1. Apply What You've Learned - Planning for Health Care Expenses

Scenario: You are single and 35 years old. You are thinking of leaving your employer in January 2015 and becoming self-employed. However, replacing the insurance you currently receive through your employer is a big concern.

You have saved a nice nest egg, but you know that the medical costs from one serious accident or the development of a serious medical condition could wipe out your savings. You estimate your net income will be $34,000 in your first year of self-employment. You are looking to enroll in health care through the health insurance marketplace.

The estimated benchmark premium in your state for a 35-year-old is $3,000 per year. You are responsible for paying 7.50% of your income for health insurance. You are also considering purchasing disability insurance and long-term care insurance in case something happens in which you are no longer able to work or care for yourself.

Think about the Affordable Care Act (ACA) and answer the following questions:

1. If you choose to not enroll in a health insurance plan during 2015, your tax penalty under the Affordable Care Act (ACA) will be the greater of either $165, $325, $650, $975 or 2.0%, 1%, 1.5%, 2.5% of your gross income.

2. If you are subject to the tax penalty, it will be paid: (Pick One)

quarterly when the IRS sends you a bill

by monthly automatic withdrawals from your checking account

on your income tax return

3. The tax penalty applies to each year, month, or day that you do not have coverage for health insurance coverage for yourself or a member of your household. You are, however, allowed a maximum gap of six, three, one, or four months before becoming subject to the penalty tax.

4. Under the ACA and the new rules of the health insurance marketplace, the factors that may be used to determine your health insurance premium can include all of the following except: Check all that apply.

the current state of your health

any preexisting health conditions

the number of people in your family

your age

the state in which you live

5. For an insurance plan to meet the federal government's standard of a qualified healthcare plan, it must provide ten essential benefits. Among these essential benefits are: Check all that apply.

Pediatric services, including dental and vision care

Laboratory services

Mental health and substance abuse services

Illegal drug coverage

Emergency services

Prescription drug coverage

6. The ACA provides for several different tiers of plans to be available through the various federal and state healthcare exchanges. At your age, you can select any one of the plans except for the bronze, platinum, silver, gold, or catastrphic plan, which covers 60%, 80%, 70%, 90% of the insured's out-of-pocket medical costs.

7. As the plans' tiers progress from bronze to silver to gold to platinum, (1) the percentage of out-of-pocket costs covered by each tier decreases or increases, and (2) the cost of the plans included in each of the tiers will decrease or incrase? .

8. You expecting to pay 6.00%, 7.00% , 7.50%, 8.00% of your income (pre-tax) for your health insurance if it is obtained through a federal or state healthcare exchange. The ACA allows for several types of tax credit subsidies, including income-based tax credits. One such credit can be based on a benchmark premium, which in your current situation, is worth $4,000, $3,000, $2,500, $3,500 and equal to the cost of the second-lowest-cost silver, most expensive bronze, second-lowest-cost platinum, most expensive goldplan in your geographic area.

9. Therefore, the amount of the tax credit is expected to be $450, $473, $900, $428, and means that you should expect to pay $473, $38, $900, $428 per month on an after-tax basis (rounded to the nearest whole dollar) for your health insurance coverage.

10. One possible solution to the lack of health insurance if you elect to leave your current job is to rely on COBRA coverage. Which of the following statements regarding COBRA and its provisions is true? Check all that apply.

You must exercise your COBRA rights within 90 days after you leave your former employment.

COBRA rules apply if your employer has more than 20 employees.

Under COBRA, you can remain a member of your group health plan for up to 18 months after you leave the job provided that other restrictions are met.

To receive healthcare benefits under your former employer's plan, you must pay the entire premium (your and the employer's portion) plus an administrative fee.

You make changes in your health insurance coverage either during the even months of the year (February, April, June, etc.), during the odd months of the year (January, March, May, etc.), during the open enrollment period or if you or your family experiences a defined important family event.