Despite being more than two months into the Affordable Care Act’s open enrollment season, many Americans are still scratching their heads when it comes to understanding the legislation.
From uncertainty over the functionability of the federal and state insurance exchanges, to whether or not coverage is in effect, thousands of Americans are scrambling to sort fact from fiction in regards to health-care reform.
“We are definitely doing a lot of educating about what to expect,” says Carrie Mclean, director of customer care at eHealthInsurance. “Any time there’s a cut off, people get nervous.”
Here’s a look at the most common misinformation experts say is circulating and what’s really true:
Myth No. 1: The Penalty Kicks in Jan. 1
One of the biggest confusions surrounding the Affordable Care Act is when individuals will be penalized for not having coverage. The president’s signature legislation mandates nearly every American have insurance in 2014 or face a penalty of either $95 or 1% of their salary, whichever is greater.
But consumers have until the end of open enrollment, which goes until the end of March to get coverage.
“We’re definitely getting a lot of people thinking that if they don’t get insurance today they have to pay a tax penalty,” says Mclean. “They don’t understand open enrollment goes through March 31 and they won’t get a tax penalty right away.” If anyone fails to obtain coverage by the close of the registration period, the penalty will be filed on their 2014 taxes in April 2015.
Another confusion about the fine, according to Kevin Luss, owner of financial planning firm The Luss Group, is that everyone without insurance will get hit with the penalty. He says it’s only collected if the tax payer is getting a refund.
Myth No. 2: No One is Excluded from the Law
The ACA may bring sweeping reforms, but according to Luss, there are ways to get around the law if you fall into certain categories.
“There are two groups of people that need to buy insurance: those people that didn’t have insurance to begin with and those that had it canceled on them,” says Luss.
He says the hardship exception that was released on Dec. 21 will also mean more people can avoid penalties. With this exception, people who had their insurance plan canceled because they didn’t meet the ACA’s standards and their new coverage options are unaffordable, they can be exempt from paying the fine or getting insurance altogether, Luss says.
In addition to the hardship exception, people can also get exemptions for their religious beliefs. Native Americans, undocumented immigrants and people who are incarcerated are also exempt.
Myth No. 3: You Must Buy Insurance on a State or Federal Exchange
Although most of the focus has been on the troubled state and federal exchanges, you have alternatives to seek coverage. In fact, it’s only the consumers who are eligible for a government subsidy that have to shop those exchanges, says Mclean.
“There are other places to get ACA-qualified plans,” she says. Consumers can purchase coverage from insurance companies or via an approved insurance broker. “If you are not getting a subsidy, you don’t have to shop the government exchanges,” she says.
Myth No. 4: I Don’t Qualify for a Subsidy
The subsidy portion of the Affordable Car Act has created a lot of confusion with many people assuming for one reason or another they won’t qualify for a discount. “Any of the government websites have calculators to determine your subsidy eligibility,” says Mclean, noting that a lot of the non- government sellers of ACA-eligible plans also offer tools and calculators for consumers to figure out what if any subsidy they can get.
Anyone making up to 400% of the federal poverty level will be eligible for a subsidy, and according to Kaiser Family Foundation, for an individual this tops out at around $45,000 per year, and for a family of four, this cuts off at around $94,000 per year.