Navigator Guide FAQ of the Week: Coverage Requirements

Open Enrollment in most states ends next week, on December 15. As consumers continue to weigh their coverage options throughout the enrollment period, the CHIR team is highlighting frequently asked questions (FAQs) from our recently updated Navigator Resource Guide. In this installation, we answer FAQs about individual requirements to maintain coverage.

I’m uninsured. Am I required to get coverage?

Yes, you are required to get coverage that counts as “Minimum Essential Coverage.” This requirement is called the individual responsibility requirement, or sometimes called the individual mandate. As of January 1, 2019, you are no longer required to pay a penalty for not having coverage. However, some states, including California, District of Columbia, Massachusetts, New Jersey, and Rhode Island, have their own coverage requirement that does impose a tax penalty. If you live in one of these states, contact your state Department of Insurance for more information.

While the tax penalty for not maintaining minimum essential coverage has been eliminated beginning in 2019, whether you have access to or are enrolled in a plan that qualifies as minimum essential coverage is essential in determining eligibility for premium tax credits and certain special enrollment periods.

What is “minimum essential coverage” and why do I need it?

“Minimum essential coverage” refers to insurance that provides at least the “minimum” level of coverage, as defined by the Affordable Care Act. The ACA’s individual mandate requires people to maintain minimum essential coverage. Further, whether you have access to or are enrolled in a plan that qualifies as minimum essential coverage affects your ability to receive premium tax credits and whether or not you may qualify for most special enrollment periods. The following types of coverage will allow you to comply with the individual mandate and qualify for most special enrollment periods if you lose it:

  • Employer-sponsored coverage, including COBRA continuation coverage and retiree coverage
  • Coverage purchased in the individual market, including a plan purchased through a state or the federal health insurance marketplace
  • Grandfathered health plans, even if they do not cover services like prescription drugs
  • Medicare Part A coverage and Medicare Advantage plans
  • Most Medicaid coverage
  • Most Children’s Health Insurance Program coverage
  • Veterans health coverage administered by the Veterans Administration that are comprehensive
  • Most types of TRICARE (coverage for members of the military)
  • Coverage for Peace Corps volunteers
  • Refugee Medical Assistance from the federal Administration for Children and Families
  • Department of Defense health benefit program for civilian employees known as “Non Appropriated Fund” personnel
  • Certain self-funded student health coverage and other coverage may be recognized as minimum essential coverage, see this list.

Insurers may provide individuals with a Summary of Benefits and Coverage, which uses a standard format to outline the benefits, cost-sharing and coverage limits of plans. The Summary of Benefits and Coverage must also state whether the plan meets minimum value and counts as minimum essential coverage.

Some types of coverage sold outside a health insurance marketplace do not qualify as minimum essential coverage, such as discount plans, short-term policies, or policies that cover only cancer. These kinds of products are sometimes referred to as “excepted benefits.” Coverage under these options will not satisfy the individual mandate or the requirement to have coverage to qualify for most special enrollment periods. Further, you cannot use premium tax credits to purchase these plans.

If you are uncertain whether your plan qualifies as minimum essential coverage, for purposes of complying with the individual mandate, qualifying for a special enrollment period, or receiving premium tax credits, contact your employer’s human resources department or your health insurer. (26 U.S.C. § 5000A (f); 45 C.F.R. § 156.602).

What’s the penalty if I don’t have coverage?

As of January 1, 2019, you are no longer required to pay a penalty for not having coverage. However, some states, including California, District of Columbia, Massachusetts, New Jersey, and Rhode Island, have their own coverage requirement that does impose a tax penalty. If you live in one of these states, contact your state Department of Insurance for more information.

While the federal tax penalty for not maintaining minimum essential coverage has been eliminated beginning in 2019, whether you have access to or are enrolled in a plan that qualifies as minimum essential coverage is essential in determining eligibility for premium tax credits and certain special enrollment periods.

If there’s no longer an individual mandate penalty, why should I get coverage?

You are still required by law to have minimum essential coverage, but beginning January 1, 2019, you will not be charged a tax penalty for failing to have coverage unless you live in a state with an individual mandate (California, District of Columbia, Massachusetts, New Jersey, or Rhode Island).

Beyond these legal requirements, insurance coverage is an important protection against unexpected, high medical costs. The cost of paying for medical care out of pocket is prohibitively expensive for most people, and while insurance coverage can also present a financial burden, it is far less than the cost of paying for an emergency or treatment for an unforeseen diagnosis without coverage.

To ensure that an insurance product provides comprehensive coverage and adequate financial protection, and to see if you qualify for premium tax credits, visit HealthCare.gov.

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