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Are You Ready for Health Reform?

Army doctor with stethoscope.

Some of the most sweeping parts of the federal health care overhaul soon should take effect. If you don't have health insurance, the latest rules could require you to take action — or risk paying a penalty.

Mandatory Health Insurance

Starting Jan. 1, 2014, nearly every U.S. citizen and legal resident is expected to be required to have a minimum level of health insurance coverage. Most health plans offered through an employer or TRICARE should be sufficient. Adult children younger than 26 can choose to be covered under their parents' health insurance — with parental permission and certain other requirements.

Individuals who can afford health insurance but decide not to get it may face tax penalties.

"Those penalties may start off small and rapidly grow larger over the following two years," says Anna Brooks, USAA's executive director of health solutions.

Even so, the penalty could take a bite out of your income. For example, in 2014, the maximum family penalty is projected to be $95 per uninsured adult and $47.50 per uninsured child, or 1% of income, whichever is greater. The maximum a family would have to pay, however, is likely to be capped at $285.

By 2016, the maximum penalty could reach $2,085 for a family, according to the Kaiser Family Foundation.

If you're a business owner, however, you should not immediately face penalties for not offering coverage, even if you employ 50 or more people. This portion of the Patient Protection and Affordable Care Act is not scheduled to be enforced until 2015.

Shopping for Health Insurance

If you don't have health insurance yet, the Affordable Care Act gives you several new reasons to buy it:

  • Guaranteed coverage. Effective Jan. 1, health insurers should not be able to turn you down because of your medical history.
  • Standardized features. Policies are expected to fit one of four levels of coverage: bronze, silver, gold and platinum. Standardized features and the same cap on out-of-pocket expenses are designed to make it easier to compare plans offered by different insurers.
  • Premium subsidies. If your household income is one to four times the federal poverty level — currently $23,550 for a family of four in most states — and you're not eligible for or offered other acceptable health coverage, you may qualify for premium tax credits that could reduce your out-of-pocket costs. Estimate your subsidy.
  • Wider access to Medicaid. In 2014, eligibility for the program that covers low-income Americans may expand in many states. To see if you qualify, check your state's Medicaid website.
  • Health insurance exchanges. On Oct. 1, Americans should be able to start buying insurance through new public exchanges, or "marketplaces," for coverage that begins Jan. 1, 2014. "Some states may not have coverage online initially, which means you may have to enroll by phone instead," Brooks says. Whether your state has an exchange or not, you should be able to find an available marketplace by visiting healthcare.gov. Through your employer, you also may have an option of buying insurance in a private exchange.

An Open Window

The enrollment window for 2014 coverage is scheduled to stay open until March 31. In the future, enrollment is projected to be open from Oct. 15 to Dec. 7, for coverage that starts the following year. If you lose your coverage during the year because of a "qualifying event," such as a divorce or a move to a new state, you should be able to buy a health plan outside the open enrollment period.

Study your options and decide the best path for you. If you still have questions, take a look at the Health Reform FAQ.

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Contributor

USAA, a diversified financial services organization, is the leading provider of competitively priced financial planning, insurance, investments, and banking products to members of the U.S. military and their eligible families. Rated among the highest among financial services companies for customer advocacy in a Forrester Research survey, USAA provides convenient and accessible financial products to its more than 9 million members. For more information about USAA, or to learn more about membership, visit usaa.com
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