How Much Is the Health Insurance Penalty for...

a  Learn to calculate your family health insurance penalty and know what you'll owe.image ©iStockphoto/Tim McCaig Will your family have to pay a tax penalty for not having health insurance? How much is the family health insurance penalty? Will it be cheaper to go without family health insurance and pay the penalty, or to buy health insurance?Knowing the amount of your penalty can help you budget for it, but calculating the penalty for a family can be trickier than calculating the penalty for an individual.BackgroundA controversial part of the Affordable Care Act, the individual mandate requires Americans to have health insurance by January 1, 2014. Those who don’t have coverage face a penalty tax, the shared responsibility payment. Only a small number of Americans are exempt from the requirement to have health insurance coverage.Each state has a health insurance exchange to help families and individuals find insurance. Subsidies are available to help low-income families afford health insurance. But, if you’re accustomed to going without insurance and don’t qualify for a subsidy, you’ll have to squeeze this new expense out of the family budget or you’ll owe the penalty tax.How to calculate the family health insurance penaltyFirst, scroll down to look at the penalty table at the bottom of the page. Then come back up to learn how to use it.The penalty your family will owe is either a fixed minimum amount or a percentage of your family’s income, whichever is larger. The percentage-of-income penalty usually hits middle-class or wealthier families. It ensures that the penalty isn't so small it's merely a nuisance. The fixed minimum penalty usually hits low-income families. It ensures everyone pays at least a minimum penalty.Here’s how you figure out your family's penalty.Calculate the family’s minimum penalty.Calculate the family’s percentage-of-income penalty.Compare the two results; you’ll owe the larger of the two.How to calculate the family’s minimum penaltyTo calculate the family’s minimum penalty, add together the individual penalty amounts for each family member using the penalty for the appropriate year from the table below.Two rules make the family’s minimum penalty smaller. The individual penalty is halved for children under 18 years old. The family’s minimum penalty is capped at three times the individual penalty.ExampleTom and Sandy have 3 young children. Nobody in the family has health insurance. They need to calculate the family’s minimum penalty for the year 2015.The table shows the minimum penalty is $325 for each individual in the family. But, only the adults owe the full amount. The minimum penalty is half that amount, or $162.50, for each of the kids.$325 (for Tom) + $325 (for Sandy) + $162.50 (for child 1) + $162.50 (for child 2) +$162.50 (for child 3) = $1,137.50 (for the family)But, a family’s minimum penalty maxes out at three times the individual minimum penalty, or $325 x 3 = $975. Since $1,137.50 is larger than $975, they’ll use $975 for the amount of their minimum family penalty as they move forward with their calculations.How to calculate the family’s percentage-of-income penaltyFigure the percentage-of-income penalty for the family based on the entire household’s income. From the table below, the penalty percentage for 2015 is 2% of the income above the filing threshold.Tip: Don't pay the government too much. Only pay the health insurance penalty on the portion of your income that's over the filing threshold. Subtract the filing threshold from your income before calculating the penalty.Tip: The filing threshold is the amount of income that requires you to file a tax return. People with incomes below the filing threshold don’t have to file an income tax return; those with incomes above the threshold must file.Tip: You can estimate the filing threshold using the 2012 figures of $9,750 for single filers, $12,500 for head-of-household filers, and $19,500 for married couples filing jointly. Or, for the most accurate results, you can get the filing threshold for the year in question from publication 501 at the IRS forms and publications page.ExampleTom and Sandy together will make $100,500 in 2015. They file their taxes as a married couple filing jointly, so they’ll use $19,500 as an estimate of their filing threshold, subtracting it from their income before they calculate the percentage.$100,500 - $19,500 = $81,000The family’s income - the filing threshold = the portion of their income to be penalized.$81,000 x 0.02 = $1,620The portion of income to be penalized x the 2% penalty = their percentage-of-income penalty.Pulling it all together: know what you’ll oweNow that you’ve calculated your family’s minimum penalty and your family’s percentage-of-income penalty, you need to compare them. Your family’s shared responsibility payment will be based on the larger of those two amounts.There are a few situations that might decrease your family’s penalty.Do you have a large penalty?The penalty maxes out at the national average cost of a bronze-tier family health insurance plan for that year. Will your family have health insurance for part of the year?Only pay the penalty for the months your family is uninsured. For example, if your family was uninsured for seven months of the year, you would only pay seven-twelfths of the yearly health insurance penalty. Can’t find affordable health insurance?If you can’t find family health insurance that costs less than eight percent of your household income, your family may be exempt from the penalty. The eight percent figure is based on what your family has to pay for the coverage, not on the cost before employer contributions or premium subsidies.ExampleTom and Sandy’s minimum family penalty for 2015 was $975. Their family’s percentage-of-income penalty was $1,620. Since their percentage-of-income penalty is larger, that’s the figure their family penalty will be based on. If their family had been uninsured all year, they would owe a shared responsibility payment of $1,620.However, Sandy switched jobs in July, and her new employer offered health insurance. The entire family was covered by health insurance starting in September. Since they were only uninsured for the first 8 months of the year, they only have to pay the penalty for the portion of the year they were without coverage.$1,620 x 8/12 = $1080The yearly penalty amount x the part of the year they were uninsured = the final family penalty owed.Tom and Sandy owe a shared responsibility payment of $1080 because their family lacked health insurance coverage for 8 months of 2015. Along with their 2015 income taxes, this penalty tax is due to the IRS by April 15, 2016.Sources:US Code 2011, Title 26, subtitle D, Chapter 48, sec5000AIRS: Questions and Answers on the Individual Shared Responsibility ProvisionCongressional Research Service report: Individual Mandate and Related Information Requirements Under the PPACAYear 2014Year 2015Year 2016After 20161% of income above filing threshold2% of income above filing threshold2.5% of income above filing threshold2.5% of income above filing threshold

