Health Insurance Marketplace Tax Subsidy Calculator

A big aspect of the Affordable Care Act is the availability of tax subsidies for people that fall into certain income brackets.  You can check those brackets out here.  We also have this handy subsidy calculator that can help determine if you might be eligible for premium assistance when you purchase a health insurance plan. Before you assume that you will get a subsidy, make sure your non-income eligibility requirements are met.

Marketplace Tax Subsidy Calculator

2015 Obamacare Subsidy Calculator Provided by: SubsidyCalculator.com

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What is a Health Insurance Exchange Notice and Why is it Important?

With the health insurance exchanges, also known as health insurance marketplaces, set to open for business on October 1, 2013, the world of health insurance is about to change dramatically.  Through these exchanges individuals will be able to purchase medical insurance by comparing plans, insurance companies, and premiums side by side on their computer screen.

One of the advantages of buying insurance through the marketplace is the possibility of obtaining a tax credit subsidy to help pay for the cost of the coverage.  However, not everyone is eligible for the subsidy.  One of the ways to not be eligible is to be offered affordable coverage with a certain level of benefits through your employer.  But how do you know if your group coverage makes you ineligible for the tax credits?  Your employer will provide you with a health insurance exchange notice.

What is the Health Insurance Exchange Notice?

The health insurance exchange notice will explain to you whether or not your coverage eliminates you from the subsidy.  Employers are required to provide this notice to existing employees by October 1, 2013 and to new employees within 14 days of employment.

There has been some confusion about possible penalties given to employers who do not comply with the requirement to provide a health insurance exchange notice.  Some reports suggested that there would be a $100 per day per employee penalty.  The Department of Labor came out later and confirmed that there would not be a penalty for lack of compliance.  Still, employees are encouraged to send the notice.

If your employer does not provide a notice, it is still important to find out if you are offered coverage that will keep you from being able to access the tax subsidy.

Why is the Health Insurance Exchange Notice Important?

The Patient Protection and Affordable Care Act requires every American to purchase health insurance or else face a tax.  Since health insurance is an expensive addition to the budgets of many people, the law allows for subsidies to help pay for the premiums.  However, if medical coverage is available through an employer, the subsidy is not available.

When an individual applies for coverage through the exchanges, the site will ask if group coverage is offered.  To be accurate in answering this question, people can rely on the health insurance exchange notice provided by their employer.

Are Model Notices Available?

Model notices are available through the Department of Labor’s website.

Model notice for employers that offer a plan

Model notice for employers that do not offer a plan

Group Coverage can be an Inexpensive Option

Even if you are not eligible for a subsidy because of employer sponsored coverage, the group coverage is still a great option.  The Affordable Care Act mandates that employers cannot charge employees more than 9.5% of their salary for coverage.  In many cases, this premium will be less expensive than coverage purchased through an exchange, even with a subsidy in place.  Therefore, not being able to get the tax credits because of available group coverage is not necessarily a bad thing.

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Is a Health Insurance Exchange Something a Young Person Should Enroll In?

When the Patient Protection and Affordable Care Act (PPACA), or as it is commonly known, Obamacare, was passed, the law set up the idea of a health insurance exchange, which would allow individuals to go online and more easily shop for medical insurance.  The exchanges did not eliminate the ability to obtain insurance through an employer or on the individual insurance market outside of the exchange.  But it did provide a new option.

What is a Health Insurance Exchange?

A health insurance exchange is an online marketplace that will allow individuals to compare medical insurance plans with different plan designs and from various health insurers.  In fact, the exchanges have now become known as health insurance marketplaces.

The exchanges are administered on a state level.  Each state has the responsibility to set up their own marketplace and recruit insurers to participate.  Some states have elected not to set up an exchange.  In those instances, the residents of a non-participating state will be able to find health insurance coverage through a federal exchange.

Insurance companies are not required to participate in every available exchange.  They are free to choose which one fits their plans the best.

What are the Benefits of a Health Insurance Exchange?

The online marketplaces allow individuals to see side-by-side the different options available to them.  Gone are the days of struggling to understand the coverages available and the premiums that the insurance plans cost.

PPACA also has a subsidy provision in it for lower wage earners.  If you earn under a certain threshold (originally set at 400% of the poverty level), you will be eligible for tax credits.  The health insurance exchanges will be able to run a calculation for you to determine if this tax subsidy applies to your situation.  In most cases, the subsidy will be taken into account on your next year’s tax return, but if you cannot wait that long, the exchanges can reduce your premium up front.

Lastly, the exchanges are simply another way to enter the health insurance market.  If you do not have a group plan available and you are not satisfied with your options in the individual market, the exchanges are another great place to look.

Should a Young Person Enroll in a Plan on a Health Insurance Exchange?

Whether or not to enroll in a plan on the exchange is a personal one.  If you have medical benefits available to you through your employer, then it will usually always be advantageous to accept those benefits.  Employers usually subsidize the cost of the premiums for their employees.

PPACA also requires insurers to allow children to remain on a parent’s plan until age 26.  If you are below age 26, you can probably save money by enrolling in your mom or dad’s plan, if they have one.  This is especially the case if you have siblings that are still on the plan.  Most likely, your parent is already enrolled in a family plan, so adding you will not cost any extra money.

If those options are not available, then it comes down to purchasing insurance on your own directly through an insurance company or through the health insurance exchange.  The exchange will probably be easier to navigate, but that doesn’t mean that you will find the best price there.  Not every insurance company is going to be available on the exchange, and you may be able to find a better price by staying away from the exchange, although that could take some effort on your part.

A health insurance exchange isn’t anything to be afraid of, but look around before deciding that it is your best option for your health care needs.  You can find your state’s exchange here.

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