Minimum Coverage for the Affordable Care Act
Tax Law Update: The individual mandate and penalty have been repealed beginning with tax year 2019, but are still in effect for 2018 returns.
The ACA requires you to carry a “minimum requirement” of health insurance, but what does that mean exactly? Do you have to have a prescription plan? Hospitalization? Prenatal care?
There are two parts to the answer. First, the ACA has changed all health insurance plans, in several ways:
- Under the ACA, you can no longer be turned down for insurance because of a pre-existing condition, though some insurance companies may make you wait for coverage or increase your out-of-pocket expenses.
- Insurance premiums can’t vary by gender. They can only vary by the state you’re insured in, your age, and in some cases, whether you’re a smoker.
- Employer-provided plans can cover adult children up to 26 years old, even if the child is no longer a qualifying dependent.
Affordable Care Act Minimum Requirements for All Insurance Plans
Second, the ACA requires that plans offer certain essential benefits in order to qualify as meeting minimum coverage. Any health insurance plan you choose – from your employer or from a Marketplace – must include the following services and coverage:
- Ambulatory, emergency, and hospitalization services
- Maternity and newborn care
- Mental health and substance abuse services, including behavioral therapy treatment
- Prescription drug coverage
- Rehabilitative services and devices
- Laboratory services
- Preventive and wellness services
- Chronic disease management
- Pediatric services, including oral and vision care
Some plans available through the Marketplace provide dental coverage, but this is not a requirement. Other services that don’t have to be included as a minimum requirement include standalone dental and vision plans, worker’s comp, and accident or disability income insurance.
Employer Health Insurance Plans
Insurance offered by your employer must still provide the essential benefits in order to satisfy the minimum coverage requirement. Your employer’s health insurance must also cover at least 60% of all covered costs. In addition:
- If you pay for your employer’s health insurance, and the cost exceeds 9.86% of your 2019 household income, you may opt out of coverage and be eligible for subsidies to get insurance through the Healthcare Marketplace.
- Your health insurance plan may be a grandfathered plan, meaning it still satisfies the ACA requirements, even though it doesn’t provide all the essential benefits.
Other Qualifying Health Care Coverage Options
So what if you’re already insured? Depending on what type of coverage, then you should meet the minimum requirements. If you’re covered by one of the following plans, you're considered fully covered:
- Tricare for Life – active duty military, National Guard and Reserves, retirees, their families, survivors, and certain spouses
- Veteran’s Healthcare
- Peace Corps Healthcare
- Any other health benefit including state health benefits – the Secretary of Health and Human Services and IRS must recognize the providing organization