Fighting a Health Insurance Claim Denial

zYou might run up against a health insurance claim denial when you use a medical service. Fortunately, routes are available for disputing claim denials, including getting help from the government in many states.It's usually worth fighting your denial. Sometimes your insurer will surrender and pay your claim to avoid the expense of handling an appeal. Sometimes your protests will uncover and reverse a mistake the insurer has made. And often a combination of the two will result in at least a partial payment.The best way to avert a claim problem is to avoid a dispute in the first place.This will take a little work on your part: You must read your policy and understand what it covers -- and doesn't cover -- before you get treatment. Pay particular attention to procedures and treatments that require prior approval from your insurer. If you fail to get prior approval, your care may not be covered.Alert your doctor about what's covered under your policy and try to make sure that she knows when prior approval is required. Your doctor deals with many patients and health insurance companies, so you can't expect that she will be as familiar with your health plan as she is with your medical history.If you are enrolled in a PPO or HMO make sure that you understand your health plan’s policy about using network providers. If you are in an HMO you will not be covered for any health-related services outside the HMO network unless you need some type of procedure that is not available in the network. You will need to get prior approval from the HMO for such services. The same applies for your PPO, you most likely can go out-of-network, but you will have significant out-of-pocket expenses.If there is anything in your policy that you don't understand, call your health plan's customer service line and ask for an explanation.Once you file a claim or you have asked for a pre-approval of a treatment, keep all of the records -- provider bills, explanations of benefits notices from your insurer and all other correspondence -- in a folder or paper-clipped together, so you can review them at a glance if the need arises.Start by reviewing your paperwork file. Then call your health plan's customer service line. Often, mistaken denials can be cleared up at this level. Be sure to take notes on all phone conversations, including the date and time of the call, the names of the people you talk to and what was discussed.If speaking with a customer service representative does not work, you may have to escalate to a formal written appeal.Your insurance policy will outline the paperwork your health plan requires you to file. You can expect to provide a great deal of information in writing, including copies of bills, your healthcare provider's name, address and phone number, and your physician's statement about why your treatment was or will be necessary.Many health plans have several steps in the appeal process. If your initial appeal is denied, you most likely will have additional appeals available. The entire appeal process should be outlined in the benefits booklet you received from your health plan.In many states, you can ask your state insurance commissioner's office to perform an independent review of your dispute. This step is usually taken after you go through your health plan's internal appeals process first.To find out about an independent review, check your health plan benefits booklet (sometimes referred to as “Evidence of Coverage”), which in some states is required to inform health plan members about appeals options external to the health plan. Another important resource is your state’s insurance department, or agency.Some health plans offer arbitration, in which an independent third party reviews the dispute and recommends an outcome. Whether the arbitrator's ruling is binding depends on the state and the health plan.If arbitration is offered under an employer-provided health plan, federal law says you can't be charged for using it.The more information you have, the more likely you are to win your claims denial appeal. Create a paper trail by keeping the following:your health insurance policycopies of denial letters from your health plancopies of any correspondence between you and your health plan, or between your health care provider (such as your doctor, hospital, or lab) and your health plandetailed notes of conversations with your health plancopies of correspondence with your state insurance departmentIf you get your health insurance through your employer, you should discuss your claims situation with your company’s benefit manager, who may have some leverage with your health plan.The Kaiser Family Foundation provides an outline of the external review process for each state.You can also get more information from your state health insurance department.This article was co-authored by David Fisher, a freelance writer based in Bend, Ore. In addition to writing and editing he has worked as a financial adviser and held insurance licenses in several states.

