Cover Oregon Health Insurance Exchange Questions & Answers
This is a guest post by Michael Nelson, a licensed tax consultant and an Oregon health insurance producer from Nelson Financial & Estate Planning in Woodburn, Oregon. I first met Michael during the Dave Ramsey Financial Counselor Training that my husband and I attended last year and was impressed with his desire to learn as much as he could to help his clients make sound financial decisions. I asked Michael if he would help us understand the new Affordable Care Act and how to use the Cover Oregon Health Insurance Exchange.
Before we dive in, a quick note: I understand that the ACA is a politically charged issue (well, that may be the understatement of the decade). This post is intended only to help my readers in Oregon understand what their options are and direct them towards a competent insurance professional. In light of this, please refrain from leaving any political rants on this blog. I get that many of you are frustrated, but neither Michael nor I can make a single change to the law. Contact the people representing you in Congress with your feedback.
Healthcare. Insurance. Requirement. Ugh… All words we don’t like, and yet, they will all become a reality starting in 2014. While there are obviously tons of political opinions about the requirement to have health insurance in 2014, the fact remains that it is going to happen and individuals and businesses need to be aware of how the new laws will affect them.
As a Licensed Tax Consultant (#30376) and Oregon Health Insurance producer, I understand the confusion and frustration. Below I have outlined some key areas of the new healthcare law along with answering some common questions I often receive.
The Affordable Care Act (nicknamed Obamacare) created “exchanges” in order for individuals to shop for health insurance and possibly receive tax credits to help with the cost of the premiums. Each state was given a choice to use the Federal Exchange that is managed by Human and Health Services or to create their own. In the usual pioneer-spirit of the Northwest, both Washington and Oregon created their own exchanges.
Once the exchanges are fully functioning, an individual and small employer may search for health insurance coverage from the different health insurance companies through the exchange. If individuals and small employers meet certain qualifications, they may receive a tax credit for the health insurance that they purchase through the exchange. The tax credits will not be issued for health insurance purchased outside of the exchange.
Below are some common questions asked about the new health insurance requirement in Oregon:
Do I have to get Cover Oregon insurance?
Insurance that is purchased from Cover Oregon is not “Cover Oregon insurance” but insurance that is purchased from insurance companies through the market place called Cover Oregon. For example, an individual will have multiple options for plans with different deductibles and coverage from multiple insurance companies like Lifewise, Kaiser Permanente, Moda (formerly ODS), Providence, and others. Also, health insurance can be purchased outside of Cover Oregon and still meet the requirement to have health insurance for 2014.
What if I didn’t qualify for health insurance before?
There are no longer any pre-existing conditions. Health insurance companies used to ask numerous questions about your health in order to see if you qualified for their plan. The only questions now that will affect your premium amount (besides your age and the number of family members) will be if you regularly use tobacco.
What if I have health insurance through my employer or my spouse’s employer?
If you have health insurance through your employer in 2014, you will meet the requirement to have health insurance and there is no need for you to explore Cover Oregon.
There are rules in the Affordable Care Act that indicate that if an employee is required to pay over 9.5% of their household income on their portion of the health insurance through their company (if it was only that person being insured) then that coverage would be deemed unaffordable and that individual may apply for health insurance with Cover Oregon. It seems unlikely that this will apply to very many individuals as larger employers are also aware of this new rule and will most likely calculate to ensure their employees don’t have to pay more than 9.5% of their wages on their portion of the premium.
What if I have Medicare?
Generally, if you are over the age of 65, you are enrolled in Medicare and will meet the requirement to have health insurance for 2014. Individuals with Medicare can purchase additional Medicare advantage plans to supplement their coverage, but that is not necessary to meet the requirement to have health insurance.
Wouldn’t it be easier to just pay the penalty?
Most insurance seems like a pain until something major happens and then most people are thankful they had insurance (or wished that they would have had insurance). Many individuals are reasoning that they will just pay the penalty until they get sick, but that won’t necessarily work with the new changes to health insurance. An individual (outside of an employer plan) may only enroll in health insurance during an open enrollment period unless there is a life changing event during the year (getting sick is not one of the qualifying events).
For example, health insurance for 2014 can only be purchased from October 1, 2013 – March 31, 2014. After that, the next time someone can enroll for health insurance is for the calendar year of 2015 and that open enrollment period will only be from October 2014 – December 2014.
In addition, the 2014 penalty is the GREATER of $95 a person ($285 maximum) OR 1% of the Adjust Gross Income. So, a family with 2 parents and 2 kids that makes $20,000 a year would pay a $285 penalty for not having insurance, but a family with 2 parents and 2 kids that makes $60,000 a year would pay a $600 penalty ($60K multiplied by 1%). The penalty will increase to 2% of the Adjust Gross Income in 2015 and 2.5% in 2016.
Is there a way to receive assistance in paying for the premiums?
The “subsidies” that individuals are hoping to receive for helping pay their health insurance premiums are actually called premium tax credits. These are tax credits that you will receive on your tax return based on your household size and income.
For example, a family of 4 can receive this tax credit if their income is $94,200 or less. A family of 6 may earn up to $126,360 and still receive tax credits. These tax credits are similar to tax credits like the child tax credit, but now this credit can be received in advance. For instance, instead of receiving a $1,200 credit on your tax return, you can have that $1,200 broken up into 12 equal payments (for each month in the year) and have $100 sent to the insurance company to help pay for your premium.
