I've been thinking about your question a lot over the past few months, because I've been placed in a similar situation - I'm getting kicked off my parents insurance soon, but I earn enough that I'll be subject to the tax penalty for not having insurance if I go with the BYU plan. I've spent a lot of time researching this, and I want to give out appropriate information to those who are in a situation like yours and mine. I've also spent a lot of time researching this because I was really upset with BYU too, but I didn't want to judge them unfairly. I'm going to try to present what I've found in my research to you (and other readers) in this answer in case it's helpful. I'm going to answer your questions in three parts. First, I'll explain what the situation actually is (your source wasn't exactly right), second, I'll give you appropriate information about your options if you're in this situation (as well as information about how to tell if you really are in this situation or not), and finally, I'll give you my opinion on BYU's decision.
Two important notes before we begin: First, if you're worried about tax penalties for your situation but don't care about my opinion or political/economic speculation about BYU's decision, you can just read part two. I've written each of the three parts of this answer so that they can be read on their own if you're only interested in certain pieces of information. Second, I am not a tax professional or a lawyer. In this answer I am providing a free service by presenting the information available as best as I understand it. However, both I and the 100 Hour Board official disclaim all liability for all answers posted. Use the advise given here at your own risk.
Part One: The Situation
As you'll read in section three, I don't necessarily have kind words for BYU on this subject, but as I've dug into the situation in order to answer your question, I've found that the situation created by the Affordable Care Act is actually way more complicated than I had originally imagined. I have some sympathy for their situation. This answer is complicated; but given the effort it seems like you put into your question, I assume you're someone that's willing to follow the complexity to get an answer. Let me put in a disclaimer before we get too far: I've done research using publicly available documents and information about the Affordable Care Act to given you an answer. As you'll see, the Church is in a fairly unique position here, and since I'm not a lawyer I may not have gotten everything exactly right, though I've done my best.
Let's start with the basics. This is actually about much more than BYU. This is about the Church as a whole. You see, the Church employs so many people (and runs so many other organizations) that long before the Affordable Care Act (which is important to the story and we'll get to in a minute) was passed, it started it's own insurance company to run it's healthcare plan for its U.S. employees and others it was responsible for. The organization is called "Deseret Mutual Benefits Administrators," abbreviated DMBA. You might recognize their logo; if you're currently on the student health plan, or if you served a domestic mission, their logo was on the insurance card you were given. They run all the Church's healthcare programs, including the student health plan for all church schools, the medical program for domestic missionaries, and a more comprehensive insurance plans for its full-time employees - including employees of BYU.
We'll come back to DMBA. Now let's shift gears and talk about the Affordable Care Act. This is the law that we call "Obamacare." In this answer, I refer to this law by the abbreviation "ACA." However, the terms "Affordable Care Act," "ACA," and "Obamacare" are all interchangeable.
When President Obama took office in 2010, he made overhauling the U.S. health system a priority of his administration. There were several problems he wanted to address. First, there were too many Americans that were under-insured. Before the ACA, many medical insurance plans had what were called "maximum benefits" numbers (also sometimes called "benefits caps"), which meant that the insurance plan would stop paying for your medical bills, even if you were still sick, after it had paid out a certain amount. This was a very terrible situation. Often, people purchased insurance plans that seemed to have an absurdly high cap on benefits - often in the millions of dollars - only to find that their insurance plans weren't enough when they faced very serious medical problems like a serious car crash or cancer. Imagine being part way through treatment only to find that your insurance company was no longer going to cover your chemotherapy.
The second problem President Obama wanted to fix was that buying health insurance without an employer was too difficult - almost impossible. People who were self-employed or between jobs often didn't have an effective way to purchase health insurance. Many insurance companies didn't even sell health insurance to individual people or families. And even if an individual or family managed to purchase health insurance on their own, there were almost no laws protecting them. Often, insurance companies would end people's coverage just because the policy holders were becoming too expensive for the insurance company - even if the individual hadn't done anything wrong and had always paid their premium every month - and they could do this completely legally.
Third, President Obama wanted to end the practice of denying someone coverage for what was referred to as a pre-existing condition. Basically, what this meant was that if you signed up for health insurance for any reason (starting a new job, buying an insurance plan yourself, etc.) you wouldn't receive coverage for any condition you had already been diagnosed with, no matter how serious. (Cancer, etc.) That may seem horribly unkind on the part of insurance companies (What if someone just started a new job?), but remember the problem you would run into if insurance companies didn't have that rule: no one would ever purchase health insurance until they got sick. Since only very sick people would purchase health insurance, premiums would skyrocket, and no one would be able to afford health insurance.