Can You Get a Health Insurance Exemption?

aIf you don’t want to pay a penalty tax, you’ll either have to have health insurance after December 31, 2013, or you’ll have to get a health insurance exemption.One of the provisions of the Affordable Care Act, the individual mandate, penalizes people who go without health insurance by making them pay a penalty tax called a shared responsibility payment. There are only three ways around this penalty:Have health insurance coverage that meets coverage rules.Get an exemption.Belong to a group the government views as having health insurance coverage, whether or not you actually do have coverage.You’re likely exempt from the individual mandate health insurance penalty if you:Aren’t in the United States legally.Are in jail or prison, unless you're incarcerated pending disposition of charges.Are an Alaskan Native or a member of an Indian Tribe.Have a small enough income that you’re not required to file income taxesHow much income can you have before you’re required to file income taxes? For 2012, individuals could earn $9750 before they had to file, and couples could earn $19,500. But, it changes every year. If you’d like to know the filing threshold for any particular year, it’s found in IRS publication 501 for that year, which you can get from the IRS Forms & Publications webpage.Have a religious conscience objection to insuranceTo qualify for this exemption: You must be a member of a recognized religious sect.You have to waive all of your Social Security benefits.The Commissioner of Social Security must agree that your religion opposes insurance for things like death, disability, and medical care.The Commissioner must find that members of your religion have made arrangements to provide for their dependent members since they aren’t using insurance as a safety-net.The sect must have been in existence continuously since December 31, 1950.David Emery, the About.com Guide to urban legends, addresses this area in more detail in“Are Muslims Exempt from ObamaCare Health Insurance Mandate?”Are a member of a health care sharing ministryHealth care sharing ministries are religion-based groups of people who assist each other with paying medical bills. You can learn more about health care sharing ministries from The Alliance of Health Care Sharing Ministries. Your membership won’t make you exempt from the individual mandate unless your sharing ministry has been in existence since 12/31/1999. Additionally, the ministry's yearly accounting audits must be available to the public.Can’t afford coverageTo be considered unaffordable, your contributions toward job-based coverage must be more than eight percent of your household income. For health insurance from your state’s health insurance exchange to be considered unaffordable, your contribution toward the annual premium of the lowest cost bronze plan available in the individual market must be more than eight percent of your household income.Have gone less than 3 consecutive months without coverageYou’re only allowed to use this exemption once per year, and only the first occasion each year is exempted. For example, if you’re uninsured for two months in February and March, then again for three months in August, September, and October, you’ll only be exempt for the February and March period. You’ll owe the shared responsibility payment penalty for the August, September, and October period.Have a hardship that legitimately prevents you from getting health insuranceYour health insurance exchange must decide that you have a hardship affecting your ability to get health insurance. Exchanges use rules and guidelines to make this decision. You can learn more in, "How To Get a Hardship Exemption."Your state health insurance exchange is responsible for exemptions based on hardship and religious conscience objection. Apply with the exchange; it will make the eligibility decision and issue the exemption if you qualify.You can claim exemptions based on the following when you file your federal tax return:coverage costing more than eight percent of your incomemembership in a healthcare sharing ministrymembership in an Indian Tribebeing incarceratedIf you prefer not to wait until you file your taxes, the exchange can also address the above exemptions. You might choose this option if you have questions or if you're not sure if your situation matches the criteria exactly.Exemptions due to being uninsured for less than three months will be taken care of when you file your income taxes.If your exemption is due to having a small enough income that you don't have to file federal income taxes, you don't actually have to apply for the exemption; it's automatic. If you file taxes even though you don't have to, for example because you want to get a refund, you won't have to pay the penalty tax.The government treats some people as though they have minimal essential health insurance coverage, even if they don’t. While not exactly the same as being exempt, the effect is similar in that those people don’t have to pay the health insurance penalty tax, even if they don’t have health insurance. You’ll be treated as though you have health insurance coverage if:For at least 330 days of the year, you live outside of the United States and maintain a tax home outside of the United StatesYou are a resident of Guam, American Samoa, Northern Mariana Islands, Puerto Rico, or the US Virgin Islands, and you don’t have a closer connection to the United States or a foreign country than you do to the US possession where you’re claiming residency.If none of those things applies to you, but you don’t want to owe the penalty tax, your best bet for avoiding it is to get health insurance coverage.If you’re unemployed or can’t get health insurance through your employer, your next best option is to try your state’s health insurance exchange. All of the health insurance plans sold through the exchange will meet the rules for minimum coverage. The exchange will also check to see if you’re eligible for any subsidies or tax credits to help you afford coverage, and apply those credits before you have to pay for the insurance.Before you shop for health insurance at your state’s health insurance exchange, learn how to pick the health insurance plan that’s the best fit for your healthcare needs and your budget in, “Before You Buy Health Insurance—What You Need to Know When You’re Shopping for Health Insurance.”If you don’t qualify for a health insurance exemption, you’re not living abroad or in a U.S. possession, and you’re not going to get health insurance before January 1, 2014, then you’re probably going to have to pay the shared responsibility penalty. “How Much Is the Health Insurance Penalty for an Individual?” and "How Much Is the Health Insurance Penalty for Families?" will help you figure out how much you’ll owe.  Source: U.S. Code 2011, Title 26, Subtitle D, Chapter 48, section 5000A

How Much Is the Health Insurance Penalty for an...