This process of having the insurance receive your tax credit in advance will be available once an individual can fully apply on Cover Oregon and then you will reconcile the amount you received in advance on your tax return. Also, since the tax credit is based on your Adjusted Gross Income, there are certain tax strategies that can benefit your family and also lower your Adjusted Gross Income to help you qualify or receive a larger premium tax credit (definitely speak with a tax professional on this one).
How does this affect employers?
Employers with 50 or more “full time equivalent” employees are required to offer health insurance to their employees starting in 2015. Employers with 25 or less employees can receive tax credits for paying for health insurance for their employees if the health insurance is purchased through Cover Oregon.
In some circumstances, employees may benefit more from getting an individual policy through Cover Oregon and potentially receive tax credits to help with the premium than to pay 50% of the premium that the employer may offer. There are other ways that an employer can provide help to their employees’ health cost without offering health insurance to them. For instance, an employer may make contributions to an employee’s Health Saving account.
I’m self-employed. How does this affect me?
Self-employed individuals are also required to have health insurance in 2014 and should look at coverage through Cover Oregon for possible tax credits. If an individual receives the tax credits in advance (see above question), it is important to make sure they know what their net profit is throughout the year because an in increase income could cause an individual to have to “pay back” the advance payments they received on their tax return.
Also, employer tax credits are not available for employees that are related so individuals that are self-employed and have family members on payroll should look into getting individual coverage through Cover Oregon.
What if I’m currently enrolled in the Oregon Health Plan or Healthy Kids?
Individuals that are currently enrolled in the Oregon Health Plan (OHP) and Healthy Kids should have received a notification about submitting a “fast-track” form. The notices should have been mailed out at the end of September and individuals need to mail back the “fast-track” form to be enrolled into health insurance coverage for 2014. Individuals that are not currently enrolled in the Oregon Health Plan and Healthy Kids should consider applying through Cover Oregon to see if they could potentially qualify for the OHP or Healthy Kids.
Oregon Health Plan (OHP) provides health coverage to low-income Oregonians. Healthy Kids provides no-cost health coverage for uninsured children and teens up to the age of 19 in Oregon.
How much do I need to make to qualify for the Oregon Health Plan, Healthy Kids, or Tax Credits?
Individuals may qualify for the Oregon Health Plan (OHP), Healthy Kids, or Premium Tax Credit if their household size and income is a below a certain range of the Federal Poverty Level. Each year the Poverty Level is determined based on the number of people living in a house and the income that household generates.
- If the household size and income is below 138% of the Federal Poverty Level, than that family should qualify for the Oregon Health Plan.
- If a family has children (ages 0-18) and their household size and income is below 300% of the Federal Poverty Level, then the children should qualify for Health Kids and the premiums for the children should be zero.
- If a family is under 400% of the Federal Poverty Level, then they could qualify for a tax credit.
Here is an illustration to understand how this will work:
If a family of 4 makes $30,000 for a year, they should qualify for the Oregon Health Plan. If a family of 4 makes $50,000 a year and two of those family members are children (under the age of 18), then that family would qualify to have their children on Healthy Kids and the other two members could qualify for tax credits for the premiums they pay for health insurance. If that family of four made $50,000 a year and everyone was over the age of 18, then that family would qualify for the premium tax credits and not Healthy Kids. If a family of 4 makes $100,000 a year, they would not qualify for any tax credits.
Currently, the information for the Oregon Health Plan and Health Kids are not yet available. The website for Cover Oregon is also waiting to become fully available. Once the Cover Oregon is fully functional, individuals will be able to apply for coverage and find out exactly if they qualify for the OHP, Healthy Kids, or Premium Tax Credits. Individuals should consider talking with an agent to discuss how their income and household size will qualify them for the OHP, Healthy Kids, or tax credits. Again, you can have an agent at no cost to you.
When do I need to get coverage if I am choosing to use the Cover Oregon exchange?
The open enrollment period for Cover Oregon has already begun and will last until March 31, 2014. In order to have coverage on January 1, 2014, you will need to submit an application to Cover Oregon by December 15, 2013. The Cover Oregon website is still being updated and should hopefully be able to receive applications by the end of the month.
How can a health insurance agent help you?
A health insurance agent can help you decide which plan would be best for you and your family at no cost to you. They can also help you fill out the Cover Oregon application to ensure you receive the tax credits (when it becomes available online). Health insurance agents can also help answer questions you have about how the new health care laws will affect you. You can find an agent certified to answer your Cover Oregon questions on Cover Oregon’s website.
If I can answer any more of your questions, please contact me neltax.com/healthcare. I have online seminars that further discuss how the health insurance requirement will affect you. Also, I would love to be your agent and help you find the best plan for you and your family. Please submit your name and number on my website and I will contact you soon to start discussing the best health care coverage for you.
Michael and I are planning additional posts discussing Cover Oregon, including case studies that illustrate the realities of the changes with the ACA. Please leave your questions in the comments and we will do our best to answer them in the near future!
Disclaimer: This information is for general guidance only. Please consultant a tax professional to see how the new health care law will personally affect you.
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