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Health insurance in the United States is extremely complex. With dozens of private health insurance companies and half a dozen public insurance options like Medicaid and Medicare, navigating the world of healthcare can get a bit tricky. In Texas, health insurance is regulated by both state and federal laws.
The majority of state laws in Texas prescribe the benefits that must be included in health plans. They are mostly designed to protect the consumer. In Texas, most plans fall under individual, small group, large group or Consumer Choice Plans. Texas law requires insurance companies to cover pre-existing conditions like diabetes or back pain. This helps covered patients see their health care provider for urgent matters.
However, the different types of private insurance plans may have different criteria. For example, covering issues like diabetes is not required for small group plans, but individual plans, large plans, and Consumer Choice Plans must cover diabetes. Despite these extensive laws, there is no law in Texas that requires individual residents to have health benefits, and there is no state law that requires employers to provide their workers with insurance. However, after the passage of the Affordable Care Act, more popularly known as Obamacare, state laws took a back seat to federal requirements.
The Affordable Care Act (ACA) was passed in 2010. Colloquially known as Obamacare, the ACA drastically changed private health insurance in Texas. Designed to provide affordable health insurance to Americans, Obamacare also established two insurance mandates: the individual mandate and the employer mandate.
The employer mandate was devised to encourage businesses to provide affordable health insurance to their full-time employees. The mandate requires all businesses with at least 50 full-time employees to provide suitable insurance plans to their employees. Companies who meet these criteria, but do not provide insurance plans to their employees must pay a fine for each uncovered employee. Depending on the percentage of uncovered employees, this fine could be $2,000 to $3,000 per uncovered employee.
Even though there is an employer mandate for larger companies, small companies with less than 25 full-time workers can earn tax credits to help them pay for insurance plans. This allows them to handle the extra cost of providing health benefits to their employees when they have low yearly earnings.
Obamacare also has an individual mandate for people buying health insurance. The individual mandate was included in the ACA to provide an incentive for young, healthy people to join in the health insurance market and visit their health care provider more regularly. This mandate requires individuals to be covered by private or public insurance plans. Texans who are not covered through their employers, through individual plans or through government plans are required to pay a penalty. The penalty is calculated by taking each month an individual is uninsured. Penalties can be as much as $272 per person or 2.5% of household income.
Despite this requirement, the government provides exemptions for Texans who meet specific criteria. The main exemption applies to individuals who can not afford healthcare coverage. If total household income is under a certain amount, individuals do not have to pay the penalty. Maximum income is $10,350 for single persons under the age of 65 and $20,000 for married couples under 65 years old. Typically, individuals over 65 years of age are allowed to make more money while still being exempt. The price of the cheapest insurance plan available on the market is also factored into exemptions. For example, if the most affordable plan is more than 8.05% of a household's income, then the household is not required to pay a penalty. The government also waives the penalty if the health insurance gap is three months or less. American citizens who live overseas for most of the year can avoid paying, as can foreign nationals living in the United States. Members of American Indian tribes and AmeriCorps volunteers do not need to pay either.
Texas state law does not require residents to have insurance benefits. However, the ACA—under the auspices of the federal government—does mandate that Texans have health benefits. If an individual or company does not qualify for a penalty exemption, they will have to pay a fee when they file their tax return.