Important Dates for Self-employed Individuals
- January 1, 2014: ACA mandatory individual health coverage starts
- March 31, 2014: Marketplace enrollment deadline for coverage without penalty
- NEW DATE November 15, 2014: Marketplace opens for 2015 enrollment
If you are an individual who operates a small business and does not have employees, you qualify as a self-employed individual within the Affordable Care Act guidelines.
The same health care insurance options that are available to individuals apply to the self-employed business owner. Depending on your income level and household size, you may also qualify for income tax credits towards the cost of insurance that is purchased through the public health exchanges (Health Insurance Marketplace). You will have the option to purchase insurance coverage through your own private insurer, which does not qualify you for tax credits.
- National Association of Insurance Commissioners provides an overview of changes taking effect under the Affordable Care Act plan.
- Consumer Reports - Health Reform: Seven Things You Need to Know Now (en español)
- Q&A: What Obamacare means to you. (Source: Omaha World Herald)
- Essential Benefits - What is required to be included in all new individual and small group policies (Source: United Health Care)
?Nebraska Blue Cross/Blue Shield provides a good overview of individual health insurance coverage options at AskBlue. Enter your zip code, gender and select “Individual.”
Starting in 2014, the individual shared responsibility provision of the ACA calls for each individual, including children to (1) have basic health insurance coverage (known as minimum essential coverage), or (2) qualify for a statutory exemption or (3) plan to make a shared responsibility payment (penalty tax) when filing a federal income tax return.
Individuals will not have to make a payment if:
- coverage is unaffordable,
- if they spend less than three consecutive months without coverage,
- or if they qualify for an exemption for several other reasons, including hardship and religious beliefs.
(Source: U.S. Treasury)
►See Requirement to Buy Coverage chart provided by the Kaiser Family Foundation to check if you meet the requirement for coverage. The chart also shows what penalties will apply if insurance is not purchased and you meet the requirement threshold.
- 2014 penalties - $95 per adult and $47.50 per child, up to $285 for a family OR 1% of family income, whichever is greater.
- 2015 penalties - $325 per adult and $162.50 per child, up to $975 for a family OR 2% of family income, whichever is greater.
- 2016 penalties - $695 per adult and $347.50 per child, up to $2,085 for a family OR 2.5% of family income, whichever is greater.
►See also the Health.gov explanation of penalties: What if Someone Doesn't Have Health Coverage in 2014.
Determining Health Care Needs
To help determine your insurance needs, the University of Maryland Extension has developed worksheets to use as planning guides:
- Insurance Needs Worksheet
- Monthly Spending Plan Worksheet
- Health Insurance Comparison Plan Worksheet
Individuals who are self-employed may choose to purchase insurance through the federal Marketplace exchange, member-owned cooperative, or through a private insurer. Plans should be carefully evaluated for out-of-pocket costs (co-pays, premiums and deductibles), benefits provided, and the scope of doctor/service networks available to you and your area.
If you already have a health insurance plan that was in existence on March 23, 2010, you may be able to keep your existing or "grandfathered" plan. These plans are not subject to many of the ACA law changes. Review your existing plan, check with your insurance company, and refer to the article, "What if I have a grandfathered health insurance plan?" for consumer protections your plan must or need not have to qualify as a grandfathered plan.
If you choose to stay with your current plan, you will not be eligible for health care subsidies that could be applied toward your premium payments in 2014. To qualify for the health subsidies, you must purchase health coverage through the federal exchange.
Coverage through new federally-funded health insurance marketplaces for individuals and small businesses will be in place January 1, 2014 with open enrollment beginning October 1, 2013. For information on individual enrollment, visit these locations on Healthcare.gov:
- What if I'm self-employed?
- Will I qualify for lower costs on monthly premiums?
- Am I eligible for coverage in the Marketplace?
Individual health insurance marketplaces will offer a choice of four levels of benefit packages that differ by the percentage of costs the health plan covers. The "metal values" are designed to help you effectively compare and select your individual health coverage based on the defined structures and benefits offered within the plan.
Advance Premium Tax Credit.
Individuals and the self-employed may qualify for premium tax credits or subsidies. The amounts are based on your individual and family Modified Adjusted Gross Income (source: UC Berkeley) and are available on a sliding scale with higher income receiving less tax credits.
