The ACA and Legal Practices (#16) / Individuals without insurance make 2015 coverage decisions

October 29, 2014

health-care-lawThis is installment #16 in a series of blog postings on the Affordable Care Act (ACA) and legal practices.

Individuals without health insurance coverage that is acceptable under present ACA regulations are deciding how to respond to the individual mandate for 2015.

They may decide to purchase acceptable coverage or pay a penalty.

Subsidized coverage may be purchased through the Health Benefit Exchanges. Non-subsidized coverage may also be purchased outside of the Exchanges through the individual state markets.

Health insurance must provide “minimum essential coverage,” as now defined by regulations.

However, “minimum essential coverage” is a misleading term, if read literally.

Rather, under the recent regulations that have been adopted, this term should be interpreted as meaning the types of health insurance coverage deemed acceptable in the regulations.

Federal agencies (the Department of Health and Human Services and the Internal Revenue Service) have provided lists of those types of insurance that do and do not meet these program requirements.

Included as acceptable alternatives are government-sponsored programs (Medicare and Medicaid); all eligible employer-sponsored plans that are offered in the small or large group markets within a state; and all health plans sold on the individual market.

Only the original ACA restrictions remain on the plans that can be sold—which do not allow insurance companies to consider pre-existing medical conditions, cap annual or lifetime benefits, or charge for preventive care services. No new general restrictions have been added.

This lack of plan requirements for services covered is in contrast with the Extended Health Benefits (EHBs) for Qualified Health Plans (QHPs) sold on the Exchanges, which are well defined and constitute a reference “standard” for health insurance.

Federal agencies list a variety of plans that do and do not qualify as providing “minimum essential coverage”. Almost all types of general health insurance are allowed. For 2014, approval was “waivered-in” for some types of plans that clearly did not provide for any type of basic health care coverage. For 2015, some of these waiver options are no longer available.

The lists of acceptable alternatives include many possibilities that are far removed from  Qualified Health Plan (QHP) coverage. In order to reduce political resistance to the ACA, individuals are now allowed to obtain coverage that is very limited.

And numerous exemptions from the ACA individual mandate now allow many individuals to choose not to obtain coverage at all, without penalty.

This strategy by federal agencies will result in a wide range of levels and types of coverage, which seems to be in conflict with the original intent of the ACA to “solve the health coverage problem”. It is yet to be seen how coverage arrangements will work out for 2015.

It is yet to be determined how individuals without acceptable coverage during 2014 (even with the available options and waivers and the extended exemptions) will react to having to pay penalties with their 2015 tax returns.

It is also yet to be seen how individuals will decide to proceed regarding the purchase of 2015 coverage, given the range of options now available.

Attorneys may find that many clients require custom assistance to make decisions that best protect their interests and satisfy their preferences.

More information about implementation of the Affordable Care Act and associated legal practice issues may be found in recent books on the ACA and on the health care system, other postings to this blog, and on the ACA Blog, also written by the author of this series.