# Explain ACA to me. **URL:** \ **Category:** Factual Questions\ **Created:** [September 29, 2013, 9:57pm UTC](https://boards.straightdope.com/t/explain-aca-to-me/669955 "2013-09-29T21:57:56Z")\ **Posts on this page:** 8\ **Page:** 1
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [September 29, 2013, 9:57pm UTC](https://boards.straightdope.com/t/explain-aca-to-me/669955/1 "2013-09-29T21:57:56Z")
So I keep hearing about subsidies and exchanges and penalties (sorry, as per CJ Roberts - tax) and whatnot. I have to admit I’m not sure how it all works. Using myself as an example since I think it’s a pretty common situation for most Americans. My insurance is decent and the wife’s is crap - basically paying lower premiums for the priviledge of insurance not paying for much of anything. Coverage for just me is less than 10% of my income, coverage for me and her is more than 10% of my income but less than 10% of our income and coverage for all of us is more than 10% of our income. My son has his own child-only policy which is unusual but ignore that for this question because we were just informed that his policy is cancelled effective 1/1/14 because of ACA requirements\*. We are well over the poverty level. Let’s say I cover myself and not her. Will she be penalized for not having insurance? Will we be penalized for not covering our son. What would her/his/our options be with exchanges and subsidies. This magic 10%, does that mean 10% for insurance or 10% for insurance + medical costs like deductables. Lastly, what is the actual financial penalty for not having insurance? - Please let’s not get into how that claim that ACA is forcing them to cancel policies is bullshit. That’s in another thread. Suffice it to assume either he is cancelled or the cost will be prohibitive. ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [September 29, 2013, 10:10pm UTC](https://boards.straightdope.com/t/explain-aca-to-me/669955/2 "2013-09-29T22:10:16Z")
Oh forgot to add that we just found out that my son’s new psychologist doesn’t take his insurance but can get paid from an HSA. Except for his learning disability, he is very healthy (as is the wife) so maybe someone can talk about how an HSA/FSA fits into all this. I believe my insurance is a 'high deductable" one bit since I’m keeping this general, let’s assume this hypothetical family of 3-4 has access to HDHP if need be. ---
**Author:** ![twhitt](https://avatars.discourse-cdn.com/v4/letter/t/87869e/32.png) [@twhitt](https://boards.straightdope.com/u/twhitt)\ **Post date:** [September 29, 2013, 10:16pm UTC](https://boards.straightdope.com/t/explain-aca-to-me/669955/3 "2013-09-29T22:16:42Z")
Without knowing really any pertinent details, I entered some information into [this calculator](http://kff.org/interactive/subsidy-calculator/#state=&zip=&income-type=dollars&income=55000&employer-coverage=1&people=3&adult-count=2&adults%5B0%5D%5Bage%5D=21&adults%5B0%5D%5Btobacco%5D=0&adults%5B1%5D%5Bage%5D=21&adults%5B1%5D%5Btobacco%5D=0&child-count=1&child-tobacco=0) and got a superficial result. [QUOTE=Kaiser Family Foundation] In general, employees who are offered insurance through work are not eligible for subsidized exchange coverage, so long as their insurance meets specified requirements. You would only be eligible for subsidized exchange coverage if your income is between 1 and 4 times the federal poverty level and you would have to pay more than 9.5% of your household income for your own coverage through the insurance offered by your employer. [/QUOTE] ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [September 29, 2013, 11:08pm UTC](https://boards.straightdope.com/t/explain-aca-to-me/669955/4 "2013-09-29T23:08:15Z")
> [@Saint\_Cad](#): > > Let’s say I cover myself and not her. Will she be penalized for not having insurance? Yes. [This](http://www.irs.gov/uac/Questions-and-Answers-on-the-Individual-Shared-Responsibility-Provision) answers all the questions about the mandate, or more specifically the penalty/payment you owe if you don’t follow the mandate and is a good source for an answer to both your first and second question. > [@](#): > > Will we be penalized for not covering our son. Yes. > [@](#): > > What would her/his/our options be with exchanges and subsidies. This magic 10%, does that mean 10% for insurance or 10% for insurance + medical costs like deductables. 