KQED News and The California Report
Updated: March 11, 2014
On January 1, 2014, the Affordable Care Act went into full effect. By the end of February four million Americans had enrolled in a plan, and more than 800,000 of them are in California. If you've been putting it off — the deadline to sign up for this year is March 31. We know that figuring out what parts of the law have to do with you can be a challenge.
We're here for you. This guide explains how the health law affects you, your family or your small business, here in California. It's for people who already have insurance and people who don't — but want to get it. We're regularly updating the guide to reflect the most recent changes announced nationally and statewide. In the guide we outline the new health insurance options offered to you as a Californian and show you how to access them. If you're concerned about the cost, we also show you what help is available.
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I Have Health Insurance
At a Glance
- If you already have health insurance from your employer, you don't have to do anything. The new health law does not require employers to change the insurance they provide.
- Medicare is largely unchanged by the Affordable Care Act, although the law improves coverage of prescription drugs.
- If you're already receiving Medi-Cal, you will continue to do so.
- If you buy insurance for yourself or your family, you have access to a new marketplace called Covered California. You may also qualify for tax credits to help you pay for health insurance. Anyone who does not have health insurance can buy it through Covered California.
Most people in California have health insurance, either from their employer or through a government program such as Medicare or Medicaid. If you are one of these people, little about your situation will change because of the health law. That's the headline.
But there are some caveats, so let's dive in.
Employer-based Health Insurance
If you receive health insurance at work, you are likely to continue to do so. But even after the health law takes effect Jan. 1, employers may change plans, premiums, deductibles or other elements of the insurance they offer, just as they can now.
The Affordable Care Act mandated several changes that benefit people with health insurance. These changes include:
- Children can stay on a parent's plan until age 26
- Your insurance company cannot drop you if you get sick
- You get free preventive care with no co-pay and no deductible, including many cancer screening tests (although some plans already in effect may be exempt from providing this benefit)
- Lifetime caps on coverage are banned
The main change for Medicare beneficiaries is that the Affordable Care Act closes the so-called doughnut hole. That's the coverage gap in Medicare Part D, which pays for prescription drugs. Under Part D, seniors pay a certain initial amount for prescription drugs, then pay all of their costs up to $4,700, when coverage starts up again. The ACA requires this coverage gap to grow more narrow over time. The gap will be completely closed by 2020.
Medi-Cal is the government health insurance program for the poor. (In other states, it's called Medicaid.) If you are currently receiving Medi-Cal, you will continue to do so.
But what many people don't know is that Medi-Cal does not cover everyone who is poor. Under the Affordable Care Act, California is expanding Medi-Cal to cover more poor people who do not have health insurance. This guide has more information about the Medi-Cal expansion.
I Am Covered Through the Low Income Health Program. What Do I Do?
The Low Income Health Program (LIHP) was built as a "bridge to reform." On Jan. 1, the 600,000 Californians in the LIHP automatically transitioned to Medi-Cal. You can read more about Medi-Cal in this guide.
I Buy My Own Health Insurance. What Does the New Health Law Mean to Me?
Before the ACA went into effect, people who bought insurance for themselves or for their families had no leverage with insurance companies. If you bought your own insurance, you may have paid a much higher premium than a large company would pay for similar coverage. If you were sick, the insurance company could have charged you a higher premium or refused to cover you altogether.
Effective Jan. 1, 2014, many of those insurance practices are no longer permitted. The health law restricts what insurance companies are allowed to consider in setting premiums. Specifically, insurers may no longer use your health history to set rates. Instead, rates will be based on three factors only: age, where you live, and number of people in your family. You cannot be turned down or charged a higher premium because you are sick.
The Affordable Care Act also makes it easier for individuals to shop for insurance. As part of the law, California set up an online marketplace where you can buy health insurance. The marketplace is called Covered California. Each plan offered on Covered California must offer a standard set of benefits. The goal is that consumers can make an "apples-to-apples" comparison of competing plans.
As part of its responsibility, Covered California reviewed plans that insurance companies wanted to offer on the marketplace. The agency certified plans that met the requirements of the health law. People can shop for these certified plans and compare prices. In addition, consumers may qualify for subsidies (in the form of tax credits) to help them pay for insurance.
