ACA’s Top 10 Misconceptions (Nos. 1 – 5)

Over the course of the last 3 years, I have had both the honor and pleasure of discussing the Affordable Care Act (ACA) with a number of organizations, clubs, groups, and even a local radio show.  Throughout this time, and unfortunately it persists, I have encountered a number of misconceptions and misunderstandings relative to several provisions of the law.  So I decided to assemble a list of…you guessed it…the top 10 most common ACA misconceptions that I have come across to date. Here are the first 5:

1. The public health insurance marketplace/exchange is the only place to purchase individual health insurance in 2014 that is subject to the various ACA provisions.
FALSE! The new ACA Marketplaces are the only places where Individual health insurance coverage can be purchased with federal subsidies/tax credits.  However, Individual health insurance plans purchased off the ACA Marketplace in 2014 contain the same provisions such as guaranteed issue, no pre-existing condition exclusions, community rating, 10 essential health benefits, limits on out of pocket expenses, etc. Coverage purchased off the ACA Marketplace is not subsidy eligible though.
2. The Individual Mandate and associated penalty applies to everyone.
False! The individual mandate does not apply to individuals who cannot afford coverage because the cost exceeds 8% of their household income.  It also does not apply to prisoners, Native Americans eligible for care through the Indian Health Care service, immigrants who are in the country illegally, people whose religion objects to having insurance coverage, members of a health care sharing ministry and individuals who experience a short coverage gap of less than three consecutive months.
3. All preventive health care is covered at 100%, per the ACA.
False! The ACA includes a provision that requires [non-grandfathered] health insurance policies to cover certain prescribed preventive health care services at 100% (no copay or deductible). Some preventive services ordered by a doctor may not necessarily be included on the list of ACA prescribed preventive services, and thus, not covered at 100%.  Additionally, insurers are not required to provide 100% coverage for otherwise eligible preventive care that is provided by non-network providers.
4. All of the ACA provisions apply/affect all health insurance plans at the same time, regardless of the type of plan,how the plan is insured/funded, and when the plan renews.
False! Certain provisions of the ACA that affect individual and fully insured small group plans (i.e., fewer than 50 employees) do not affect fully insured large group plans (i.e., 50 or more employees). Also, group plans that are partially self funded are not subject to a number of ACA provisions (a previous blog post addressed these exceptions, click –
So called “grandfathered” plans do not have to comply with a number of provisions (click, provided they continuously maintain grandfather status.  And finally, a health insurance policy’s anniversary date determines when certain provisions apply to a plan. Many provisions become effective upon the plan’s first anniversary date, “on or after January 1, 2014″.
(Note: many small group plans were offered (and accepted) the option of an “early renewal” effective 12/1/2013.  Such plans will not have to comply with a number of ACA provisions until their plans renew on 12/1/14).
5. An employer that is subject to the Employer Shared Responsibility provision (aka “pay or play”; aka “the employer mandate”) that does not offer affordable coverage at a minimum coverage level is automatically fined/penalized.
This is perhaps the most misunderstood (and incorrectly explained) provision of the entire ACA.  A previous blog post clarified the two different types of penalties and the amounts associated with each (click  Both penalties are triggered specifically by at least one employee doing BOTH OF the following:
                  – Verifying and being eligible for a federal subsidy; and
                  – Purchasing coverage on the public marketplace/exchange
          Unless or until at least 1 employee takes BOTH of these actions, the employer faces no penalty.  There is a significant difference between employer shared responsibility EXPOSURE versus actual PENALTY.  It’s extremely important for affected employers to understand, and perhaps even calculate, both.


Next week’s post will list the last 5 of my top 10 list of most common ACA misconceptions; so stay tuned, and spread the clarity!