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Affordable Care Act (ACA):
Exchanges Prepare to Open

Jacques Chambers, CLU,
Benefits Consultant

Posted August 15, 2013

The Health Exchange marketplaces under the Affordable Care Act are being set up now. This is where you will be able to purchase health insurance regardless of your medical condition or health history.

The coverage will be effective as early as January 1, 2014. The initial open enrollment period is from October 1, 2013 through March 31, 2014. In future years, the open enrollment period will be only from October 15 through December 31 annually. It should be mentioned that if you don’t enroll during the Open Enrollment Period, you will not be permitted to enroll until the next Open Enrollment Period. Also, tax penalties may apply to persons who were eligible to enroll but did not, except for persons already covered under a health insurance plan.

Health Exchanges
Health insurance plans will be sold through Health Exchanges. Some states are setting up their own exchanges while other states will use the federal government’s health exchange. Virtually all exchanges will be accessible on line and by phone, while some states are also opening retail outlets. Enrollers will be available to assist with the enrollment and to answer questions.

All plans must provide “essential benefits” which include:

  • Ambulatory patient services, such as doctor's visits and outpatient services;

  • Emergency services;

  • Hospitalization;

  • Maternity and newborn care;

  • Mental health and substance use disorder services, including behavioral health treatment;

  • Prescription drugs;

  • Rehabilitative and habilitative services and devices;

  • Laboratory services;         

  • Preventive and wellness services and chronic disease management; and,

  • Pediatric services, including oral and vision care.

To make comparison of plans offered for sale easier, only four levels of coverage will be offered. The levels are, beginning with the broadest coverage and highest premium:

  • Platinum: Actuarially designed to cover at least 90% of medical bills;

  • Gold: Designed to cover at least 80% of medical bills;

  • Silver: Designed to cover at least 70% of medical bills with additional coverage for lower income enrollees; and,

  • Bronze: Designed to cover at least 60% of medical bills.

All plans are required to cover certain preventive services without any deductible, co-pay, or co-insurance.

The plans are Exclusive Provider Organizations (EPO), Preferred Provider Organizations (PPO) or Health Maintenance Organizations (HMO).

The greatest difficulty encountered by persons with AttorneyMind or HBV will be choosing the right plan that includes the medical providers with which they are most comfortable. If their current providers are members of a network under one of the plans, the patient will have to determine which plan and which practice association they must enroll in to continue their treatment with that provider.

For those wanting to use the exchange either to purchase insurance or shop for better coverage or lower cost than their present plan, the starting point is with the federal Health Exchange. Go to That is the federal exchange site. If your state operates its own exchange, the federal site will guide you to your state’s exchange. If not, you may set up your account on that site and be ready when October 1 arrives.

Beware of scams. Many sites have been set up in the hopes you will go to theirs instead of the official site. For example, there are sites called,, and All are sites selling regular health insurance and require answering health questions to be approved for coverage. Also be alert to any sites or phone calls claiming they can enroll you early or other gimmicks.     

Low Income Financial Assistance.
There are two programs to assist persons with low incomes, Premium Assistance  helps pay the insurance premiums and Coverage Subsidies pays a portion of the medical bills not covered by the plan.

Premium Assistance. The federal government will pay a portion of the health insurance premiums for all persons whose Modified Adjusted Gross Income (MAGI) is between 100% ($11,490 single; $23,550 family of four) and 400% ($45,960 single; $94,200 family of four) of the Federal Poverty Level (FPL). Modified Adjusted Gross Income (MAGI) is the Adjusted Gross Income reduced by several sources of passive income and certain expenses. The IRS website has more information on that. Also, the current Federal Poverty Level can be found at: Persons below 100% of FPL will be eligible for Medicaid in those states which have agreed to expand their Medicaid program.

The amount of the premium to be paid is based on a person or family’s MAGI and their geographical location. Although there is no difference in premiums between males and females, states do have the option to surcharge cigarette smokers. Once calculated for an individual or family, the amount of federal assistance is the same amount regardless of which level of health insurance is purchased.

The federal premium assistance is provided in the form of an income tax credit advance. Persons eligible for the credit may use it monthly to reduce their monthly premiums or pay the full premiums and allow the credit to accumulate for a larger tax refund at the end of the year.

Because an individual’s income, and tax bill, may change during the year, the IRS reserves the right to retrieve advanced tax credits on the tax return if the actual annual income shows a substantial difference from the estimated income. However, for lower income individuals, under 400% FPL, the amount that can be retrieved is limited substantially.

Subsidies to Help With Medical Bills
All health plans have deductibles, co-pays, and out-of-pocket limits. For persons with low incomes, the federal government will subsidize the insurance payments so that the insured person will pay less. These subsidies are only available on Silver Plans and are based on the person’s income level (MAGI).

Low Income Subsidies for Silver Plan

Annual Federal Poverty Level
FPL % (single/family of four)

% of Bills Covered by Insurance & Subsidy

Less than 150% ($17,235/$35,325)


150% to 200% ($22,980/$47,100)


200% - 250% ($28,725/$58,875


Greater than 200%


Penalties for Not Purchasing Health Insurance
The Affordable Care Act penalizes persons who do not have or purchase health insurance with an additional tax. This is done to encourage healthy persons to buy insurance before it is needed.

The individual responsibility requirement does not apply to:

  • People who cannot afford coverage (defined as those who would have to pay more than 8 percent of their household income for their premiums);

  • Undocumented immigrants;

  • People without insurance for less than three months;

  • Individuals with incomes below the tax filing threshold;

  • Exemptions will also be given to specified categories of individuals; for example:

    • Persons who already have health insurance individually, through an employer, Medicare, or Medicaid;

    • For religious reasons;

    • American Indians;

    • Americans living abroad for at least one year; and,

    • Incarcerated individuals.

The tax penalty is quite low in the initial year, but increases thereafter:

  • 2014 – The greater of $95 per person or 1% of family income.

  • 2015 – The greater of $325 per person or 2% of family income.

  • 2016 – The greater of $695 per person or 2.5% of family income.

  • Future years – Penalties will increase with inflation.

For people without health insurance and who couldn’t buy it because of a chronic medical condition, this is an excellent opportunity to obtain quality coverage. And for those with lower income, there is assistance not only with making the premium payments, but also with paying the portion of the bills not paid by insurance.


Confused about applying for disability? Click here

[Jacques Chambers, CLU, and his company, Chambers Benefits Consulting, have over 35 years of experience in health, life and disability insurance and Social Security disability benefits. For the past twelve years, he has been assisting people with their rights, problems, and other issues concerning benefits and disability. He can be reached at or through his website at:]


Copyright August 2013– AttorneyMind - All Rights Reserved. Permission to reprint is granted and encouraged with credit to the AttorneyMind.

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