So, in order to solve these problems, President Obama made several changes to the health insurance industry in the Affordable Care Act. In order to solve the first problem (about plan benefit maximums), he simply made benefit caps illegal. President Obama almost certainly knew that this would result in higher premiums (and it has), but likely felt - rightly, in my opinion - that the benefit outweighed the risk. To solve the second problem (the difficulty of buying health insurance as an individual) he created the now-infamous healthcare.gov website (and allowed states to create their own websites if they didn't want to use the federal one) where individuals could shop for health insurance.
Solving the last problem was the trickiest part of all. How could you require health insurance companies to cover pre-existing conditions without either (a) bankrupting all health insurance companies every where or (b) raising premiums to the point where health insurance is basically useless?
The answer, as you've probably already realized, is to force everyone to buy health insurance. This means that healthy people - who may not normally purchase health insurance unless they are legally required to - would be paying health insurance premiums just like sick people. This way, there's no risk that healthy people would wait to buy health insurance, and this means that health insurance premiums won't skyrocket.
Now I've only addressed the BIGGEST changes the ACA made. There are a lot of smaller ones. For example, nearly every healthcare plan in the world - even government-sponsored ones like Medicaid - have some form of cost-sharing scheme. Which means that the patient pays some part of their costs. For example, if you see the doctor and the total fee was $100 for a regular appointment (which is about average) your insurance company might require you to pay a flat fee (called a "copay," maybe around $5), or a percentage of your costs (called coinsurance, often around 5-10%).
President Obama decided that people were less likely to get preventative care if they had to participate in such "cost sharing" measures for that type of care, so he required that everyone get some types of preventative care (immunizations, annual physicals, mammograms) for free without cost sharing.
I bring this up to address one point you made in your question. You criticized BYU for not bring their plans up to the "minimum standard" as required by the government,. However, it's worth mentioning that when the Affordable Care Act was first passed, almost no plans met theses standards, because the rules were just too novel. Many of standards created by the ACA were very new at the time, and few plans met the standards staring out.
And this didn't just effect BYU. Health insurance companies across the country started canceling health insurance plans as the date the law took effect got closer. And that led to a huge public outcry - you might remember it - which led Congress and the president to pass a law allowing plans that didn't meet ACA standards to have "grandfathered" status. This is really important to understand - Congress essentially allowed health plans that already existed before the ACA was passed to continue operating legally (and exempting their participants from fines were not having insurance) until the end of 2017.
Part Two: What to Do
Before we begin, let's talk about whether or not you need to be worried. When the Affordable Care Act (also called "Obamacare," hereafter referred to as the "ACA") was passed, part of the law was that every American would be required to have health insurance or pay an additional tax. The ACA set certain standards for health insurance that every healthcare plan had to follow. BYU's health plan doesn't follow those standards, which means it doesn't count as actual "insurance" in the eyes of the federal government. That means that if you only have BYU's health insurance, you may face a tax penalty of around $700. That having been said, this will not effect you at all if any of the following apply to you:
- You are on your parent's insurance plan and their insurance plan is Affordable Care Act compliant. Nearly all insurance plans (with the obvious exception of BYU's student plan) are ACA compliant, but you can talk to your parents to make sure if you're worried. Keep in mind that you can only stay on your parent's insurance until you turn 26. If you're approaching your twenty-sixth birthday and will still be in school at that time, you'll want to pay attention to the information below. If you'll have your own job by the time you turn twenty-six you can disregard this whole controversy. Stay on your parent's healthcare plan.
- You or your spouse has a full-time job that provides you with compliant insurance. If you or your spouse are working full time and you are covered by the insurance provided by your or your spouse's employer, you can disregard this controversy. This is true even if you're working full-time for BYU, as long as you're enrolled in the insurance BYU provides for full-time employees, not the student health plan. Stick with your current insurance plan.
- You get compliant health insurance from another source. If you get health insurance from somewhere else, and that insurance is ACA-compliant, you should keep that coverage and ignore this whole controversy.
