Vanguard is required under the Affordable Care Act (ACA), the federal health care reform law, to provide all crew members with a copy of the notice called the New Health Insurance Marketplace Coverage Options and Your Health Coverage to make you aware of the health insurance market created in support of the ACA. This market is called the Health Insurance Marketplace, or just Marketplace. The Marketplace opened October 1, 2013, and allows Americans to shop for health care coverage. This notice also tells you how to contact the Health Insurance Marketplace if you decide to purchase Marketplace coverage rather than participate in Vanguard's health plans. Below are answers to some questions you may have after reading the Marketplace notice.
Q: Should I consider the Marketplace for myself or any of my dependents?
A: You should always explore all benefits options available to you. That could include Vanguard's health plans, a spouse or partner's employer-provided health coverage, or the Marketplace offerings. However, we expect that eligible crew members will likely choose to remain in the Vanguard health plans rather than electing a Marketplace health plan for the following reasons:
- The Vanguard health plan options provide very comprehensive coverage.
- Vanguard subsidizes more than 80% of the total cost of the health plan coverage; Vanguard does not contribute toward the cost of Marketplace coverage.
- Crew members can pay their share of the premiums for this coverage on a pre-tax basis. In contrast, Marketplace coverage must be purchased on an after-tax basis.
You can use the Summary of Benefits and Coverage to compare each of the Marketplace plans to one another, as well as to compare the Marketplace plans to the Vanguard plans.
Q: The Marketplace notice mentions a premium tax credit. Am I eligible?
A: The ACA offers a premium tax credit to eligible Americans who purchase health coverage through the Marketplace. However, individuals who are offered employer-sponsored coverage that meets the minimum value standards outlined in the ACA are not eligible for the credit. Because Vanguard's health plans meet these minimum value standards and are also considered affordable, crew members who can participate in Vanguard's health plans are not eligible for the premium tax credit.
Crew members who are scheduled to work less than 30 hours per week cannot participate in Vanguard's health plans and may be eligible for a premium tax credit if they choose to purchase health coverage from the Marketplace.
Q: What is the minimum value standard?
A: Generally, a health plan meets the minimum value standard if it's designed to pay at least 60% of the total cost of health services for a standard population. Currently, Vanguard's health plans pay more than 80% of the total cost of health services.
Q: How is affordable coverage determined?
A: As the Marketplace notice mentions, coverage is considered affordable if the employee's share of the annual cost for self only (or crew only) coverage is no greater than 9.5% (as adjusted) of total household income for the year. Vanguard's health coverage is considered affordable for crew members who can participate in Vanguard's lowest-cost health plan (the High-Deductible Health Plan).
Q: What is the individual mandate under health care reform?
A: The individual mandate requires that, starting in 2014 and ending in 2018, most Americans have health care coverage either through an employer (e.g., Vanguard's health benefits coverage), through a government program, or by buying their own policies from the Marketplace.
Q: If I don't have health coverage, is there a penalty?
A: Yes, for tax years 2014–2018. The Internal Revenue Service (IRS) imposes a penalty for those who do not have health coverage, though there are various exceptions. This penalty, which would apply when you file your federal income tax returns, is either a percentage of your income or a flat dollar amount, whichever is greater.
For 2019, the individual mandate will no longer exist, and individuals will therefore no longer be taxed. However, the penalty will have to be paid in 2019 for those who did not have health coverage in 2018.
The chart below outlines the penalty schedule through 2018.
The greater of:
The greater of:
The greater of:
Note: The penalty is prorated by the number of months without coverage, though there is no penalty for a single gap in coverage of less than three months in a year.
Q: Where can I get more information on the Marketplace?
A: The best source for information on the ACA is healthcare.gov, a federal government website managed by the U.S. Centers for Medicare & Medicaid Services. This easy-to-navigate site offers an overview with lots of helpful informationincluding videos, calendars, and questions and answersabout the Marketplace health insurance offerings.