subsidy caps the cost of individual health insurance at 2% – 9.5% of their household income if their household income is less than 400% above the federal poverty line. This equates to roughly $90,000 per year for a family of four.
Starting in October 2013, you will be able to get information about all the plans available in your area.
Health Care Reform Definitions for the Consumer:
In 2014, significant portions of health care reform take effect. As a result, individuals and small business owners will want to understand the following terms:
Affordable Care Act (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.
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.
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 the individual market. There are special exemptions for financial hardship and religious objections.
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.
A health insurance exchange is an online health insurance marketplace in each state where consumers can obtain private health insurance, subsidized by the government. Open enrollment starts October 1st, 2013 for coverage taking effect January 1, 2014.
Medicaid Expansion: New rules give states the option of extending coverage in Medicaid to most people with incomes under 133% of poverty.
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.
Tax Subsidies: For households with incomes up to 400% of the federal poverty level (FPL), The Affordable Care Act provides tax subsidies that reduce premium costs. These 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.
IRS and HHS Issue Proposed Regulations on Individual Mandate
On January 30, 2013, the Internal Revenue Service (IRS) and the Department of Health and Human Services (HHS) issued two sets of proposed regulations related to the individual mandate provision of the Patient Protection and Affordable Care Act (PPACA).
The individual mandate requires most individuals to have minimum essential coverage or pay a penalty beginning in 2014. The penalty is now called a “shared responsibility payment.” Some individuals may qualify for an exemption so they will not be required to have coverage or pay a penalty.
The proposed regulations confirm the individual mandate requirements and outline the process for requesting an exemption. The proposed regulations cover:
· What qualifies as minimum essential coverage
· How penalties will be determined and paid
· Who is exempt from paying the penalty
· When individuals can apply for an exemption
1. What Qualifies as Minimum Essential Coverage
An individual is considered to have minimum essential coverage for any month in which he or she is enrolled in one of the following types of coverage for at least one day:
· An employer group health plan
· An individual health insurance policy
· A government plan such as Medicare, Medicaid, Children’s Health Insurance Program (CHIP), TRICARE or veterans coverage
· Student health coverage
· Medicare Advantage plan
· State high risk pool coverage
· Coverage for non-U.S. citizens provided by another country
· Refugee medical assistance provided by the Administration for Children and Families
· Coverage for AmeriCorp volunteers
All these types of plans qualify as minimum essential coverage, and there are no additional coverage requirements that must be met.
2. How Penalties will be Determined and Paid
The first penalties will be due when individuals file their 2014 tax returns in 2015. A penalty is determined by calculating the greater amount of either a flat dollar amount or set percentage of income. The annual penalties for 2014 through 2016 are noted below. Beginning in 2017, penalties will increase based on the cost of living.
· 2014: Greater of $95 per adult and $47.50 per child under age 18 (maximum of $285 per family) or 1% of income over the tax-filing threshold
· 2015: Greater of $325 per adult and $162.50 per child under age 18 (maximum of $975 per family) or 2% over the tax-filing threshold
· 2016: Greater of $695 per adult and $347.50 per child under age 18 (maximum of $2,085 per family) or 2.5% over the tax-filing threshold
If the penalty applies for less than a full calendar year, the penalty will be 1/12 of the annual amount per month without coverage.
3. Who is Exempt from Paying the Penalty for Not Having Coverage
Individuals who meet the following criteria will not pay a penalty if they do not have minimum essential coverage:
· Individuals who cannot afford coverage. Coverage is considered unaffordable if an individual’s contribution toward minimum essential coverage is more than 8% of the annual household income. The monthly contributions are calculated at 1/12 the annual household income to determine if they exceed the 8%.
· Taxpayers with income below the tax filing threshold, which is the amount required to file a federal tax return
· Individuals who qualify for a hardship exemption. This exemption is available to individuals who are not eligible for Medicaid because their state chose not to expand Medicaid, or to individuals who have a personal or financial hardship that keeps them from being able to afford coverage.
· Individuals who have a gap in minimum essential coverage of less than three consecutive months in a calendar year
· Members of religious groups that object to coverage on religious principles
· Members of health care sharing ministries. These are non-profit religious organizations where members share medical costs.
· Individuals in prison
· Individuals who are not U.S. citizens
· Members of Native American tribes
U.S. citizens residing in a foreign country are typically exempt from having minimum essential coverage if they meet certain requirements, such as residing abroad for an entire calendar year. And, residents of U.S. territories (Guam, American Samoa, Northern Mariana Islands, Puerto Rico, and Virgin Islands) are automatically deemed to have minimum essential coverage.
4. When Individuals Can Apply for an Exemption
There are times when a person may request exemption. The Exchange will review the application, issue a certificate of exemption and notify the IRS. Other types of exemptions are claimed when individuals file their federal income tax returns.
· Religious and hardship exemptions are only available when applying through an Exchange.
· Individuals who cannot afford coverage, who experience short coverage gaps, who are not U.S. citizens and who have household incomes below the filing threshold may apply for an exemption through the IRS.
· Members of a health care sharing ministry, individuals in prison and members of Native American tribes may apply for an exemption through either an Exchange or through the IRS when filing a federal tax return.