Important caveat: The health law also phased out certain types of insurance policies because these policies did not meet the ACA's health coverage requirements. People with one of those policies had to choose a new plan, and for many people they were more expensive. Just under a million people in California received notice of cancellation during the fall, 2013. About a third of those people, though, were eligible to receive subsidies to help them buy a new plan. If your policy was canceled and you are facing higher premiums, Covered California has set up a special hotline to help you. That number is (855) 857-0445.
I Do Not Have Health Insurance
At a Glance
- 7 million people are uninsured in California.
- Under the health law, most people must have insurance by March 31, 2014, or pay a fine.
- People who are uninsured may get insurance in one of two ways: an expanded Medi-Cal program or a new online health insurance marketplace.
- People who buy insurance in the marketplace may be eligible for federal tax credits to help them afford health insurance.
In California, 7 million people do not have health insurance. Many say they cannot afford it. Others say insurance companies refuse to issue them a policy because they are sick. Most uninsured people have jobs, or are the children of working parents, but their employers do not offer health insurance.
What the Health Law Changes for Individuals
Under the Affordable Care Act most people must have health insurance or pay a fine. While the ACA went into effect Jan. 1, 2014, people have a grace period until Mar. 31 to buy insurance and avoid the penalty. The penalty in 2014 is $95 per person or 1 percent of income, whichever is greater. The penalty rises to $695 per person or 2.5 percent of income in 2016. (Penalties for children are half the amount for adults.)
Some people are exempt from both the requirement and the penalty. These include people living in the U.S. without proper documents, members of federally recognized Indian tribes and people who are in prison. Other people may be exempt as well.
The Affordable Care Act provides two paths to help uninsured people access health insurance. You can buy a plan at the state's new health insurance marketplace called Covered California.
Alternatively, you may be covered by an expansion of Medi-Cal, the government's health insurance program for the poor. Your income will determine which one of these paths is for you.
The New Marketplace — Covered California
In the Covered California marketplace, insurers may no longer deny you coverage because of a current or past health condition. In addition, many people qualify for government subsidies — in the form of tax credits — to help them purchase health insurance.
Expanded Medi-Cal program
Medi-Cal is the government health insurance program for people who are low-income or disabled. Under the new federal law, California is expanding the income limits for the Medi-Cal program. Many more low-income people will qualify.
Which Program Am I In?
Your income will determine whether you will buy insurance through the marketplace or are covered by Medi-Cal.
The health law uses a new calculation of income, called Modified Adjusted Gross Income (MAGI). In general, it's the total of your adjusted gross income — plus any tax-exempt income you might have. But it's not last year's income. When applying for insurance, you will be asked to estimate what you expect your 2014 income will be. If you expect to earn roughly the same next year, you can estimate your MAGI by adding lines 8b and 37 from your 1040 tax return. But if you think your income will change, you will need to estimate.
If you want more specifics of what income is counted — and what income isn't — check this helpful summary (pdf) from the UC Berkeley Labor Center.
Once you have calculated your income, look at the chart below. If your 2013 income is at or below the number that corresponds to your household size, you are probably eligible for Medi-Cal. This guide has more information about the Medi-Cal expansion.
If your income is higher than the number you see below, you may buy insurance on the Covered California marketplace. This guide has more information about Covered California.
The income amounts shown are approximately 138 percent of the federal poverty level. That's the new upper limit for Medi-Cal eligibility.
In either case, you can apply at Covered California. Think of it as one-stop shopping. Through the application process, you will find out if you are likely to be eligible for Medi-Cal or if you qualify for a subsidy to buy private health insurance on the Covered California site. Even if you make too much money to qualify for a subsidy, you can still enroll in insurance through Covered California.
Household Size Income 1 $15,850 2 $21,400 3 $26,950 4 $32,500 5 $38,000 6 $43,600 7 $49,100 8 $54,700
Immigrants who have a green card and have been living in the U.S. five years or longer are eligible for the same benefits of the Affordable Care Act as U.S. citizens. They may need to pay a penalty if they do not have health insurance. If you are in the U.S. legally, but do not have a green card, you are also eligible for many of the benefits of the Affordable Care Act. You can read more in the I Am an Immigrant section of this guide.
