The Affordable Care Act (ACA) of 2010 included the creation of an exchange or marketplace where individuals shop and enroll in qualified health plans on the Internet, with federal subsidies for moderate income households to assist with plan premiums and cost sharing expenses.
Responsibility for implementing the ACA provisions, administering new and revised programs, and overseeing ACA funding rests with the U.S. Department of Health and Human Services (HHS).
Individual states retain discretion in the establishment and operation of their Health Insurance Marketplace, the online marketplace where individuals will be able to view health plan options and purchase qualified health plans.
In New York, the NYS Department of Health created its own marketplace called the New York State of Health Marketplace, https://nystateofhealth.ny.gov.
Summary of Qualified Health Plans
A key component of the ACA was the creation of health insurance exchanges or marketplaces whereby consumers shop online for qualified health plans (QHP). An individual/family is eligible to enroll in a QHP if they are a citizen or an individual lawfully present in the U.S., is not incarcerated, is a resident of the state in which the Marketplace is operating, and is not eligible for Medicaid, Medicare, Child Health Plus, or employer-based health insurance.
During the annual enrollment period, people are eligible to sign up for a QHP or switch to another QHP. After the open enrollment period ends individuals will typically not be eligible to enroll in a plan unless they meet certain circumstances, which allows them to enroll in a health plan or change plans on the Marketplace. These are known as ‘special enrollment periods.’
Under the ACA small businesses with up to 50 full-time equivalent employees can shop online to purchase qualified health plans (ACA compliant plans) for their employees. NYS opted to expand the definition to allow small businesses with up to100 full-time employees to purchase plans on the Marketplace beginning January 1, 2016.
1. While the Affordable Care Act also impacts employers, both large and small, this chapter focuses on provisions for the individual and family, not for employers.
2: This section focuses on NY State’s rules regarding Qualified health Plans.
Health Care Subsidies for Low-Income Households
THE PREMIUM TAX CREDIT
The premium tax credit is a federal subsidy for low and moderate-income households that reduces the amount of the premium an individual or family pays for health insurance on the NYS of Health Marketplace by providing a tax credit to offset the plan’s premium. To qualify, the individual/family must purchase a qualified health plan through the state’s health insurance marketplace, not be eligible for public health coverage, that is, Medicaid, Child Health Plus, Medicare, not have access to health insurance through an employer, be a U.S. citizen or lawfully present individual, and have an annual income up to 400% of the federal poverty level (FPL). Consumers can choose to receive the credit in advance or wait until they file their taxes and receive it as a refund. See below, The Premium Tax Credit, for additional information.
The American Rescue Plan Act (ARPA) and the Inflation Reduction Act increased the amount of the premium tax credit for those with incomes up to 400% FPL through 2025. In addition, individuals/households with incomes over 400% FPL will not have to pay more than 8.5% of their adjusted gross income towards the cost of health insurance premiums through 2025.
THE COST SHARING REDUCTION
The cost sharing reduction is a federal subsidy for low and moderate-income households that reduces the amount of out-of-pocket expenses, including deductibles, co-payments and co-insurance. To qualify for this subsidy, the household must purchase a silver level health plan through the state’s health insurance marketplace, not be eligible for public health coverage, that is, Medicaid, Child Health Plus, the Essential Plan or Medicare, be a U.S. citizen or lawfully present individual, and have an annual income between 200 and 250% of the federal poverty level (FPL). Once enrolled, the eligible individual/family will automatically have reduced out-of-pocket expenses (co-payments, co-insurance and deductibles). See below, The Cost Sharing Reduction, for additional information.