Two-Year Extension on Health Plans Not Meeting New Law Standards

In case you haven’t heard, the Obama Administration announced yesterday, an additional two-year extension for individual health plans that don’t meet minimum insurance coverage requirements, allowing insurance companies to continue offering these plans.

The two-year extension comes after a one-year grace period announced in November by the Obama Administration.

Under the Affordable Care Act, insurance companies are required to meet minimum essential insurance requirements for coverage.

Those offering out-of-date private plans that don’t comply with the new law were required to issue cancellation notices to their customers.  Those who received the notices were required to purchase insurance in the Health Insurance Marketplace by the March 31, 2014 deadline.

This new extension may prevent some customers with insurance that doesn’t meet minimum coverage standards under the Affordable Care Act from receiving cancellation notices and may allow them to stay on their existing health plans for an additional two years.

What Does this Mean for You and Your Taxes?

• If your insurance doesn’t meet minimum essential requirements, you may have two more years on your existing health insurance plan and you may not have to worry about purchasing in the Health Insurance Marketplace by March 31, 2014 to avoid a tax penalty assessed on your 2014 taxes filed in 2015.

•  You can continue on your old insurance plan until October 1, 2016 if your state commissioner allows your insurer to continue offering your plan.

Quick Tip:  It will be up to your state commissioner whether they allow your insurer to continue offering out-of-date private plans for two more years.  If they don’t, you will have to purchase health insurance in the Health Insurance Marketplace if your insurance is cancelled.

What If I Received a Cancellation Notice?

If your insurance was already cancelled because it did not meet the new standards under the Affordable Care Act, then your insurer has the option of possibly insuring you for two more years.  It will be up to the state commissioners whether they allow insurers to continue offering out-of-date private plans for two more years.

Check back with the blog for more up to date information regarding the health care law.

TurboTax is here to help explain health care reform and how it affects you and your taxes, so that you can make the best decision for your health and finances.

Have specific questions about how this impacts you?  Get health care answers in our TurboTax AnswerXchange.