one-year enforcement safe harbor (i.e., until the first plan year beginning on or after august 1, 2013) by timely satisfying certain requirements set forth by the u.s. department of health and human services. effective october 1, 2013 individuals may enroll in health insurance plans offered through state-based health insurance exchanges, or through the federal exchange in states that opted not to develop their own state-based exchange. coverage begins on january 1, 2014. open enrollment through the health insurance exchanges ends on march 31, 2014, after which time uninsured individuals generally may not purchase insurance through an exchange until the following open enrollment period. in subsequent years, the open enrollment period will start on october 1 and end on december 7. effective january 1, 2014 insurers are prohibited from denying coverage (or charging higher rates) to any individual based on pre-existing medical conditions or gender. insurers are prohibited from establishing annual spending caps of dollar amounts on essential health benefits. under the individual mandate provision (sometimes called a "shared responsibility requirement" or "mandatory minimum coverage requirement"), individuals who are not covered by an acceptable health insurance policy will be charged an annual tax penalty of $95, or up to 1% of income over the filing minimum, whichever is greater; this will rise to a minimum of $695 ($2,085 for families), or 2.5% of income over the filing minimum, by 2016. the penalty is prorated, meaning that if a person or family have coverage for part of the year they won't be liable if they lack coverage for less than a three-month period during the year. exemptions are permitted for religious reasons, members of health care sharing ministries, or for those for whom the least expensive policy would exceed 8% of their income. also exempted are us citizens who qualify as residents of a foreign country under the irs foreign earned income exclusion rule. in 2010, the commissioner speculated that insurance providers would supply a form confirming essential coverage to both individuals and the irs; individuals would attach this form to their federal tax return. those who aren't covered will be assessed the penalty on their federal tax return. in the wording of the law, a taxpayer who fails to pay the penalty "shall not be subject to any criminal prosecution or penalty" and cannot have liens or levies placed on their property, but the irs will be able to withhold future tax refunds from them. (ends in 2019. repealed by the tax cuts and jobs act of 2017) united states department of health and human services (hhs) federal poverty level in 2014 persons infamily unit48 contiguous statesand d.c.alaskahawaii 1$11,670$14,580$13,420 2$15,730$19,660$18,090 3$19,790$24,740$22,760 4$23,850$29,820$27,430 5$27,910$34,900$32,100 6$31,970$39,980$36,770 7$36,030$45,060$41,440 8$40,090$50,140$46,110 each additionalperson adds$4,060$5,080$4,670 medicaid expansion by state. expanding medicaid not expanding medicaid ongoing debate over medicaid expansion in participating states, medicaid eligibility is expanded; all individuals with income up to 133% of the poverty line qualify for coverage, including adults without dependent children. the law also provides for a 5% "income disregard", making the effective income eligibility limit 138% of the poverty line. states may choose to increase the income eligibility limit beyond this minimum requirement. as written, the aca withheld all medicaid funding from states declining to participate in the expansion. however, the supreme court ruled in national federation of independent business v. sebelius (2012) that this withdrawal of funding was unconstitutionally coercive and that individual states had the right to opt out of the medicaid expansion without losing pre-existing medicaid funding from the federal government. for states that do expand medicaid, the law provides that the federal government will pay for 100% of the expansion for the first three years, then gradually reduce its subsidy to 90% by 2020. as of august 2016, 31 states and the district of columbia have expanded medicaid. (see: state rejections of medicaid expansion). health insurance exchanges are established, and subsidies for insurance premiums are given to individuals who buy a plan from an exchange and have a household modified adjusted gross income between 100% and 400% of the federal poverty line. section 1401(36b) of ppaca explains that each subsidy will be provided as an advanceable, refundable tax credit and gives a formula for its calculation. a refundable tax credit is a way to provide government benefits to individuals who may have no tax liability (such as the earned income tax credit). the formula was changed in the amendments (hr 4872) passed march 23, 2010, in section 1001. to qualify for the subsidy, the beneficiaries cannot be eligible for other acceptable coverage. the u.s. department of health and human services (hhs) and internal revenue service (irs) on may 23, 2012, issued joint final rules regarding implementation of the new state-based health insurance exchanges to cover how the exchanges will determine eligibility for uninsured individuals and employees of small businesses seeking to buy insurance on the exchanges, as well as how the exchanges will handle eligibility determinations for low-income individuals applying for newly expanded medicaid benefits. premium caps have been delayed for a year on group plans, to give employers time to arrange new accounting systems, but the caps are still planned to take effect on schedule for insurance plans on the exchanges; the hhs and the congressional research service calculated what the income-based premium caps for a "silver" healthcare plan for a family of four would be in 2014: health insurance premiums and cost sharing under ppaca for average family of 4 income % of federal poverty level premium cap as a percentage of income income $ (family of 4)a max annual out-of-pocket premium premium savingsb additional cost-sharing subsidy 100%2%$23,850$477$10,851$5,040 133%3%$31,721$952$10,376$5,040 150%4%$35,775$1,431$9,897$5,040 200%6.3%$47,700$3,005$8,323$4,000 250%8.05%$59,625$4,800$6,528$1,930 300%9.5%$71,550$6,797$4,531$1,480 350%9.5%$83,475$7,930$3,398$1,480 400%9.5%$95,400$9,063$2,265$1,480 ^ note: the 2014 fpl is $11,670 for a single person and about $23,850 for family of four. see subsidy calculator for specific dollar amount.