aWill you have to pay a tax penalty for not having health insurance? How much is the health insurance penalty? Will it be cheaper to go without health insurance and pay the penalty, or to buy health insurance?One of the more controversial parts of the Affordable Care Act is the individual mandate which requires Americans to have health insurance by January 1, 2014. Although a small number of Americans are exempt from the requirement to have health insurance coverage, the rest of us will face a penalty, the shared responsibility payment, if we are uninsured.Each state will have a Health Insurance Exchange to help people find insurance, and subsidies will be available to help low income people afford health insurance. But, if you’re accustomed to going without insurance and don’t qualify for a subsidy, you’ll have to squeeze this new expense out of your budget or pay the individual mandate penalty.If you’re thinking about forgoing health insurance in hopes of saving money, the cost of the penalty will eat into your savings. Knowing the amount of your penalty can help you budget for it.If you're trying to calculate the penalty for a family, you can learn how here.Calculating the health insurance penaltyFirst, scroll down and look at the Individual Mandate Penalty Table at the bottom of the page. Then come back up to learn how to use it.The penalty you’ll pay is either a fixed minimum amount, or a percentage of your income. Using the table, calculate the penalty as a percentage of your income first. Then, compare that to the minimum health insurance penalty for that year. Your individual mandate penalty will be the larger of the two.Tip: Don't pay the government too much. Only pay the health insurance penalty on the portion of your income that's above the filing threshold. Subtract the filing threshold from your income before you calculate the penalty. (You’ll see examples of this below.) Tip: The filing threshold is the amount of income that requires you to file a tax return. People with incomes below the filing threshold don’t have to file an income tax return; those with incomes above the threshold must file. You can estimate the filing threshold using the 2012 filing threshold figures of $9750 for single filers and $19,500 for married couples filing jointly. Or, you can get the actual filing threshold for the year in question from publication 501 at the IRS forms and publications page.Situations that might decrease your penaltyCouldn’t find affordable health insurance?If you can't find health insurance that costs you less than 8% of your income, you may be exempt from the penalty. (The government can increase that 8% figure in the future if the cost of health insurance increases faster than average incomes increase.)Do you have a large penalty?The penalty amount is capped at the national average cost of a bronze-tier health insurance plan for that year.Did you have health insurance for part of the year?Only pay the penalty for the months you went without health insurance. For example, if you went without health insurance for seven months of the year, you would only pay seven-twelfths of the yearly health insurance penalty.Example AStan is a single 24 year old tax filer who made $45,000 in 2015 and was uninsured all year. Although his employer offered health insurance costing $280 per month, Stan felt he couldn't afford the $280 each month, so chose to go without insurance. Using the 2012 filing threshold amount of $9750, here are Stan’s estimated calculations:Step 1$45,000 - $9,750 = $35,250Stan’s income - filing threshold for single filers = portion of Stan’s income used to calculate the penaltyStep 2$35,250 X 0.02 = $705portion of Stan’s income used to calculate the penalty X the penalty percentage for 2015 which is 2% or 0.02 = Stan’s percentage-of-income penaltyStep 3Check the table. Compare the minimum penalty for 2015 with the percentage-of-income penalty you just calculated, and Stan’s individual mandate penalty will be the bigger of the two.Since $705 is larger than the minimum health insurance penalty of $325 for 2015, Stan will have to pay a penalty of $705 when he files his taxes on April 15, 2016. Stan’s employer offered health insurance that would have cost Stan less than 8% of his income, so Stan isn’t exempt from paying the penalty.Example BMary is a single 45 year old who was uninsured for eight months in 2016. The rest of 2016, she had health insurance. She earned $75,000. Using the 2012 filing threshold figures to estimate Mary’s penalty, here are the calculations:Step 1$75,000 - $9750 = $65,250 Mary’s income in 2016 - filing threshold for single filers = portion of Mary’s income used to calculate the penaltyStep 2$65,250 X 0.025 = $1,631.25portion of Mary’s income used to calculate the penalty X the penalty percentage for 2016 which is 2.5% or 0.025 = Mary’s percentage-of-income penaltyStep 3Check the table and choose the larger of the two penalties. The minimum penalty for 2016 is $695. Since that's less than Mary’s percentage-of-income penalty of $1631.25, Mary has to choose the percentage-of-income penalty.Step 48/12 X $1631.25= $1087Mary only has to pay eight-twelfths of the penalty since she was only uninsured for 8 months. So, Mary will have to pay an individual mandate penalty of $1087 when she files her taxes.Sources:US Code 2011, Title 26, subtitle D, Chapter 48, sec5000A; IRS: Questions and Answers on the Individual Shared Responsibility Provision; Congressional Research Service report: Individual Mandate and Related Information Requirements Under the PPACAYear 2014Year 2015Year 2016After 20161% of income above filing threshold2% of income above filing threshold2.5% of income above filing threshold2.5% of income above filing threshold

CHIP - The Children’s Health Insurance...