1. Your option on the exchange/subsidy is non-existent. You’ve indicated your income is well above the poverty level meaning you almost certainly will not qualify for a subsidized exchange plan. You can decline to be insured by your employer, and you can get an exchange plan. If your income was low enough to qualify you for a subsidy, then the fact that your employer’s plan appears to be ACA compliant means you still would not qualify for an exchange subsidized plan since the subsidies are only available to people who meet the income requirements and who are not offered compliant coverage through their employer or who are not offered coverage through their employer that meets the affordability metrics. 2. Your wife also most likely does not have the ability to get a subsidy from an exchange plan because of income issues. I think subsidies are totally phased out around 400% of poverty level (IIRC around $48k for an individual.) However, while she may not qualify for a subsidy, she can get excused from paying the penalty if the insurance available to her is shown to cost more than the cutoff percentage (IIRC 8% of household income.) But I think that only applies if both her employer plan is over the threshold **and any exchange provided plans** are over the threshold. So if her employer plan costs say 14% of income, but she could get an unsubsidized exchange plan that costs 6% of income she’d be expected to get the exchange plan and if she chose not to and remained uncovered she’d be required to pay the penalty. > [@](#): > > Lastly, what is the actual financial penalty for not having insurance? I don’t care for this because I don’t fully understand the terms, but this is how you’re supposed to calculate it: > [@](#): > > Six Steps to calculate the Shared Responsibility Payment > > 1. Determine your Flat Dollar Amount. > a. Add together the Applicable Dollar Amounts for all individuals included in the taxpayer’s shared responsibility family, and write the total here: \_\_\_\_\_\_. b. The dollar amount for one adult x 3= **. (This is 300% of the applicable dollar amount.) > c. Write the smaller of the two above results here: $**\_\_. This is your Flat Dollar Amount. > > 2. Determine your Excess Income Amount. > a. Subtract your filing threshold from your household income. b. Multiply the result by 1% in 2014, 2% in 2015, and 2.5% for 2016 onward. > c. Write the result here: $\_\_\_\_\_\_\_\_. This is your Excess Income Amount. > > 3. Determine your Monthly Penalty Amount. > a. Write the larger of Flat Dollar Amount or Excess Income Amount here: \_\_\_\_\_\_. Multiply by 1/12 and write here: \_\_\_\_\_\_. This is your Monthly Penalty Amount. > > 4. Determine the Sum of the Monthly Penalty Amount. > a. Multiply the Monthly Penalty Amount by the number of months you did not have a qualified health plan, and write the result here: $\_\_\_\_\_\_. This is the Sum of your Monthly Penalty Amount. > > 5. Determine the Sum of the Monthly National Average Bronze Plan Premiums. > a. Look up the dollar amount of the monthly national average bronze plan premiums for yourself/your family: \_\_\_\_\_\_. b. Multiply this by the number of months you did not have a qualified health plan, and write the result here: \_\_\_\_\_\_. This is the Sum of the Monthly National Average Bronze Plan Premiums. > > 6. Compare the result from #4 (Sum of Monthly Penalty Amount) and #5 (Sum of Monthly Bronze Plan Premiums), and write the smaller number here: $\_\_\_\_\_\_. This is your Shared Responsibility Payment. You’re done! Enter this amount in your tax return. ---
**Author:** ![buddy431](https://avatars.discourse-cdn.com/v4/letter/b/6a8cbe/32.png) [@buddy431](https://boards.straightdope.com/u/buddy431)\ **Post date:** [September 29, 2013, 11:59pm UTC](https://boards.straightdope.com/t/explain-aca-to-me/669955/5 "2013-09-29T23:59:07Z")
> [@Saint\_Cad](#): > > Lastly, what is the actual financial penalty for not having insurance? > [@Martin\_Hyde](#): > > I don’t care for this because I don’t fully understand the terms, but this is how you’re supposed to calculate it: … Plus whatever your medical bills are… ---
