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Self-Employed And With Lots Of Questions About Health Care

Illustration by Katherine Streeter for NPR

The health care exchanges may be open, but there's no question they're still kind of a mess.

"The rollout has been excruciatingly awful for way too many people," Health and Human Services Secretary Kathleen Sebelius conceded to the Senate Finance Committee last week.

But mess or not, the law is going forward, people are trying to use it, and they have questions. Here are some of yours, and our answers.

Fran Heyman of Westchester, N.Y., wants to know, "If you are self-employed, is there a cap to how much you can make to use the Affordable Care Act insurance?"

No. There's no upper limit to how much you can earn and still be able to buy health insurance on the exchange. But there is an upper limit on how much you can earn and qualify for a subsidy to help offset the costs. That upper limit is 400 percent of the federal poverty level — about $46,000 in modified adjusted gross income for an individual and about $94,000 for a family of four. If you earn less than those amounts, you can qualify a subsidy that will lower your premiums. Earn more than that, you'll have to pay full freight.

Barbara Lorell of Bremerton, Wash., has the opposite question — what happens if you earn too little? She's a self-employed pet sitter, and she says her income fluctuates a lot during the year. She wonders what happens if she signs up for a plan on the health exchange and gets federal subsidies to help pay her premiums, but then doesn't end up earning enough and should have been on Medicaid instead. Will she be expected to pay those subsidies back?

If you are self-employed, is there a cap to how much you can make to use the Affordable Care Act insurance?

No, she won't. The way the law was written, it was expected that most people with low incomes would be enrolled in the Medicaid program. Because of that, if your income is under the poverty line — $11,490 for an individual this year — you're not eligible to buy coverage on the exchange. You could enroll in Medicaid instead, but only if your state is one of the 26 that are expanding the program. If not, you may fall into the gap where there is no program for you.

The catch, as Lorell points out, is that you have to estimate your income in advance. So you may overestimate your income, buy coverage and get subsidies, and then discover when tax time comes that you weren't actually eligible, after all, because you earned too little. Experts assure us that this possibility has been taken into account, and you won't be punished or thrown into jail or even asked to pay back the subsidies in those situations.

On the other hand, if you underestimate your income and get subsidies, then end up earning more, come tax time the following year you will be expected to pay back subsidies you weren't eligible for.

Staying with this theme of who can and can't use the exchanges, here's a question from Michell Wright of Atlanta. She wonders, "If your employer currently offers insurance, did you have to go with your employer's insurance, or were you actually able to select a plan outside of that?"

This is one of the most frequently asked questions about the health law. And the answer is, it depends. Pretty much anyone can drop employment-based insurance and buy a policy on the exchange instead. But in most cases you won't be eligible for a subsidy, no matter how low your income is.

That's because the members of Congress who wrote the law didn't want people rushing out of their employment-based plans to the exchanges and getting federal subsidies, which would have run up the law's price tag. So for most people it won't make a lot of economic sense to switch — most employers pay at least some, and usually a lot, of the cost of employee health insurance if they offer it.

But there are two situations where you can drop the health insurance you've been getting through your job, and get a subsidy on the exchanges. One is if for whatever reason your employer's insurance plan is on the skimpy side and doesn't pay at least 60 percent of typical health expenses for a covered group. The second is if your coverage — not your family's coverage, but your coverage — costs more than 9.5 percent of your family income.

Speaking of subsidies, Phil Smith from New Braunfels, Texas, has a subsidy question. He says he's read that the subsidies apply only to silver-level plans, and that if a person decides to purchase a lower-cost bronze plan, the subsidy cannot be applied.

That's actually not the case. But first let's back up a bit and explain what he's talking about. There are four different levels of coverage you can choose on the exchanges, and they're named for metals: bronze, silver, gold and platinum. Bronze plans have the lowest premiums but also the fewest benefits; platinum plans, the highest premiums and most generous benefits.

People under age 30 have another option; a basic plan that covers just preventive services and three primary care visits before deductibles are met. But the plan also covers care for a catastrophic illness or injury.

The confusion arises because the amount of subsidy someone gets is calculated based on the silver plan. But that subsidy can then be applied to any plan you want. For many people, that subsidy may be enough to get bronze-level coverage free.

If the person chooses to simply pay the tax and not purchase actual health insurance through the website or exchanges, is ... [that] citizen covered for any health care expenses?

But there's an exception to that, too. Some people will qualify for help with not just premium, but with deductibles and copays, too. That's for people with income under 2 1/2 times the poverty level, or about $23,000 for an individual. To get that extra help, you do have to buy a silver-level plan.

Jim Thomas, of Philadelphia, has a question about the law's tax penalty if people don't buy coverage. "If the person chooses to simply pay the tax and not purchase actual health insurance through the website or exchanges," he asks, "is ... [that] citizen covered for any health care expenses, such as private doctor visits or emergency room visits?"

That's easy: No. That person has chosen to remain uninsured. And therefore he or she is financially responsible for his or her own medical bills.

There is a separate federal law, called EMTALA, that requires hospitals to treat people who show up in emergency rooms. But those hospitals will send you a bill. In many cases people without insurance are also poor and can't pay those bills, and hospitals end up eating the cost. But hospitals work hard to collect what they can, so they will come after people they think might be able to pay.

Thomas also asked why people wouldn't just wait until they need the insurance to sign up. That's because in most cases you can sign up only during open enrollment periods. This first open enrollment period goes until the end of March 2014. After that, however, these open seasons will be a lot shorter, lasting only about six weeks each year.

Brian Gorman of Hoboken, N.J., has been looking at plans in his state, but he's finding a problem. "I realize that my health care plan here in New Jersey will restrict me to New Jersey doctors and be more expensive than if I were to buy a plan in New York. Is it possible for me to buy a New York state plan as a New Jersey resident?" he asks.

Is it possible for me to buy a New York state plan as a New Jersey resident?

Not right now. At the moment you're required to sign up in the exchange for the state that matches your mailing address. There actually is a provision in the Affordable Care Act to allow something called health care choice compacts that would do exactly what Gorman is talking about. So far, seven states have passed legislation that could allow health insurance policies to be sold across state lines. But none of those states has taken the necessary steps to let this happen. So right now you have to stay in your home state.

But insurance plans can and do include doctors and hospitals in other states, particularly in areas located near a state border.

Finally, Ruth Ahrens of Lubec, Maine, asks a question relevant to everyone trying to use the balky HealthCare.gov website: "How are people obtaining the paper applications?"

There are several ways to get a paper application. One of them is actually from the much-maligned HealthCare.gov website. On the home page there are now four icons that have replaced the photo of the smiling lady no one was ever able to identify. One of those icons connects to the paper application. Operators at the HealthCare.gov call center (1-800-318-2596) can also provide paper applications, as can health care navigators or assisters. They are usually affiliated with local civic or health organizations such as community health centers or hospitals.

Copyright 2022 NPR. To see more, visit https://www.npr.org.