aThe Children’s Health Insurance Program (CHIP), created by Congress in 1997, is a partnership between the federal government and the states to extend health coverage to uninsured children and pregnant women in families who cannot afford to purchase private health insurance but have incomes too high to qualify for Medicaid.Your state has the option to either expand its Medicaid program to include people who are eligible for CHIP or create a separate state program.A Dr. Mike CHIP fact: In 2008 more than 7.3 million children received services from the Children’s Health Insurance program.On February 4, 2009, President Obama signed into law the Children's Health Insurance Program Reauthorization Act (CHIPRA), which renews and expands CHIP from 7 million children to 11 million children. The new law also pays for CHIP through 2013.If you cannot afford to buy private health insurance and your family earns too much to qualify for Medicaid, you may be eligible for CHIP.Each of the states and the District of Columbia has different eligibility rules. However, in most states, uninsured children who are 18 and younger whose families earn up to $44,100 a year (for a family of four) may be eligible.The annual income figure varies depending on the size of your family. For example, for a family of two the income limit is $29,140 a year and for a family of six the income limit is $59,060 a year.If your children are currently enrolled in the CHIP program in your state, it is unlikely that you will notice any changes in your children’s benefits or where they receive care due to the passage of the Patient Protection and Affordable Care Act (health reform) in March 2010.The health reform law requires your state to maintain the current eligibility in CHIP until 2019. The bill also extends funding for CHIP through 2015.Depending on your income and the state you live in, you may have to pay a small monthly premium to receive coverage. Some states also have an enrollment fee or copayments for healthcare services. For example, the state of Colorado charges $35 to enroll two or more children and has a copayment of $2 to $5 for a doctor’s visit and to fill a prescription.The fees required by the states are often very low and may be related to your income. For example, in New York State, you may be eligible to enroll your children in CHIP with a higher income and pay a monthly premium of $9. And, in Illinois, a family of four with an annual income between $44,000 and $66,156 would have to pay a monthly premium of $40 for each child.Although your state can create its own set of benefits for CHIP, each state is required to cover the following services:routine check-upsimmunizationsdental careinpatient and outpatient hospital careEmergency room visitslaboratory and x-ray servicesAs previously mentioned, your state can require that you share in the cost of CHIP through monthly premiums and copayments for services. However, preventive care must be provided at no cost to you.One of the best resources for information about CHIP is the government-sponsored website InsureKidsNow.This site provides information about CHIP and Medicaid and, using an interactive map, gives you access to CHIP in all 50 states and the District of Columbia. The site also has a hotline and you can watch a video that features families who have benefited from CHIP.In his remarks when he signed the Children’s Health Insurance Program Reauthorization Act, President Obama said the following:“No child in America should be receiving her primary care in the emergency room in the middle of the night. No child should be falling behind at school because he can’t hear the teacher or see the blackboard. I refuse to accept that millions of our kids fail to reach their full potential because we fail to meet their basic needs. In a decent society, there are certain obligations that are not subject to tradeoffs or negotiation – health care for our children is one of those obligations.”And, “Since it was created more than ten years ago, the Children’s Health Insurance Program has been a lifeline for millions of kids whose parents work full time, and don’t qualify for Medicaid, but through no fault of their own don’t have – and can’t afford – private insurance. For millions of kids who fall into that gap, CHIP has provided care when they’re sick and preventative services to help them stay well."

What Is a Health Insurance Exchange?

a Definition: A health insurance exchange, otherwise known as a health insurance marketplace, is a shopping area for health insurance. Although private health insurance exchanges do exist, the phrase most commonly refers to public health insurance exchanges developed within each state as part of health care reform.Background:Mandated by the Affordable Care Act to be running in every state by October, 2013, the intent is to provide individuals and small businesses somewhere to shop for affordable health insurance that meets the requirements of the Affordable Care Act.How Health Insurance Exchanges Work:Insurance companies compete for your business using the marketplace. This competition is meant to keep the cost of health insurance premiums down.Another consumer-friendly aspect of health insurance marketplaces is the ease of comparing apples to apples. The exchanges allow direct comparison of competing health insurance policies in two ways. First, all health insurance policies offered through the exchanges must provide a minimum set of essential health benefits. Second, all health insurance policies offered must conform to one of four benefit tiers: bronze, silver, gold, and platinum.A policy’s benefit tier describes the percentage of covered healthcare expenses the plan will pay, otherwise known as the actuarial value of the plan. This helps policy holders estimate the amount of cost-sharing the policy requires. You can learn more about how these benefit tiers work in, "Bronze, Silver, Gold, and Platinum—Understanding the Metal-tier System."Health insurance exchanges are the access point for government subsidies that make health insurance more affordable for low income Americans. The only place you can apply for a government health insurance subsidy is your state's health insurance exchange. The subsidy is only good for health insurance bought on the health insurance exchange. You can learn more about these subsidies in, "Can I Get Help Paying for Health Insurance?"Even if you don't want to buy health insurance, you may end up having contact with your state's health insurance exchange since health insurance exemption certificates are only issued through health insurance exchanges. If you don't have health insurance, don't want to get health insurance, and want to avoid a tax penalty, you'll need an exemption certificate. find out if you're eligible in, "Can I Get a Health Insurance Exemption??"Health insurance marketplaces are state based, and their health plan offerings will vary from state to state. A state may run its own exchange, or choose to have the Federal Government run its exchange. Find out how to contact the health insurance exchange in your state, as well as whether it's run by your state or by the federal government.Health insurance marketplaces begin enrolling people in October 2013 for benefit coverage starting January 1, 2014. This coincides with the Affordable Care Act’s individual mandate, which also goes into effect January 1, 2014, requiring all citizens and legal residents of the United States to have health insurance.

