Under the new law, individuals and their households who can afford it are required to obtain health insurance coverage. Eligibility for financial assistance with this coverage is determined by comparing the household's income to the Federal Poverty Limit (FPL) for that household size.
Households whose income is less than 133% of the FPL are eligible for Medicaid, a state-administered health care program which normally provides free coverage to low-income families for essential health services. As part of the ACA legislation a streamlined Medicaid (or MAGI Medicaid) program is available which allows states to determine eligibility and categorize people within those households so that different services can be made available to different members of a family unit. The categories of people supported under the ACA includes parents and caretakers, children, pregnant women, (non-parent) adults, and individuals formerly in receipt of foster care.
The Children's Health Insurance Program (CHIP) has been streamlined as part of the ACA legislation. CHIP applies to the children of households whose income is too high for the whole family to receive Medicaid, but is still less than 200% of the FPL. A common scenario, therefore, when household income is just below 200% FPL is for adult members in the household to receive insurance assistance and children to be eligible for CHIP.
States can optionally extend the range of the coverage they provide for families with income of up to 200% of the FPL with a state basic plan under the State Basic Health Program which provides basic health insurance to families where the insurance plan is chosen and paid for by the state. If states choose not to provide a basic plan, then the upper limit for Medicaid stays at 133% and all adult members in the household between there and 400% are eligible for insurance assistance; the amount of assistance offered by the government decreasing as the household income increases to that limit.
Citizens and households whose income is above the level at which they can get state-sponsored health care but below 400% of the FPL are still entitled to financial assistance from the federal government which they can use to offset the cost of private insurance. This is what we term 'Insurance Assistance' and is issued in the form of premium tax credits and/or cost sharing reductions. Premium tax credits are tax credits that allow a household to reduce their tax bill to offset the monthly cost of an insurance plan. Since tax returns are filed annually, this corresponds to an annual amount and is formally calculated at the time a tax return is filed. Tax credits are calculated on a sliding scale based on income as a percentage of the FPL. For example, someone with an income equivalent to 300% of the FPL will get a lower tax credit than someone with an income of within 200% of the FPL.
Citizens and households whose income is above 400% of the FPL aren't entitled to any financial assistance from either the federal or state government, but must still comply with the individual mandate to purchase private health insurance in the form of Qualified Health Plans (QHPs). These individuals and households can still apply for assistance and be determined income-ineligible for assistance, but continue to enroll in a QHP if satisfying the other non-financial criteria. Or if safe in the knowledge that financial assistance is not available, or happy to look for health coverage without assistance, they can simply apply to shop directly for QHPs; essentially non-financial information is captured without the need for income information and eligibility determined to purchase QHPs through the exchange.
Employers have a duty towards their employees to offer assistance with their insurance costs. Like the individual exchange, the SHOP exchange is a competitive marketplace where individuals employed by small businesses can buy QHP coverage, subsidized by their employer. The premium that an employee has to pay for the cheapest plan offered by their employer after the contribution has been taken away should not exceed 9.5% of the employee's income. If the premium doesn't exceed this amount, then this coverage is considered affordable and the employee can avail of this employer-sponsored coverage. Additionally, the employee can look to his options in the individual exchange; eligibility for employer-sponsored coverage does impact an individual's eligibility for insurance assistance, however the employee is not precluded from being determined eligible for Medicaid, and that may be a more beneficial coverage option for the employee. If the premium does exceed 9.5% of the employees income, the employee is entitled to waive their employer-sponsored coverage and apply for assistance in purchasing insurance coverage; this includes insurance assistance in the form of premium tax credits and cost-sharing reductions.
Individuals may choose to request an exemption from the individual responsibility requirement in a limited number of circumstances as defined in the ACA, for example, if the individual has a qualifying religious exemption, is a member of a health-sharing ministry, is incarcerated or is not lawfully present in the United States.
IBM Cúram for Health Care Reform meets each of these by allowing citizens and employees to peruse a range of health care options, determine their potential eligibility for assistance, shop for plans, and apply directly to health care providers, or apply for an exemption.