^ dhhs and cbo estimate the average annual premium cost in 2014 will be $11,328 for a family of 4 without the reform. maximum out-of-pocket premium paymentsmaximum out-of-pocket premium payments under ppaca by family size and federal poverty level. (source: crs)maximum out-of-pocket premium as percentage of family income and federal poverty level (source: crs) two federally regulated "multi-state plans" (msp)—one of which must be offered by a non-profit insurer, and the other cannot cover abortion services—become available in a majority of state health insurance exchanges. the msps must abide by the same federal regulations required of an individual state's qualified health plans on the exchanges, and must provide identical cover privileges and premiums in all states. msps will be phased in nationally, being available in 60% of all states in 2014, 70% in 2015, 85% in 2016, and 100% in 2017. section 2708 to the public health service act becomes effective, which prohibits patient eligibility waiting periods in excess of 90 days for group health plan coverage. the 90-day rule applies to all grandfathered and non-grandfathered group health plans and group health insurance issuers, including multiemployer health plans and single-employer group health plans pursuant to collective bargaining arrangements. plans will still be allowed to impose eligibility requirements based on factors other than the lapse of time; for example, a health plan can restrict eligibility to employees who work at a particular location or who are in an eligible job classification. the waiting period limitation means that coverage must be effective no later than the 91st day after the employee satisfies the substantive eligibility requirements. two years of tax credits will be offered to qualified small businesses. to receive the full benefit of a 50% premium subsidy, the small business must have an average payroll per full-time equivalent ("fte") employee of no more than $50,000 and have no more than 25 ftes. for the purposes of the calculation of ftes, seasonal employees, and owners and their relations, are not considered. the subsidy is reduced by 3.35 percentage points per additional employee and 2 percentage points per additional $1,000 of average compensation. as an example, a 16 fte firm with a $35,000 average salary would be entitled to a 10% premium subsidy. a $2,000 per employee penalty will be imposed on employers with more than 50 full-time employees who do not offer health insurance to their full-time workers (as amended by the reconciliation bill) – the 'employer mandate'. "full-time" is defined as, with respect to any month, an employee who is employed on average at least 30 hours of service per week. in july 2013, the obama administration announced this penalty would not be enforced until january 1, 2015. for employer-sponsored plans, a $2,000 maximum annual deductible is established for any plan covering a single individual or a $4,000 maximum annual deductible for any other plan (see 111hr3590enr, section 1302). these limits can be increased under rules set in section 1302. this provision was repealed on april 1, 2014 to finance part of the new spending, spending and coverage cuts are made to medicare advantage, the growth of medicare provider payments are slowed (in part through the creation of a new independent payment advisory board), medicare and medicaid drug reimbursement rates are decreased, and other medicare and medicaid spending is cut. members of congress and their staff are only offered health care plans through the exchanges or plans otherwise established by the bill (instead of the federal employees health benefits program that they currently use). a new excise tax goes into effect that is applicable to pharmaceutical companies and is based on the market share of the company; it is expected to create $2.5 billion in annual revenue. health insurance companies become subject to a new excise tax based on their market share; the rate gradually rises between 2014 and 2018 and thereafter increases at the rate of inflation. the tax is expected to yield up to $14.3 billion in annual revenue. the qualifying medical expenses deduction for schedule a tax filings increases from 7.5% to 10% of adjusted gross income (agi) for taxpayers under age 65. consumer operated and oriented plans (co-op), which are member-governed non-profit insurers, entitled to a 5-year federal loan, are permitted to start providing health care coverage. the community living assistance services and supports act (class act) provision would have created a voluntary long-term care insurance program, but in october 2011 the department of health and human services announced that the provision was unworkable and would be dropped. the class act was repealed january 1, 2013. effective october 1, 2014 federal payments to disproportionate share hospitals, which are hospitals that treat large numbers of indigent patients, are reduced. the payments will subsequently be allowed rise based on the percentage of the population that is uninsured in each state. effective january 1, 2015 cms begins using the medicare fee schedule to give larger payments to physicians who provide high-quality care compared with cost. the "employer mandate" (originally scheduled to take effect on january 1, 2014) goes into effect for employers with 100 or more employees. effective october 1, 2015 states are allowed to shift children eligible for care under the children's health insurance program to health care plans sold on their exchanges, as long as hhs approves. effective january 1, 2016 states are permitted to form health care choice compacts and allows insurers to sell policies in any state participating in the compact. the "employer mandate" (originally scheduled to take effect on january 1, 2014) goes into effect for employers with 50 to 99 employees. effective january 1, 2017 under section 1332 of the affordable care act, a state may apply to the secretary of health and human services for a renewable "waiver for state innovation" provided that the state passes legislation implementing an alternative health care plan meeting certain criteria. the decision of whether to grant the five-year waiver is up to the secretary (who must annually report to congress on the waiver process) after a public comment period. a state receiving the waiver would be exempt from some of the central requirements of the aca, including the individual mandate, the creation by the state of an insurance exchange, and the penalty for certain employers not providing coverage. the state would also receive compensation equal to the aggregate amount of any federal subsidies and tax credits for which its residents and employers would have been eligible under the aca plan, but which cannot be paid out due to the structure of the