10 Things you need to know about the Health Reform law

1. Millions of individuals and businesses will be securing insurance through an exchange starting in 2014.

An exchange is just a fancy word for a website that shows you all your benefit options in one place, compares plans side-by-side, and allows you to enroll online.

There are public (government) and private (private sector) exchanges. Exchanges should also provide education on Health Reform, how the law affects you or your business, and help you determine if you qualify for any subsidies (like discounts) or tax credits.

2. Starting January 1, 2014, there is an individual requirement to have health insurance.

You must have health insurance or pay a penalty unless you qualify for an exception. If you don't have access to an affordable job-based insurance plan or a government-sponsored plan, you can enroll in individual or family health insurance during Open Enrollment.

This year's Open Enrollment is October 1, 2013 - March 31, 2014. In 2015 and beyond, the Open Enrollment will be October 1st - December 31st.

3. If your household income is less than 400% Federal Poverty Level (about $96,000 a year for a family of four), then you will qualify for some level of tax subsidy toward the purchase of an individual health insurance plan starting in 2014.

A good way to think of a tax subsidy is a "discount" that reduces your premium or out-of-pocket expenses on things like deductibles or copays. You can only use your subsidy if you do not have access to an affordable job-based insurance plan, either through your job or your spouse/partner's job.  

4. If you qualify based on family size and household income, you can apply your subsidy toward four plans offered through an exchange.

There are four plan choices: platinum, gold, silver, bronze. If you are less than 30 years old, you have a fifth "catastrophic plan" option. These plans will be issued by brand-name insurance companies (like BluecCross BlueShield, Humana, United Healthcare, Kaiser, etc.) who are competing for your business. 

These same plan options are available for private policies that are not paid subsidized by the government.

5. The law divides businesses into two categories: Small and Large.

Small businesses have less than 50 full-time equivalent employees. Large businesses have 50 or more full-time equivalent employees.

A full-time equivalent employee is a true employee of your business (not 1099), generally receiving a W2, who works 30 or more hours per week and at least 120 days per year.

If you are Self-Employed (business of one), you are not considered "an employer" under the Health Reform law, and will shop for Individual and Family policies instead of business policies. 

6. Large businesses are required to offer affordable health insurance to their employees or pay a penalty. 

Not offering: The penalty is $2,000 per employee per year. There is a waiver on the first 30 employees.

So, for example, if you have 52 employees, you would pay zero penalty for the first 30, $2,000 penalty for the last 22 employees, or a $44,000 penalty per year. This part of the law has been delayed until 2015.

Not affordable: What the employee pays toward employee-only health insurance cannot exceed 9 1/2% of his/her Modified Adjusted Gross Income (This does not consider what he/she pays toward spouse or children's coverage).

If it's not affordable and one employee qualifies for a subsidized individual plan, the business will pay a penalty of $3,000 per employee. This part of the law has been delayed until 2015.

7. Small businesses are not required to offer health insurance to their employees, but can choose to offer benefits. 

Because of price, underwriting rules (see #9), and administration, many small businesses might offer individual policies to employees instead of a business plan. That way, the group won't have to worry about participation, contribution, and on and off-boarding rules that apply to business plans.

Or, by offering group health insurance to your employees, you might qualify for a Small Business Healthcare Tax Credit. This credit is for businesses with less than 25 employees (the highest credit to businesses with less than 10) who pay at least half of the employee premium and have an average income of less than $50,000 per year. 

8. All individual and small business policies issued on or after January 1, 2014 must include a set of Essential Health Benefits - with no yearly or lifetime limits so you can never run out of insurance for core care:

ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health, substance abuse, and behavioral health, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric services including dental and vision care for children under the age of 19.

9. There are many changes to how individual and small business policies are underwritten and priced.

No health insurance company can turn you away or charge you extra premium because of health history, pre-existing conditions, how often you use your plan, gender, or profession.

All pre-existing conditions and Essential Health Benefits (including pregnancy, preventive care, and more) are covered.

The gap between what the youngest and oldest pay for health insurance has to shrink to a 1:3 ratio (generally, that means younger will be paying more than before and older will be paying less than before so they meet in the middle).

The only thing considered in your rate is age, zip code, and tobacco usage.

10. You can keep the plan you have now. 

If you want to keep the plan now, you can. Unless your plan is grandfathered, it will be adjusted sometime in 2014 to become compliant with the new Health Reform law. Some insurance companies are adjusting that rate January 1st, and some are giving you the option to lock-in 2013's rate for all of 2014.

Generally speaking, those individuals and small businesses who see the advantages of today's rating system (younger, male, preferred health, non-rated industry) might see a big increase once those advantages go away in 2014 under ACA.

However, those individuals and businesses who are at a disadvantage in today's system (paying high premiums because older, female, pre-existing conditions, high claims, rated industry) might see a big decrease once the insurance companies can no longer penalize them for those things in 2014.

Another factor to consider is whether you qualify for subsidy, which reduces your healthcare costs. You can only qualify for subsidy during Open Enrollment (this year, October 1 - March 31). 

It's a good idea to partner with a Health Reform expert to see if it's best for you to keep your current plan or get a new ACA-compliant plan.