I Am an Immigrant
At a Glance
- Naturalized citizens are eligible for the same benefits as U.S.-born citizens.
- Most lawfully present immigrants are eligible for benefits under the Affordable Care Act and, like citizens, may be required to pay a penalty if they do not have health insurance.
- Some immigrants previously not eligible for Medi-Cal may now have access to health insurance, either under the Medi-Cal expansion or in the new Covered California marketplace. Subsidies are available to those who qualify.
- Undocumented immigrants are not eligible for benefits under the ACA and do not have to pay a fine if they do not have health insurance.
California has more immigrants than any other state. About 10 million foreign-born people live here, and just under half of them are naturalized citizens. Of the rest, many are living here lawfully; others are not. Whether they are eligible for the benefits of the ACA depends on their immigration status.
I Already Have Health Insurance. Do I Have to Do Anything Differently Because of the Affordable Care Act?
In short, if you already have insurance, nothing about your situation will change. There are some limited exceptions, but in general, if you have insurance through your job, or public insurance such as Medi-Cal or Medicare, you will continue to be insured through those programs.
I Am a Naturalized U.S. Citizen, and I Do Not Have Health Insurance. How Does the ACA Affect Me?
As a naturalized U.S. citizen you are eligible for the same benefits under the ACA as a U.S.-born citizen. Depending on your income, you may be eligible for Medi-Cal or for subsidies to help you afford insurance in the Covered California marketplace. You may need to pay a penalty if you do not have health insurance. Please consult the other sections of this guide for information about your rights and responsibilities under the health law.
I Have a Green Card. How Does the ACA Affect Me?
If you are a green card holder, then you are eligible for the same benefits as U.S. citizens under the health law. Green card holders are also called lawful permanent residents.
If you do not have health insurance, the ACA can help you get it. The health law provides two paths to assist you: through a new health insurance marketplace called Covered California, and through an expanded Medi-Cal program — the government's health insurance program for the poor. Your income will determine which one of these programs is for you. Please consult the I'm Not Insured section of this guide for a more complete explanation of benefits and how you can enroll.
Important note for lawfully present immigrants who are childless adults: Before the health law went into effect on Jan. 1, low-income childless adults were not eligible for Medi-Cal. But under the health law, they are now eligible. California is expanding Medi-Cal to include more people. If you have been denied in the past, you can submit an application to Medi-Cal via Covered California.
I Am in the U.S. Legally, But I Do Not Have a Green Card. I Am Here under a Different Kind of Visa. What Does the Health Law Mean to Me?
U.S. law includes a wide variety of ways in which immigrants can be "lawfully present," even if they are not green card holders.
The Affordable Care Act provides benefits to immigrants lawfully present under many different kinds of immigration status. You can check this list from the federal government to see if you qualify.
If you do qualify, please visit the Insurance Marketplace section of this guide to learn more about the benefits available to you.
Depending on your income and the number of people in your family, you may be eligible for subsidies to help you pay for insurance. If you earn less than 400 percent of poverty (about $46,000 for an individual or $94,000 for a family of four), you likely qualify for a partial or full subsidy.
Covered California has a cost calculator so you can estimate how much, if anything, you might have to pay for health insurance. The cost calculator will also indicate if you are eligible for Medi-Cal.
Even if you make too much money to qualify for a subsidy, you can still purchase health insurance on the Covered California marketplace.
I Am Lawfully Present and Want My Parents to Immigrate. Are They Eligible for Any Benefits?
If your parents are lawfully present, they are eligible to buy insurance on the Covered California marketplace. They may also be eligible for subsidies, depending on their income.
We Are a Mixed-Status Family. How Do We Handle Our Application?
A mixed-status family is a household of individuals present in the United States under different immigration or citizenship statuses. While undocumented immigrants are not eligible for benefits under the health law, lawfully present members of a mixed-status family likely are eligible for benefits. Please consult this document from the National Immigration Law Center.
I Am An Undocumented Immigrant. Can I Buy Insurance on the Marketplace?