**Author:** ![jacobsta811](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jacobsta811/32/2893_2.png) [@jacobsta811](https://boards.straightdope.com/u/jacobsta811)\ **Post date:** [September 30, 2013, 1:10pm UTC](https://boards.straightdope.com/t/explain-aca-to-me/669955/6 "2013-09-30T13:10:34Z")
[http://www.pe.com/local-news/topics/topics-health-care-headlines/20130623-ask-emily-what-if-employer-s-health-insurance-is-unaffordable.ece](http://www.pe.com/local-news/topics/topics-health-care-headlines/20130623-ask-emily-what-if-employer-s-health-insurance-is-unaffordable.ece) [http://www.zanebenefits.com/blog/bid/288577/ACA-Limits-Premium-Subsidies-For-Families-of-Covered-Employees](http://www.zanebenefits.com/blog/bid/288577/ACA-Limits-Premium-Subsidies-For-Families-of-Covered-Employees) First, the magic number for employer coverage being unaffordable is 9.5% of income. Second, that counts only the portion of the premiums for “self-only” coverage. Not family coverage and not deductibles. But the insurance itself must cover at least 60% of medical costs to count, so many plans out there today, especially those for part-timers or in retail businesses don’t count - these are the ones you see being “cancelled by ACA” - because the business would have to pay a penalty for not providing health insurance if they kept those. Second, you can still use the exchanges, and the provisions of the ACA, you just can’t get a _subsidy_. You can certainly elect self-only coverage and your wife and child can get a plan on the exchange, or an individual plan off the exchange since there are no more pre-existing condition limitations. Third, an HSA is a “Health savings account”, and you or you wife must have a qualified “High deductible Health Plan” (HDHP) to put money into one in the first place. At least prior to the ACA, HSA compatible HDHPs were a good option, but the money you put into an HSA is your own, the idea is simply that you save money on premiums and put the money into an HSA instead. ---
**Author:** ![Saint\_Cad](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/saint_cad/32/18907_2.png) [@Saint\_Cad](https://boards.straightdope.com/u/Saint_Cad)\ **Post date:** [September 30, 2013, 5:19pm UTC](https://boards.straightdope.com/t/explain-aca-to-me/669955/7 "2013-09-30T17:19:45Z")
I see this or something similar in many places: > [@](#): > > Under the law, residents that do not maintain insurance will be subject to a tax penalty. However, there is an affordability exception to the individual mandate tax penalty. The uninsured children and spouse of an employee would be exempt from the penalties if the cost of coverage for the entire family under their employer’s plan was more than 8% of household income. This helps some, but it still leaves families that can’t afford health coverage through their employer nor on their own without the premium subsidy. Does that mean that if the family plan for this family of 3-4 is more than 8% of household income but the employee only is less than 9.5% of employee sole income then the employee is penalized for not having insurance but the spouse and child(ren) are not? ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [September 30, 2013, 7:43pm UTC](https://boards.straightdope.com/t/explain-aca-to-me/669955/8 "2013-09-30T19:43:09Z")
> [@Saint\_Cad](#): > > I see this or something similar in many places: > > Does that mean that if the family plan for this family of 3-4 is more than 8% of household income but the employee only is less than 9.5% of employee sole income then the employee is penalized for not having insurance but the spouse and child(ren) are not? IIRC the point is this: If you don’t have ANY coverage, then of course you get penalized. That’s the whole point of the program. If you don’t buy the spouse or the kid insurance because it’s over the limit (8%) then no penalty, because it is too expensive. Theoretically, you should then buy them coverage on the exchange, where theoretically it’s affordable. technically, you could opt out of the employer’s plan and buy the whole coverage on the exchange, but if you don’t meet the criteria (employee-only plan is cheap) then you don’t get the subsidy. Of course, if the employer provided cheap employee coverage by susbidizing the plan, then opting out of the employer plan would lose that extra money. The employer dodges the penalty for unaffordable coverage if they offer an employee-only plan within the range. The whole issue of family plan costs seems to be a flaw, but at this point nobody seems to be able to change the law, oddly enough. Of course, the employer’s come-back is - how are they supposed to know what household income is? If you have a large family, your health care is going to be higher.