Under pressure to buy insurance, consumers sometimes purchase plans through an insurance exchange that is not compatible with the ACA (Affordable Care Act). When that happens the burden falls on the consumer to pay whatever tax penalties result.
I live in New York City where, for better or worse, there is a trade in knockoff handbags. You can buy a real Gucci handbag for $990 or you can do what thousands do each year and visit Canal street to get a decent Gucci knockoff for upwards of $85. But, you won’t avoid getting what you pay for.
Health insurance is, sadly, similar. Knowing that people are out there looking to buy health insurance, there is someone willing to sell you something that’s not quite as good. In this case, “not quite as good” could mean you are in violation of the law by not meeting the minimum criteria for the Affordable Care Act. Those minimum criteria are summed up in the Ten Essential Health Benefits.
How do you avoid buying a plan that is not compatible with the ACA?
A plan cannot be sold through the official federal or state healthcare exchanges unless it provides the Ten Essential Health Benefits.
The Ten Essential Health Benefits are:
- Ambulatory Patient Services – outpatient care
- Prescription Drugs – at least one covered-drug in every category of drug
- Emergency Care – Emergency only
- Mental Health Services – psychotherapy sessions and treatments
- Hospitalization – it’s important to know that insurance companies are trying to make a clear distinction between “being admitted” to the hospital (which is “hospitalization”) and staying “under observation” in the hospital (which is not)
- Rehabilitative and Habilitative Services – like physical therapy and hardware
- Preventive and Wellness Services – annual physical exams, vaccines, and such
- Laboratory Services – blood tests, scans and so on
- Pediatric Care – dental and vision for kids
- Maternity and Newborn Care – pre- and postnatal care
Plans that do not meet those requirements leave the insured person responsible for paying
- the cost of a supplemental qualifying plan, OR
- the tax penalty for not having qualifying coverage.
That tax penalty can be between $695 and $2085 based on income and where you live. You can find out what your penalty would be at the healthcare.gov site. Note: the new tax law will remove the individual healthcare mandate, eliminating this problem, but not until 2019.
What you should do:
So shop carefully. Use only the official healthcare exchanges operated by the Federal or State government. The word “exchange” is not trademarked, so others can call themselves exchanges while maybe not meeting those minimum requirements. You can avoid knockoff exchanges by going to HEALTHCARE.GOV. If you haven’t been there yet or for a while, don’t worry, it works much better than it did in the year it launched. While there select the link to GET COVERAGE. It will lead you to the official exchange that applies to you and the plans there are compliant.
You can also find more details on how your state interprets the ten Essential Health Benefits to make sure you are in compliance.