Comments regarding the HHS regulations are due by March 18, 2013. Comments regarding the IRS regulations are due by May 2, 2013 and a public hearing is scheduled for May 29, 2013.
The Keystone of the Patient Protection and Affordable Care Act (PPACA) is an unprecedented Individual Mandate tax requiring virtually all U.S. Citizens and legal residents to either have health insurance or pay a tax for not doing so, beginning in 2014.
Insurance Or Tax.
The individual mandate tax is unprecedented. As written, PPACA established an individual mandate to buy health insurance and a penalty for not doing so. This was the first time in American history that the federal government ordered the general population to purchase a commercial product. Responding to the lawsuit by NFIB and 26 states, the Supreme Court refashioned the mandate and penalty into a choice between two options: buy insurance or pay a tax for failing to do so.
Beginning in 2014, PPACA requires most U.S. citizens and legal residents to have qualifying health insurance coverage (public or private) or pay a tax for not carrying insurance. “Qualifying” is broadly defined by the law, with specific definitions left to current and future regulators.
A relatively small number of Americans will be exempt from the tax. Those exempted include: (1) people with religious objections; (2) American Indians with coverage through the Indian Health Service; (3) undocumented immigrants; (4) those without coverage for less than three months; (5) those serving prison sentences; (6) those for whom the lowest-cost plan option exceeds 8% of annual income; and (7) those with incomes below the tax filing threshold ($9,500 for singles and $19,000 for couples under 65 in 2011.)
The individual mandate tax rests on a legal definition of insurance, and PPACA’s definitions differ across markets. Government programs like Medicare, Medicaid, and CHIP automatically qualify, as do self-insured ERISA policies (mostly for larger employers). Small group and individual policies (except for grandfathered plans) must cover services comprising an “essential health benefits” (EHB) package – though the definition of that package is now clouded by uncertainty.
The essential health benefits (EHB) package is a menu of health care services that must be covered by all qualifying insurance plans in the fully-insured small-group market (“small” here means fewer than 100 employees); EHB also applies to the individual market. Self-insured groups (mostly big businesses, labor unions, and governments), fully-insured plans covering 100 or more employees, and government-provided insurance, in contrast, are exempt from most of the EHB’s costly requirements.
In late 2011, the Secretary of Health and Human Services (HHS) temporarily changed the EHB rules, adding new uncertainty. As written, the law specifies a process in which the Secretary solicits advice on EHB components, after which the Secretary unilaterally selects and revises a uniform national package. In December, the Secretary upended this scheme by authorizing each state to compile its own list of EHB coverage mandates. In the near term, this change makes it harder to predict future health insurance costs. Over the longer term, the change introduces new state and federal vagaries.
Taxes begin in 2014 and rise in years following. In each year, the tax consists of the higher of a dollar amount or a percentage of household income. For a given household, the tax applies to each individual, up to a maximum of three. Following is the schedule of taxes:
2014: The higher of $95 per person (up to 3 people, or $285) OR 1.0% of taxable income.
2015: The higher of $325 per person (up to 3 people, or $975) OR 2.0% of taxable income.
2016: The higher of $695 per person (up to 3 people, or $2,085) OR 2.5% of taxable income.
After 2016: The same as 2016, but adjusted annually for cost-of-living increases.
2014; family of 2; taxable income=$26,000; tax=$260
because $260 (=$26,000×1%) is higher than $190 (=$95×2).
2014; family of 3; taxable income=$26,000; tax=$285
because $285 (=$95×3) is higher than $260 (=$26,000×1%).
2016; family of 3; taxable income=$26,000; tax=$2,085
because $2,085 (=$695×3) is higher than $650 (=$26,000×2.5%).
2016; family of 3; taxable income=$85,000; tax=$2,125
because $2,125 (=$85,000×2.5%) is higher than $2,085 (=$695×3).
2016; family of 8; taxable income=$85,000; tax=$2,125
because $2,125 (=$85,000×2.5%) is higher than $2,085 (=$695×3).
2016; family of 8; taxable income=$300,000; tax=$7,500
because $7,500 (=$300,000×2.5%) is higher than $2,085 (=$695×3).
The individual mandate tax forces households to purchase an expensive product or to pay a tax in lieu of that purchase. The law softens this blow for some households by providing subsidies, called “health insurance premium tax credits.” To be eligible for the subsidies, a household must meet two conditions: (1) Household income must be less than 400% of the Federal Poverty Level (FPL), which varies with family size. For a family of four in 2012, 400% FPL = $92,200. (2) The household’s portion of the employer-sponsored health insurance premium must exceed 9.5% of household income.
For more details:
The Centers for Medicare and Medicaid Services (CMS) has an online Fact Sheet.
If you have not already done so, I encourage you to opt in on the form below to stay informed on all the changes that are taking place in the health insurance and medicare markets.
This document is for general informational purposes only. While we have attempted to provide current, accurate and clearly expressed information, this information is provided “as is” and Neil Primack makes no representations or warranties regarding its accuracy or completeness. The information provided should not be construed as legal or tax advice or as a recommendation of any kind. External users should seek professional advice from their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.