7 things to know about MNsure and the Affordable Care Act in 2014

Paul Bunyan
Paul Bunyan and his blue ox, Babe, are the faces of the campaign to promote MNsure, Minnesota's new online marketplace for health insurance.
Rupa Shenoy / MPR News File

Jan. 1 marks the start of the New Year, but it's also an important date for the Affordable Care Act. Starting Wednesday, nearly all provisions of the biggest change to the U.S. health insurance system since the establishment of Medicare and Medicaid in 1965 take effect.

Here are some of the law's biggest changes.

1) Plans purchased on MNsure kick in

If you picked a plan on the state's new health insurance marketplace before Dec. 31, you will be covered starting Wednesday. There's also still time to buy a plan. Open enrollment lasts until March 31.

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With few exceptions, all plans sold on and off the exchanges must include "essential health benefits" -- a basic set of benefits that include prescription drug coverage, maternity care and hospitalizations, among other things.

Anyone who picked a plan by Dec. 31 and pays for it by Jan. 10 should have insurance. But insiders and experts will be watching to see whether people are having trouble getting care. That's because MNsure has had difficulty handing off personal information about new enrollees to the insurance companies, which delayed billing for new plans.

As a result, there are lingering questions about whether people who think they've successfully enrolled in a plan are actually covered. And some people may not have their insurance cards on Jan. 1.

2) People can now be penalized for being uninsured

If you don't get insurance by March 31, you will face a $95 penalty in 2014, or 1 percent of your income, whichever is larger.

While $95 doesn't sound like much, the penalty goes up substantially in subsequent years. There are additional costs if you have dependents.

3) Insurers can no longer deny coverage to people with pre-existing conditions

Obamacare prevents insurance companies from rejecting customers if they have preexisting conditions. For many years, people who had prior health problems would have a hard time finding coverage or were unable to buy it. The law prevents that from happening.

Insurance companies can no longer limit how much they pay to cover your essential health benefits

Previously, insurance companies could cap how much they spent on your annual care and how much they spent on your care over the course of your life. That meant some people who were very sick were maxing out on their lifetime limits in a short period of time.

From now on, the law prevents insurers from capping how much they spend on those essential health benefits.

4) Medicaid expands

In Minnesota, a family of four earning $32,500 a year or less is now eligible for Medicaid. The same is true for an individual earning $15,800 a year or less.

Individuals who make too much for Medicaid but not enough to buy their own plan on MNsure qualify for MinnesotaCare.

People in both programs could enroll through MNsure. But due to delays in the system, some people have not picked an insurance plan yet. Minnesota Department of Human Services Commissioner Lucinda Jesson said these enrollees shouldn't be worried: they'll be covered no matter what starting on Jan. 1.

5) Small business credit expands

Small businesses that offer insurance to their employees through MNsure may qualify for a tax credit.

Here's how it works: A business must have fewer than 25 employees who make an average of $50,000 a year or less. And the employer must also pay at least 50 percent of their workers' premium costs.

Previously, the credit was worth up to 35 percent of the employee's premium contributions. But this year, it's up to 50 percent.

Two key provisions won't kick-in for a while.

6) The penalty for employers who don't provide coverage for their employees will be delayed by a year

Earlier this year, the Obama administration announced that it would delay a requirement that employers with more than 50 full-time employees have to provide health insurance or face a $2,000 per employee fine. The so-called employer mandate will take effect in 2015.

7) Rich benefits will be taxed in 2018

People who don't pay much for their health insurance - for instance, employees who work for institutions that offer rich benefits - don't appreciate the real cost of care, so they overuse it.

That's the theory at least behind a so-called "Cadillac tax" that is meant to curb excessive use of health care services. It doesn't take effect for a few more years, but already employers like the University of Minnesota are making changes to their employee plans to avoid the penalty.