Affordable Care Act For Individuals

Reviewed: November 20, 2014
By FinanceWeb

The Patient protection and Affordable Care Act of 2010 created a system for nearly universal health insurance coverage for Americans. Combined with the expansion of Medicaid, it promised to create a national health care system that did not discriminate on the basis of age, sex, economic status, and previous medical conditions. It created a group of minimum care standards to which all insurance policies sold through a network of authorized exchanges would comply. The minimum standards included universal access to basic services, tests and preventive care. The goal was to promote well-being and reduce preventable serious illnesses.

Health Insurance Exchanges

Individuals can purchase health insurance through state-operated health insurance marketplaces or exchanges. In states that do not provide an exchange, consumers can purchase through the federal exchange provided on behalf of the state called healthcare.gov. Health insurance exchanges are the exclusive method of using tax credits to subsidize monthly premiums. The state governments which operate ACA programs review and approve insurance plans sold on their exchanges. The states are uniquely positioned to do this since they license and regulate insurance companies. The exchanges have shown they can manage services and hold down prices.

Tax Credits and Subsidies

The Affordable Care Act created an important link with available tax credits to subsidize insurance premiums for millions of subscribers. These are not government benefits; these are tax credits that individuals can apply to monthly insurance premiums. Individuals must have a minimum income level for credits and elect to apply them to the costs of coverage. Federal regulations establish a reference point for each County based upon the federal poverty level guideline. Subscribers can get subsidies if they are within 400 percent of the applicable federal poverty level. The subsidies increase for lower income persons. Persons whose incomes are too low to qualify for tax credits can get medical coverage through expanded terms of the Medicaid programs.

Mining the Metal Tiers

The Affordable care act provides health plan information and contract standards. It uses a system of metal tiers labeled platinum, gold, silver, and bronze. These groupings help consumers compare plans that provide similar levels of coverage but with various options. With the application of subsidies, individuals gain advantages similar to those enjoyed by employees with company sponsored plans with subsidized premiums. Policies purchased through an exchange do not depend on employment with a particular employer. The platinum through bronze levels describe percentages of coverage. The lower tiers require greater out-of-pocket costs and contributions from the insured individual. The platinum programs cover the highest percentage of costs and ask for the least in additional costs and expenditures. The platinum levels have higher monthly premiums than gold, silver, or bronze.

Benchmark Plans

The ACA features benchmark plans. Created as affordable plans that would attract many subscribers by their economic value, they provide a substantial amount of coverage with low monthly premiums. During the first year of operation, a significant number of subscribers chose the benchmark bronze plans, they were the second lowest priced Bronze tier plan for each state.

Penalties and Compliance

The law urges every individual to obtain health insurance coverage that meets the standards of the ACA. For non-coverage in 2014 the maximum penalty was $95.00 per person up to the family limit of $285. For non-coverage in 2015, the penalty was $325 per person up to the family limit of $975.00. Individuals must pay tax penalties when filing the annual tax return.

Record of Success

By any accounting, the ACA has been a success. The first-year enrollment figure was more than eight million subscribers. Among individual subscribers, many have found that its provisions have saved their lives and provided greater personal security. Further, many of the leading health insurers and medical care facilities participate in the Affordable Care Act. This group includes Blue Cross and Blue Shield Companies that work with nearly every major medical facility and health care provider in the country.