How To Save on Health Insurance if You Reach...

aIf you’re reaching your health insurance out-of-pocket maximum every year, you may have opportunities to save money. When you have a chronic medical condition or high healthcare expenses, it can be hard to save money on healthcare. Coinsurance expenses can be prohibitive if you’re on an expensive medication, require frequent infusions, or need recurring costly treatments. But, your high healthcare expenses are the key to two savings opportunities.First, you may be able to save on your out-of-pocket expenses like copays, coinsurance, and deductibles. Second, you may be able to save on health insurance premiums. These savings techniques only work for people who expect to reach their plan’s out-of-pocket maximum each year.Choose a health plan with a lower out-of-pocket limitOnce you’ve paid enough out-of-pocket healthcare expenses to meet your yearly out-of-pocket maximum, most health insurance companies will pay 100% of your covered expenses for the rest of the year. The only thing you continue to pay is your monthly health insurance premium.Therefore, if you choose a health plan with a lower out-of-pocket maximum than you’re currently paying, you save money. When you’re calculating the potential savings, make sure that the savings you’ve won haven't been eaten up by higher premiums.Your best bet to find a plan with a lower out-of-pocket maximum but premiums similar to your current plan is to look at plans with higher than average deductible and coinsurance. Since most people never reach the out-of-pocket maximum, the higher the deductible and coinsurance, the less the health insurance company has to pay for healthcare services. This allows the health insurance company to charge a lower premium.Since you know you’ll be paying the full amount of the out-of-pocket limit each year, the higher deductible and coinsurance don't increase your yearly costs. In fact, since you're choosing a plan with a lower out-of-pocket maximum, your yearly costs will go down. However, the higher deductible and coinsurance will impact when you'll pay your out-of-pocket expenses, shifting those expenses toward the beginning of the plan-year. You’ll reach the out-of-pocket maximum earlier in the year because it's lower so it's easier to reach, and because your deductible and coinsurance are higher causing you to pay more upfront to reap the yearly savings.Choose a health plan with the same out-of-pocket maximum but a lower premiumAnother way to save is to shop for a health insurance plan that offers the same out-of-pocket limit as your current plan, but a lower monthly premium. While you’ll still have the same yearly out-of-pocket healthcare expenses, you’ll save money each month on the cost of the premium.Once again, you’ll have the best luck finding a plan that meets these criteria if you look at plans with higher deductible and coinsurance than your current plan. Although you’ll need to have money available in the first few months of the year to meet your new deductible and coinsurance expenses, you’ll have wiggle room in your budget since you’ll be paying less each month in premiums.Caveat EmptorMake sure you fully understand the benefits of the plan you’re considering switching to. While most health plans cover 100% of your healthcare costs after you’ve met your out-of-pocket limit, some still require you pay copays to see the doctor, or coinsurance for drugs. You need to nail down these specifics before you switch plans. For example, it will cost you dearly if you switch to a plan with a lower out-of-pocket maximum, only to discover the plan requires you to pay 20% coinsurance on your expensive prescription even after you’ve met your out-of-pocket maximum. Worse yet would be to discover that your new plan doesn’t include your expensive prescription drug in its formulary, or doesn’t cover your costly treatment. You would have to switch drugs or treatments, or pay the entire cost out-of-pocket. Because your healthcare costs are so high, it’s crucial that you thoroughly investigate a new health plan’s benefit coverage before you switch.The Affordable Care Act requires all health plans sold through health insurance exchanges to cover 100% of eligible out-of-pocket expenses after you’ve met your yearly out-of-pocket maximum. But, most plans aren’t required to comply with that before January 1, 2014, some large plans don’t have to comply until January 1, 2015, and grandfathered plans may not have to comply at all.The Affordable Care Act also created a health insurance subsidy to help decrease the out-of-pocket maximum for eligible people with low incomes. Learn more about this in, "How the Subsidy to Reduce Your Out-Of-Pocket Maximum Works." Before you switch plansRead “Out-Of-Pocket Maximum—How It Works and Why to Beware” to ensure you understand the caveats before you make any changes to your health plan.Make sure you’ll have enough money available early in the plan-year to pay the potentially higher initial costs like deductible and coinsurance, before you meet the new out-of-pocket limit and start reaping the savings. Consider a Flexible Spending Account.Make sure the health plan you’re considering will accept your prior insurance as creditable coverage so you don’t run into a preexisting condition exclusion if you change plans before those exclusions are eliminated in January 2014.If sticking with your current physician is important to you, make sure he or she is in-network with the health plan you’re considering.

