What clients need to know about the health-care law

What clients need to know about the health-care law

While businesses received a reprieve from providing health insurance coverage for employees until 2015, the federal mandate for individuals is still scheduled to take effect in 2014.

This core component of the health-care reform law is expected to extend health insurance to roughly 30 million uninsured individuals. With enrollment through established health-care exchanges set to begin in October 2013, here are some key details on this provision:

1. What is the “individual mandate”?
In 2014, individuals who are not currently maintaining health insurance will be required to obtain coverage or face tax penalties. Nothing will change for employees who currently receive health-care coverage through their employer. Also, those who are covered through Medicare, Medicaid, or other programs (veterans, active service military members, etc.) are not subject to the individual mandate. Lastly, certain lower-income individuals and families, as well as other groups (certain religious groups, Native Americans), will not be subject to the requirement.

2. What are the penalties for not maintaining coverage?
The penalties for not maintaining coverage will be phased in over several years.

Penalties increase over time

Source: Kaiser Family Foundation, 2013.

3. Who is eligible to receive federal tax credits to purchase insurance?
Individuals and families whose income is between 138% to 400% of the Federal Poverty Level (FPL) will be eligible to receive tax credits to offset the cost of coverage. For 2013, the FPL for individuals is $11,490 and $23,550 for a family of four. Depending on the state of residence, individuals and families below this threshold will receive subsidized coverage through Medicaid, including childless adults who typically were not eligible for Medicaid benefits previously. For example, a family of four with a household income below $94,200 would be eligible for a subsidy. The Kaiser Family Foundation has an online tool to help people calculate their eligibility for subsidies.

4. How will the health-care exchanges operate?

The health-care exchanges are web-based portals with information on insurance providers and their products for each state. Starting in October, individuals will be able to choose from a variety of plan options. Some of the exchanges will be operated at the state level while many states have chosen to default to a federally-operated exchange. There are four different plan tier options — bronze, silver, gold, and platinum — based on the level of benefits provided and the cost to the insured.

A chance to reach out to clients
With 2014 ushering in significant changes to the health-care system, clients will likely have questions about how the law will affect their personal situation. Advisors may update clients on the provisions of the new mandate, using the education piece, “Health-care reform and its impact on investors,” as well as the implications of new taxes introduced for higher-income taxpayers this year, outlined in “Planning for the new 3.8% Medicare investment surtax.”


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