In short, no. Under the health law, undocumented immigrants are not eligible for benefits. You are not eligible for Medi-Cal, and you are not eligible for subsidies on Covered California. Undocumented immigrants are also barred from purchasing health insurance on the Covered California marketplace, even if they use their own money.
As an undocumented immigrant you do not have to pay a fine if you do not have health insurance.
In extraordinary circumstances undocumented immigrants may be eligible for a program called "Emergency Medi-Cal." For example, a woman who is pregnant is eligible for Emergency Medi-Cal for prenatal care and the delivery of her baby.
I Am a Small Business Owner
At a Glance
- Covered California features a special marketplace for small businesses. "Small" is defined as 50 or fewer full-time equivalent employees.
- The health law does not require that small business owners provide health insurance.
- Small business owners who choose to provide health insurance may be eligible for a tax credit to help cover the cost. Eligibility is based on the number of full-time employees and the employees' wages, among other factors.
Before the health law went into effect, small business owners faced a disadvantage when shopping for health insurance for their employees. Because you, as the owner, did not have as many employees as large businesses do, it was harder for you to get the best prices.
What the Health Law Changes for Small Business Owners
Under the Affordable Care Act, small business owners can purchase health insurance for their employees in a special marketplace called "SHOP," the Small Business Health Options Program. SHOP is run by Covered California, which also runs the new marketplace for individuals and families. (Note: Healthcare.gov delayed the opening of its SHOP marketplace for one year. But Covered California is separate from Healthcare.gov. The state's SHOP online marketplace is up and running.)
In SHOP, you will be part of an insurance pool made up of small businesses across California. This is new under the health law. The goal is to give small businesses access to more plans and more buying power, just as large businesses have traditionally had.
If you currently offer health insurance and have a broker you work with, you may continue to do so. Your broker can also help you pick a plan on SHOP. If you don't have a broker, you may seek help navigating SHOP from Covered California.
Does the Health Law Require That Small Businesses Provide Health Insurance?
No. The Affordable Care Act does not require that businesses with fewer than 50 full-time equivalent employees (defined as 30 hours per week) provide health insurance. But if your business has 50 or more FTEs, you could be subject to penalties starting in 2015 if you do not provide insurance.
What Businesses Are Eligible for This Tax Credit I Keep Hearing About?
The Affordable Care Act provides tax credits for many small businesses to help offset the costs of employee premiums.
First, the tax credit is available now. If you are offering health insurance in 2013, you can claim the credit on your income tax return, if you are eligible.
The major qualifying factor in determining your business' eligibility for the tax credit is the size of your business. Only companies with 25 or fewer full-time equivalent employees qualify. Eligibility is further determined by several other factors, including:
- Your average annual wages are less than $50,000 per full-time equivalent employee.
- You pay at least 50 percent of the health insurance premium for your employees.
Both businesses and nonprofits are eligible. The tax credits are available on a sliding scale: up to 35 percent of premiums in tax year 2013 and up to 50 percent of premiums in tax year 2014. Covered California can help you determine your eligibility. Tax credits are available for a total of two consecutive years.
If I Decide to Provide Health Insurance to My Employees, How Does Covered California Help Me?
Private health insurance companies offer plans on SHOP. Check this map for an overview of which plans are offered in your area. Covered California has developed a standard set of benefits that all plans on the SHOP marketplace need to offer.
Health plans in Covered California are offered in "tiers" of coverage: platinum, gold, silver and bronze. The difference between the tiers is not what benefits are covered, but the cost of coverage. For example, platinum plans have higher premiums and your employees pay less when they see the doctor. Bronze plans have much lower premiums, but people pay more when they see the doctor.
Once you pick which tier of coverage you wish to offer your employees, you'll then decide how much of the premium you will pay, either a specific dollar amount or a percent of the premium. Under the health law, if you choose to offer insurance, then your contribution must be at least 50 percent of the premium's cost. (To be clear: This minimum threshold is required even if you are not applying for the tax credit.) Your employees can then pick any plan within that tier, and they will pay the remainder of the premium.
You will make a single monthly payment to Covered California, which will then handle premium payments to the specific health plans your employees choose.
Do I Have to Cover My Employees' Families, Too?