Beyond Medical Coverage: Vision Care Insurance

aIf you have an eye disease or eye injury your regular health insurance will pay for diagnosis and treatment. However, most regular health insurance policies do not pay for the costs of routine eye exams, corrective lenses, eyeglass frames, or contact lenses. Insurance coverage for such services is known as vision care insurance.Some large employers do provide vision care insurance as a benefit but most do not. According to the U.S. Department of Labor, less than 30% of employees receive vision care coverage.Vision care insurance usually pays for the following basic services:A yearly eye examination, including refraction to check your visionEyeglass lensesEyeglass framesContact lensesLASIK and PRK vision correction procedures at a discounted rateYour specific vision care plan may have a limit (such as every two years) on how often it will pay for lenses and frames.Usually, vision care plans (including those you buy or are provided by your employer) contract with eye care professionals to provide you with vision care services. In some plans you can use any eye care provider and receive a discount on the services offered. However, most plans purchased from a vision care insurance company are PPOs (preferred provider organizations) in which your eye care is managed by a network of eye providers. In a PPO, you also can use out-of-network eye providers, but you will pay a greater share of the cost.Eye care network professionals typically include optometrists and general ophthalmologists. Some networks also may include ophthalmologists who perform refractive surgery and provide LASIK and other vision correction procedures.An optometrist, also known as a doctor of optometry, is licensed to examine your eyes to diagnose vision problems, such as nearsightedness and farsightedness, and prescribe eyeglasses or contact lenses. Your optometrist also can test you for glaucoma and other eye diseases and diagnose eye problems related to diseases such as diabetes and high blood pressure. Optometrists can also diagnose and treat certain types of eye diseases, such as conjunctivitis (pink eye). Ophthalmologists are medical doctors who perform eye surgery, diagnose and treat diseases and injuries of the eye. Ophthalmologists, like optometrists, can also examine your eyes for vision problems and prescribe eyeglasses and contact lenses.Similar to dental insurance, you may be able to purchase vision care coverage through a local business group, college alumni association, fraternal organization, or religious group. If you are over 65, you may have a vision care (including eyeglasses) benefit if you are part of a Medicare Advantage Plan.You also can purchase your own vision benefit plan. For example, two of the larger eye insurance companies in the country that offer individual vision care policies are Vision Service Plan and Humana One. Both companies’ web sites provide access to information about the vision plans available in your state.If you wear corrective lenses and need periodic eye exams and changes in your eye lens prescription, it may be worthwhile to purchase vision care insurance. If you do not currently wear or need glasses, you may be able to get a periodic eye exam through your regular health insurance plan.An individual plan may cost you from $150 to $180 per year depending on where you live. You may also have a copayment for the initial eye examination and for the corrective lens prescription. The typical benefit usually includes:Eye Exam - Covered in fullPrescription Lenses - Covered in fullFrames - Covered up to $120Contact Lenses - $120 allowance for the cost of your contacts and the contact lens examAnother option is to enroll in a discount plan, which provides a specific discount for vision-related services. Although not an insurance policy, these plans can save you up to 30% to 40% off the retail price for exams and corrective lenses. For example, if you are a member of AARP, you can save 30% on eyeglasses and 20% on contact lenses by just presenting your AARP card to a participating vision care provider.

How Does the Health Insurance Subsidy Work?