Even if you don't fall into one of those three categories, you don't necessarily need to panic just yet. In order for me to explain to you your options, please look at the chart below and find your group letter based on your annual income and household size. Then scroll down to the explanation for you group and I'll explain to you your options. You'll also want to read the Frequently Asked Questions I've included at the end.
$0-$10,000: Group A
$10,000-$11,770: Group B
$11,770 - $29,425: Group C
$29,426 - $47,080: Group D
$47,080+: Group E
MARRIED STUDENT (NO KIDS):
$0-$15,930: Group A
$15,930 - $39,825: Group C
$39,826 - $63,720: Group D
$63,720+: Group E
NOTE: THESE NUMBERS ONLY WORK IN UTAH!
Not eligible for ACA subsidies. Advise to stay on BYU plan. Don't earn too much money.
The "it sucks to be you" group. You are both not eligible for insurance subsidies and subject to the tax penalty. You *may* be able to get out of it by filling out a complex tax form. If you have an accountant in the family, I recommend giving them a call.
Subject to tax penalty and also eligible for insurance subsidies. You can enroll in a private healthcare plan on healthcare.gov BUT THIS IS A HUGE RISK! If your income drops below $11,770 (you lose a job, whatever) by the end of the year you will owe the IRS for the ALL the premium subsidies they gave you during year, which will average a couple hundred dollars a month. Alternatively, you can just sign up for the BYU health plan and eat the $695 tax.
You earn this much as a student?!? Is your employer hiring?
I'm very confident no BYU student falls into this group.
Frequently Asked Questions
What if my income changes and I change group numbers?
It sucks to be you. True Story.
What do I count as income?
Not FAFSA, but yes scholarships
I want private insurance from healthcare.gov but I don't know how to shop for insurance?
Define deductible, premium, copay, coinsurance, formulary.
Can I just not have insurance?
No. That is both stupid and against BYU rules. They will enroll you in the student health plan even if you don't want it.
First of all, you're wrong for so, so, so, many reasons. The ACA does NOT - I repeat DOES NOT - require insurance to cover elective abortions. False. No. Nope. Untrue. Wrong. Was never a thing.
Most of this answer will not actually be opinion, but clarifying what the situation actually is.
The spokesperson for BYU referred to birth control - not abortions. Even then, she was probably mistaken. BYU can't possibly have a problem with the requirement for birth control because either (A) the university is willing to cover it for single female employees otherwise its employees would be fined for not having insurance or (B) the university is exempted from the requirement. I suspect its B, but I will find out for sure.
Hobby Lobby doesn't actually apply to this situations because Hobby Lobby was about a closely held private corporation. BYU is a subsidiary for the Church and as such is in a different legal situation.
I'm almost certain the actual reason for this problem is that BYU doesn't want to spend the money to eliminate the out of pocket limit which the ACA makes illegal. It's probably not fair to blame BYU for this as being "penny pinchers" - other universities receive public funds to run their insurance programs. Also, BYU's premiums are literally like a third of the U's.
Does this apply for full-time employees as well, like professors and staff? Will BYU be able to continue providing them with insurance?
No, it does not apply to BYU employees. BYU continues to provide them with ACA-complient insurance. Hence you see the mistakenness of BYU's justification. Whatever moral issues it has with health insurance clearly do not seem to apply to its employees. What it's spokesperson said is simply patently false. I don't think she was lying, I think she (he?) was mistaken - when he said the birth control played a role, he was responding to a question from a reporter.
I assume that very few people will purchase BYU's student health insurance now since it doesn't comply with the ACA. Has enrollment decreased since August? How will this affect BYU financially?
Yeah, because BYU is just going to give us those numbers. I can say that it probably won't impact BYU financially overall because the health program is self-funded and I doubt BYU is using student's premium money to do other things. Why? Because that would be stupid.
Some students are exempt from the health insurance penalty and will likely not have to pay very much.
Why doesn't this fall under the umbrella of the Hobby Lobby case? If SCOTUS ruled that Hobby Lobby doesn't have to cover contraception, why does BYU have to cover abortion?
This is a question that I honestly don't know the answer to.
Could this be challenged on legal grounds? How?
So anyways, there's what Halea said. He did a really great job but unfortunately, as Zedabilty said in a flagette, "THE LACK OF GOOD HEALTH INSURANCE KILLED [HALEAKALA]."