All of the plans offered in SHOP will be open to spouses and dependents. But you will decide if you wish to offer insurance to your employees only or to your employees and their families. If you decide against covering family members, they can still seek coverage on the individual market offered by Covered California. Dependents may also be eligible for Medi-Cal.
When Does SHOP Open?
SHOP opened on Oct. 1, 2013. Unlike the individual and family marketplace, SHOP does not have an "open enrollment" period. So you can sign up at any time.
Covered California has selected six plans that will offer insurance on the SHOP marketplace. They are Blue Shield, Chinese Community Health Plan, Health Net, Kaiser Permanente, Sharp Health Plan and Western Health Advantage. Please visit Covered California for more specific information about premiums.
I Am Covered by Medi-Cal
At a Glance
- Before the health law went into effect, many low-income people were not eligible for Medi-Cal. For example, adults who did not have children could not get Medi-Cal coverage.
- Under the health law, California is expanding Medi-Cal so that more people will be covered.
- You qualify if your income is less than about $15,400 for an individual or $32,000 for a family of four.
Medi-Cal is the government health insurance program for people who are low-income or disabled. In the past Medi-Cal did not cover all poor people. For example, unless they were disabled, adults who did not have children were probably not eligible for Medi-Cal.
What the Health Law Does
The Affordable Care Act provides significant funding for a dramatic expansion of Medi-Cal. The program is called Medicaid in other states.
Effective Jan. 1, 2014, anyone earning up to 138 percent of the federal poverty level is eligible for Medi-Cal.
(You may have heard 133 percent, but 5 percent of income isn't counted. This means the effective threshold is 138 percent of the poverty level.)
In real dollars, that means individuals making up to about $15,850 a year or a family of four making up to about $32,500 a year are now eligible for the insurance. The state estimates that 1.4 million more people now qualify for Medi-Cal.
In the Past, I've Found the Sign-Up Process Confusing. What Do I Do?
The Affordable Care Act mandates changes in the application process to simplify it and make it more streamlined. People can apply in person or by mail. Medi-Cal applicants may also apply at CoveredCA.com, the website of the state's new marketplace.
The health law also created a new definition of income for Medi-Cal. It's called Modified Adjusted Gross Income, or MAGI. Your assets will no longer be used in determining whether you are eligible.
I'm on Medi-Cal Now. Do I Have to Do Anything to Keep My Coverage?
No. You will continue receiving benefits. You don't need to do anything new. But, just like you do now, you will need to continue to reapply periodically to maintain your benefits.
I Am Covered Through the Low Income Health Program. What Do I Do?
The Low Income Health Program (LIHP) was built as a "bridge to reform." On Jan. 1, 2014, most LIHP recipients automatically transitioned to Medi-Cal. Some of them may earn too much money to qualify for Medi-Cal, but will be eligible for coverage and — most likely — subsidies, under Covered California. You should have received information in the mail from the Department of Health Care Services about the transition.
How Does the New Marketplace Work?
At a Glance
- The state has set up a new online marketplace, called Covered California, where people can buy insurance.
- All health plans offered in Covered California feature the same standard set of benefits.
- Effective Jan. 1, 2014, insurance companies may consider only three factors to determine the cost of your premium: age, geography and family size. Your health history may no longer be considered in setting premiums.
- To help you pay for insurance, the federal government is offering tax credits for people who qualify, based on their income.
For millions of Californians, the new marketplace — Covered California — is the heart of the health law. If you are uninsured, or buy insurance for yourself or your family, the marketplace is where you can shop. More than 400,000 Californians have used the marketplace to sign up for insurance that took effect Jan. 1. You have until March 31 to sign up, but if you do not have insurance by then, you will likely pay a penalty. In 2014, the penalty is $95 per person or 1 percent of adjusted income, whichever is greater. But that goes up over time. The penalty rises to $695 per person or 2.5 percent of income in 2016. (Penalties for children are half the amount of adults.)
Buying Health Insurance Today
Before the Affordable Care Act, if you bought insurance for yourself or your family, it may have been hard to find a policy with comprehensive benefits. Health insurance companies were generally not required to cover specific areas of care. If you had an illness, the health plan might have charged you a very high premium to get the care you wanted, perhaps more than you could afford. Or you might have found an affordable plan, but the company would not have covered the care you needed. For example, the company might have excluded specific illnesses based on your health history.