aHealth insurance is expensive, and not everyone can afford it. However, the Affordable Care Act requires that you have health insurance from January 1, 2014 onward.When they wrote the Affordable Care Act, lawmakers knew many people wouldn’t be able to afford the cost of health insurance premiums, so they included subsidies to help. One of those subsidies is the premium tax credit.The premium tax credit is designed to help people pay their monthly health insurance premiums. But, in order to get that financial help and use it correctly, you have to understand how it works.How Do I Apply for the Premium Tax Credit Health Insurance Subsidy?Apply for the premium tax credit through your state’s health insurance exchange. If you get your health insurance somewhere else, you can’t get the premium tax credit.Find out how to contact your state’s health insurance exchange.Will I Qualify for the Subsidy?People making between 100 and 400 percent of federal poverty level can qualify for the premium tax credit health insurance subsidy. Federal poverty level changes every year, and is based on your income and family size. You can look up this year’s FPL here.Using 2013 FPL levels, you'll qualify as an individual with an income range of $11,490-$45,960, a couple with an income of $15,510-$62,040, and a family of three earning $19,530-$78,120.If you meet the income qualifications, make sure something else doesn't disqualify you from receiving the subsidy. Learn more in, “Can I Get Help Paying for Health Insurance”; look for the section “What Things Disqualify Me From Getting a Health Insurance Subsidy?”How Much Money Will I Get?In order to figure out how much your premium tax credit will be, you have to know two things: Your expected contribution toward the cost of your health insuranceTip: You can look this up in the table at the bottom of the page. The cost of your benchmark health planTip: Your health insurance exchange can tell you which plan this is and how much it costs. Your benchmark plan is the silver-tiered health plan with the second lowest monthly premiums in your area. The Affordable Care Act classifies health plans based on how much of your health care costs they’re expected to cover. A bronze health plan will cover about 60 percent of the average person’s health care costs. A silver health plan will cover about 70 percent.Your subsidy amount is the difference between your expected contribution and the cost of the benchmark plan.See an example of how to calculate your monthly costs and your subsidy amount at the bottom of the page.Can I Buy a Cheaper Plan To Save Money, or Must I Buy the Benchmark Plan?Just because the benchmark plan is used to calculate your subsidy doesn’t mean you have to buy the benchmark plan. You may buy any plan listed on your health insurance exchange, but your subsidy amount stays the same.If you choose a more expensive plan, you’ll pay the difference plus your expected contribution. If you choose a plan that’s cheaper than the benchmark plan, you’ll pay less since the subsidy money will cover a larger portion of the monthly premium. If you choose a plan so cheap that costs less than your subsidy, you won’t have to pay anything for health insurance. However, you won’t get the excess subsidy back.If you’re trying to save money so you choose a plan with a lower value, (like a bronze plan instead of a silver plan), you’ll likely have higher coinsurance and copays when you use your health insurance.There’s another reason to choose a silver-tier plan. There’s a different subsidy that lowers copays, coinsurance, and deductibles for some low-income people. Eligible people can use it in addition to the premium tax credit subsidy. However, it’s only available to people who choose a silver-tier plan.Do I Have to Wait Until I File My Taxes to Get the Subsidy?You don’t have to wait until you file your taxes. You can get the premium tax credit in advance. If your income is so low that you don’t have to file taxes, you can still get the subsidy. However, if you’d rather, you may choose to get your premium tax credit as a tax refund when you file your taxes instead of having it paid in advance.How Do I Get the Money?If you choose to get the premium tax credit in advance, the government sends the money directly to your health insurance company on your behalf. You'll never actually lay your hands on the money. Your health insurer credits that money toward your cost of health insurance premiums, decreasing how much you'll pay each month.If you choose to get the premium tax credit as a tax refund, the money will be included in your refund when you file your taxes. This could mean a big tax refund. But, you'll pay more each month since you’ll be paying both your share of the premium and the share that would be have been covered by the subsidy if you'd chosen the advanced payment option.Why Wait Until I File My Taxes To Get the Subsidy?Most people won’t want to wait; they’ll choose the advance payment option. However, consider opting to get the subsidy along with your tax refund if: Your income is very close to 400 percent of FPL.Your income varies from year to year so you’re not sure how much you’ll make.When the subsidy is paid in advance, the amount of the subsidy is based on an estimate of your income for the coming year. If the estimate is wrong, the subsidy amount will be incorrect.If you earn less than estimated, the advanced subsidy will be lower than it should have been. You’ll get the rest as a tax refund.If you earn more than estimated, the government will send too much subsidy money to your health insurance company. You’ll have to pay back part or all of the excess subsidy money when you file your taxes. Even worse, if your actual income ended up more than 400 percent of FPL, you’ll have to pay back every penny of the subsidy. This could be thousands of dollars.If you get your subsidy when you file your income taxes rather than in advance, you’ll get the correct subsidy amount because you’ll know exactly how much you earned that year. You won’t have to pay any of it back.What Else Do I Need To Know When Applying for a Subsidy?If your subsidy is paid in advance, notify your health insurance exchange if your income or family size changes during the year. The exchange can re-calculate your subsidy for the rest of the year based on your new information. Example of How To Calculate the Subsidy:Figure out how your income compares to FPL.Find your expected contribution rate in the table below.Calculate the dollar amount you’re expected to contribute.Find your subsidy amount by subtracting your expected contribution from the cost of the benchmark plan.Tom is single with an income of $22,800 per year. FPL for 2013 is $11,490 for single people.To figure out how Tom’s income compares to FPL, use: income ÷ FPL x 100.$22,800 ÷ $11,490 x 100 = 198.4.Tom’s income is 198 percent of FPL. Using the table below, Tom is expected to contribute 4-6.3 percent of his income. Since he’s almost at the top of his category in the table, he uses the 6.3 percent figure. To calculate how much Tom is expected to contribute, use this equation: 6.3 ÷ 100 x income.6.3 ÷ 100 x $22,800 = $1,436.Tom is expected to contribute $1,436 per year, or about $120 per month, toward the cost of his health insurance. The premium tax credit subsidy pays the rest of the cost of the benchmark health plan. The benchmark health plan at Tom’s health insurance exchange costs $3,900 per year or $325 per month. Use this equation to figure out the subsidy amount: cost of the benchmark plan – expected contribution = amount of the subsidy.$3,900 - $1,436 = $2,464.Tom’s premium tax credit subsidy will be $2,464 per year or about $205 per month.If Tom chooses the benchmark plan, or another $325 per month plan, he’ll pay $120 per month for his health insurance. If he chooses a plan costing $425 per month, he’ll pay $220 monthly for his health insurance. If he chooses a plan costing $225 per month, he’ll only pay $20 per month for his health insurance.Your expected contribution will be