Tax credits to help individuals and families afford insurance will be available for those with income between 100% and 400% of the poverty line who are not eligible for other affordable coverage and purchase coverage through the Marketplace. 2103 levels equate to $45,960 for a poverty line at 400% for an individual or $94,200 for a family of four. See below chart for esitmates of premium contribution levels per income range.
(Source: Center on Budget and Policy Priorities)
If you are eligible for the credit, some or all of the estimated credit can be paid in advance directly to your insurance company to lower your out-of-pocket monthly premium costs in 2014; or the tax credit paid when you file your 2014 tax return in 2015.
Changes in Circumstances. Report any changes in income and family size to the MarketPlace as these changes will affect your estimated tax premium credit amounts. Receiving too little or too much can affect your refund or balance due when you file your tax return. For example, if you have greater than expected income as first reported when you purchased your Marketplace coverage and it exceeds the amount of tax credit you are eligible to receive, you will be obligated to return the extra tax credit when you file your tax return, either as a reduced refund or balance due payment. However, the amount to be repaid will depend on income levels, see below chart.
(Source: Center on Budget and Policy Priorities)
- Questions and Answers on the Premium Tax Credit (source: IRS)
- The Premium Tax Credit (source: IRS)
- Premium Tax Credits: Answers to Frequently Asked Questions (source: Center on Budget and Policy Priorities)
When you purchase coverage through the Marketplace, you may also qualify for lower out-of-pockets costs on deductibles, copayments and coinsurance. The rates depend on your income. (2013 income levels are up to $28,725 for individuals and $58,875 for a family of 4. 2014 levels are expected to be slightly higher.)
Premium Credit & Subsidy Calculators
See what subsidies you may qualify for that will help with your insurance premium costs. Calculators available at
Discover more about the Marketplace Option
- Marketplace assessment - Learn more about your qualification for the public exchange insurance by taking an assessment that looks at your individual and family circumstances.
- Enrollment preparation - Get ready to enroll in the Nebraska Marketplace by reviewing the nine preparation steps provided on Healthcare.gov.
- Plan options - Visit FinderHealthcare.gov to discover what plans may be available to you. (Information for Nebraska's insurance providers is currently not available.)
- Summary of Benefits and Coverage (SBC) - Review the SBC video (Source: Catalist Consulting) about the new SBC required documents.
More information about individual enrollment procedures and assistance is forthcoming about the federal marketplace.
Non-profit health insurance cooperatives, called Consumer Operated and Oriented Plans (CO-OPS) are authorized under Section 1322 of the ACA law. They are an alterative to the individual and small business exchanges operated by state and federal governments. The CO-OPs are formed as nonprofits and controlled by and operated on behalf of their members. There are 24 CO-OPs authorized across the United States. CoOportunity Health, based out of Des Moines, Iowa is authorized for Nebraska and Iowa and will open for business on October 1, 2013.
The objective of the CO-OPs is to create a new competitor to help drive down local consumer costs. Profits made by the CO-OP must be used to lower premiums, improve benefits or sustain programs that with enhance the quality of health care to its members. There are concerns about the long-term viability of the CO-OPs since they are designed for the higher-risk individual and small business markets.
- Cooperative is entering Nebraska, Iowa health care markets (Source: Omaha World Herald)
- The Consumer Operated and Oriented Plan (CO-OP) Program (Source: HealthReformGPS)
There are concerns about the long-term viability of the CO-OPs since they are designed to operate in the riskier individual and small business insurance markets. Key will be to find a rapidly growing CO-OP that has a sufficient health provider network to meet you and your family's needs.
Information provided here is from a variety of resources managed by government agencies, professionals, organizations, and non-profits. The information is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal or state tax penalties.
There is no implied or intended endorsement by UNL Extension of any website, information, or videos provided within this website. Nor is there any implied endorsement by the creators of the information and videos used within this website to UNL Extension. Use of the information is for educational purposes only and is designed to serve as a starting point for you to further discuss your business options with an attorney, accountant, human resource (HR) consultant, or other advisor who is well-versed in the new health care regulations.
UNL Extension ACA Team
For questions or additional information, email: ACAbizNE@unl.edu
Phone: Marilyn Schlake (402.472.4138); Carroll Welte (402.374.2929); Jim Crandall (308.995.3889); Charlotte Narjes (402.472.1724)
Overview of PPACA
(Source: Khan Academy)
To enlarge, click on the open square in the lower right corner.
How do Obamacare Subsidies Work?
(Source: eHealth Insurance)
Overview of Individual Mandate Requirements