If you don't have health insurance through work or a working spouse, you're guaranteed access to health coverage through the Affordable Care Act (ACA). You will not be charged extra or denied coverage for preexisting conditions, and ACA plans must provide certain essential medical benefits.
Here are five things you need to know about the ACA.
Everyone Has Access to the Marketplace
The ACA went into effect on Jan. 1, 2014. It put several protections in place, including requiring insurance plans to cover those with pre-existing health conditions, giving young adults the option to stay on a parent's plan until age 26, and making it illegal for health insurance companies to cancel your coverage because you're sick.
Under the ACA, premiums can only be affected by these five things:
- Your age
- Number of people in your family
- Tobacco use
- Adjustment for your geographic area
- The type of plan you choose
If you don't have insurance through an employer or spouse, you can purchase a plan through your state's Health Insurance Marketplace. Also called health insurance exchanges, these sites show you the plans available in your area so you can compare premiums. Some states, like California, have their own Marketplace websites, while others use the national one at HealthCare.gov.
Health Exchange Premiums Vary
Marketplace plans vary significantly when it comes to cost. The plans available are divided into different "metal" tiers. Platinum plans have the highest premiums, with insurance companies paying 90% of your costs. The bronze plans have the lowest premiums, and the insurance company pays about 60% of your eligible health care costs while you pay 40%. The average monthly premium for the lowest-cost bronze plan is $329 in 2022, according to the Kaiser Family Foundation. Silver and gold plans fall in between.
The average monthly premium for the lowest-cost gold plan is $462 in 2022.
Within these tiers, you can choose plans with lower or higher deductibles. To calculate your maximum potential cost for the year, add up your monthly premiums for the year plus the out-of-pocket maximum that is listed. That gives you a picture of the worst-case scenario when it comes to your health care costs.
Open Enrollment Occurs Once Per Year
You can only enroll in a Marketplace ACA plan during open enrollment or during a special enrollment period. Open enrollment begins each fall and is from Nov. 1 through Dec. 15, with coverage starting Jan. 1.
If you have a significant life change, you are entitled to a special enrollment period. Life changes include:
- Getting married or divorced
- Having or adopting a baby
- Losing health insurance coverage
- Becoming a U.S. citizen
- Leaving incarceration
To apply for a plan during a special enrollment period, visit HealthCare.gov or your state's Marketplace website. Indicate you're entitled to a special enrollment period. You'll need to state the reason and you may need to provide proof of the change, like a marriage certificate or divorce decree.
You Have the Option to Go Uncovered
When the ACA was initially passed, there was a tax penalty for not purchasing health insurance. The tax penalty was repealed as part of the Tax Cuts and Jobs Act passed in 2017. The last year subject to the tax penalty was 2018.
That means that you can go without health insurance without paying a tax penalty. While going without might be tempting to ease your budget, consider that medical expenses, illness-related work loss, or both contributed to 66.5% of personal bankruptcies from 2013 to 2016 among respondents. Going without health insurance could have serious long-term consequences.
You May Be Eligible for Tax Credits
There is a tax credit or subsidy available to make health insurance premiums more affordable. The amount of your tax credit depends on your income. You can apply some or all of your tax credit to your monthly health insurance premiums to lower the costs.
This tax credit is available for singles and families with modified adjusted gross income (MAGI) at 100% to 400% of the poverty line. In 2022, you are under 400% of the poverty line if your MAGI is less than $54,360 for singles and $111,000 for a family of four. In addition to tax credits, many states expanded their Medicaid programs to include individuals at or below 138% of the poverty level, or $25,268 in 2022 for a family of two.
The American Rescue Plan expanded subsidies. For example, those with income levels above 400% of the federal poverty line will be required to contribute no more than 8.5% of their household income and those with incomes at or below 150% will have fully subsidized plans.