The Affordable Care Act
(ACA) aims to make sure all Americans have health insurance coverage.

The federal government’s
health insurance marketplace, also called the “exchange,” is the only place you
can get lower cost insurance based on your income. There’s a limited window of
time to buy insurance every year. This is called the open enrollment period. Open
enrollment begins November 1 and closes January 31.

Keep reading to learn about
six of the most misunderstood aspects of the ACA.

#1: The cost of the penalty

The penalty might be the ACA’s
most misunderstood element. Since
2014, people who can afford health insurance must buy it or pay a penalty fee.

For 2016 and 2017, the fee
rises to whichever of the following amounts is higher (without exceeding $2,085):

  • 2.5 percent of
    your household income
  • $695 per adult, and $347.50 per
    child

The fee will be adjusted
for inflation each year.

You pay the fee when you
file your taxes. There are no criminal
penalties for not paying
the fee, but it can be taken out of your tax refund.

#2: Penalty eligibility

There’s a lot of media
coverage about the fee, but you might not have to pay it. There’s no penalty
if:

  • You go three consecutive
    months or fewer without insurance in any year.
  • You have income low enough that
    you
    cannot afford insurance, even with lower premiums or tax deductions.
  • Your income is
    low enough
    that
    you aren’t required to file a tax return.
  • You qualify for
    the expanded Medicaid program but can’t take advantage of it because your state
    hasn’t expanded their Medicaid program.

#3: Effect on employer-based
health insurance

You don’t need to buy
insurance if your employer provides an insurance plan that meets the ACA’s
minimum requirements.

If your employer does not
provide the health insurance you require, you can apply for health insurance on
the exchange. You won’t receive any tax credits or financial assistance if you
drop your employer-provided health insurance and buy your own. It’s a good idea
to consider all the possible costs before switching from your employer-provided
insurance.

#4: The cost

There are four areas of
cost:

  • premium, which is
    your monthly payment
  • deductible, which
    is the amount you pay before your insurance covers costs
  • copay, which is
    the amount you pay for each office visit or prescription medicine
  • coinsurance,
    which is the percentage of each service your insurance pays

You have to be a smart
shopper. Some plans offer lower premiums, but they usually have higher
deductibles and sometimes higher copays. On the other hand, plans with lower
deductibles tend to have higher premiums.

#5: Who gets financial assistance

You’ll find out if you are
eligible for any of these cost-reducing options once you apply for health
insurance through the exchange.

The federal government
helps you pay for insurance through tax credits, reduced premiums, and cheaper
plans.

You might be eligible for
an advanced tax credit. The amount of this credit is based on your income. You
can use this credit to pay for part or all of your insurance when you buy it.
You don’t have to wait until you file your taxes.

You may be eligible for
lower-cost health insurance options or lower-cost premiums if your income is
under certain levels. Individuals and families with lower income may also
qualify for Medicaid.

#6: Can you be denied for a
preexisting condition?

Before the ACA was passed
in 2010, insurance companies could refuse to cover you if you had a health
problem. Even if you could buy health insurance, it might not have covered
treatments related to your preexisting illness. With the ACA, this is generally
no longer the case. However, there’s one exception.

If you already have a
health insurance plan and choose to keep it rather than purchase a new plan on
the exchange, your insurance company can continue to deny you coverage for a
preexisting condition.

If you would like a preexisting
condition covered, you should apply for and purchase coverage on the exchange.

What do you need to know?

You and your family need
health insurance, but the ACA can be complicated. It may sometimes seem
difficult to understand the rules and options. Keep the following things in
mind:

  • Enroll during the
    open enrollment period
  • Understand all
    the costs.
  • Think twice
    before turning down your employer’s plan. You won’t qualify for financial
    assistance if you do.