Meeting the Mandate

On January 1, 2014, the Affordable Care Act’s requirement that all individuals secure healthcare coverage will take effect. The November issue of Church Finance Today discussed tax credits available to churches that provide healthcare insurance coverage to their employees. (See “Health Insurance Credit May Benefit Many Churches,” Church Finance Today, November 2013.) But what if your church doesn’t provide healthcare coverage? In this article, I’ll cover the essentials for church employees in search of their own medical insurance.

Beginning in 2014, all individuals and families who can afford to purchase health insurance must do so. Those who choose not to purchase health insurance are subject to a government-imposed fee and in addition, are required to pay 100 percent of their healthcare costs. The government-imposed fee is known as the “individual shared responsibility payment.”

In 2014, the fee for not purchasing health insurance is 1 percent of an individual’s yearly income or $95 per person for the entire year, whichever amount is greater. Additionally, the 2014 fee for uninsured children is $47.50 per child, with a cap at $285. These fees are not stagnant; they increase each year. Moreover, they are not a substitute for paying healthcare expenses. Uninsured individuals must pay both 100 percent of their healthcare costs and the government-imposed fee.

Individuals and families who cannot afford coverage can apply for an exemption from the fee that results from failure to secure coverage. This type of exemption is called a “hardship exemption,” and individuals qualify if they have experienced or are experiencing one of the following circumstances:

Individuals also qualify for an exemption from the fee if they are uninsured for less than 3 months of the year; if the lowest-priced coverage available to them is greater than 8 percent of their income; if they are a member of a recognized health care sharing ministry; or if they are a member of a religious sect with objections to insurance.

According to the Affordable Care Act, individuals and families must secure “minimum essential coverage.” The following types of coverage meet this threshold:

On their own, the following types of coverage do not qualify as “minimum essential coverage”:

Individuals who have only these types of healthcare coverage are at risk of paying a fee for being uninsured.

Individuals who are not covered under an employer-funded health insurance plan have three primary options for securing their own coverage: (1) purchase coverage through the Health Insurance Marketplace, (2) purchase coverage directly from an insurance company, or (3) participate in a healthcare sharing ministry.

Purchasing Coverage through the Health Insurance Marketplace
The Health Insurance Marketplace, sometimes referred to as the “exchange,” is a government-sponsored means of learning what health insurance options are available and comparing them. Individuals looking for coverage can go to healthcare.gov/marketplace/individual and by setting up an account, can conduct a side-by-side comparison of the insurance plans available to them in their state. Plans are presented in categories (e.g., bronze, silver, gold, platinum, and catastrophic) so that individuals can more easily differentiate between them.

The advantages of securing insurance via the Health Insurance Marketplace are threefold: First, all of the plans offered through the Marketplace are “qualified health plans.” This means that, among other things, they are guaranteed to provide certain essential health benefits and follow specific guidelines regarding deductibles and copayments. Second, purchasing a plan through the Marketplace allows for adjusted premiums and out-of-pocket costs based on household income and size. For example, a family of four that registers a household between $23,550 and $94,200 is eligible for lower premiums. The premium savings are distributed through a tax credit that can be applied directly to the premium each month. Finally, purchasing a plan through the Marketplace ensures individuals that they will not be turned away because they have a specific medical condition. All Marketplace plans are required to cover the treatment of pre-existing conditions.

Purchasing Coverage Directly from an Insurance Company
Individuals are not required to purchase health coverage through the Health Insurance Marketplace. As in the past, coverage can be purchased directly from an insurance company.

The disadvantage to shopping for coverage outside of the Marketplace is that insurance companies are not required to adjust premiums and out-of-pocket costs based on income, nor are they required to cover pre-existing conditions. However, if an individual’s income is high enough that he/she would not qualify for an adjustment through the Marketplace, and pre-existing conditions are not a concern, shopping elsewhere might provide additional health coverage options.

Participating in a Healthcare Sharing Ministry
Healthcare sharing ministries present an alternative to traditional health insurance. Participants in these ministries pay premiums (at a level of their choice), but unlike traditional insurance, the sums participants pay are matched with the medical bills of other eligible participants. Moreover, paying premiums does not guarantee coverage of qualifying medical expenses as it does with traditional insurance. To participate in these ministries, individuals usually must agree to certain lifestyle choices, such as refraining from tobacco use and drinking alcohol only moderately. Proponents of the sharing ministry model assert that it mirrors the example set by the New Testament church.

For answers to additional questions, individuals should consult healthcare.gov. This website provides a wealth of information in an understandable format. Website visitors can initiate a “live chat” with a representative or call 1-800-318-2596 and presumably receive answers to specific, individualized questions.