What Changes With the Health Law?
Under the Affordable Care Act, the state has set up a new marketplace, called Covered California, where insurance companies offer plans.
The headline is that the average premium, statewide, for a "silver tier" plan (more on that in a minute) is $373 per month. Many people are eligible for subsidies to help pay the premiums.
In early 2013, Covered California reviewed applications from 30 different carriers — and, together with state regulators — approved 11 final plans. These 11 plans all meet the minimum requirements of the Affordable Care Act.
The 11 plans are each offered by a different insurer. Among them are five large companies: Anthem Blue Cross, Blue Shield of California, Health Net, Kaiser Permanente and Molina Healthcare. The remaining six plans are offered by local and regional insurers: Chinese Community Health Plan, Contra Costa Health Services, L.A. Care Health Plan, Sharp Health Plan, Valley Health Plan, and Western Health Advantage.
Each region of California will offer between two and six of these plans.
Before We Dive Into How Much This Will Run You, Let's Explain a Few Terms.
You've probably heard of premiums, deductibles and co-pays. In considering what health insurance policy to sign up for, you need to think about your health status, what health risks might come your way and your own financial ability to cover those risks. For example, do you have diabetes? You can probably calculate the cost of the prescription drugs you need. Are you an avid athlete who might sustain an injury? You might want to think about how much a broken leg might run you.
Here's some jargon to help you in your decision:
• Premium: this is the amount you pay, generally monthly, to a health insurance company for your plan.
• Deductible: this is the amount you pay — out of your own pocket — before your insurance begins to pay, although some services on Covered California plans are covered outside of the deductible. For example, on all Covered California plans, you can see your primary care doctor with just a copay. Some preventive services are free.
Two cautionary notes: First, you want to be careful to pick "in network" providers, as they are usually less expensive than doctors and other providers not in your network. Second, plans with lower monthly premiums generally have higher deductibles. When you're considering different plans, think of how much health care you are likely to use, then add your total annual premium and your deductible to consider what your annual costs might be.
• Copayment: this is set amount you pay — out of your own pocket — when you access care, such as when you see a doctor or buy a prescription drug.
• Coinsurance: this is a set percentage you pay — out of your own pocket — when you access care. Some plans may charge a copay, some may charge coinsurance.
• Out-of-pocket maximum: This is the maximum amount you will pay, out of your own pocket, in a year. For most Covered California plans, this is $6,400 for an individual or $12,800 for a family. Once you reach the out-of-pocket max, all your medical expenses are generally covered by your health insurer, at no additional cost to you.
How Much Will I Pay?
Under the health law, insurers may consider only three factors when setting premiums: your age, where you live and your family's size. Insurance companies cannot turn you down or charge you a higher premium because you are sick or had a previous illness or accident.
To set up the new marketplace, state law established 19 geographic regions. That's the "where you live" factor insurers may use in setting premiums.
You can easily compare specific plans and premiums available to you — according to where you live, your age and the number of people in your family — by using Covered California's online calculator.
I've Heard the Government Is Offering Subsidies to Buy Insurance. Tell Me More.
You may qualify for a subsidy — in the form of a tax credit — to help you pay for health insurance. Tax credits are available on a sliding scale, according to your income. More than 2 million Californians will qualify for a tax credit.
If you earn between 138 and 400 percent of poverty ($15,850 - $46,000 for an individual; $32,500 - $94,200 for a family of four), you may qualify for a federal tax credit. The credit will be applied to the cost of your premium. You choose when you want to receive the credit. You might want to receive it monthly, so that you will pay less each month, or you may elect to receive it all at once when you file your taxes in the following year.
In order to receive the subsidy, you must buy a plan through Covered California. You cannot apply the subsidy to a plan you find outside of the marketplace.
Covered California offers a calculator to help you estimate the cost of your insurance after the tax credit has been applied -- and to help you compare the prices of the different plans available to you. The tax credit is based on your ability to pay for the second-lowest-cost silver plan. But you can apply the credit to any plan you wish to buy (except for a catastrophic plan). More on the "tiers" of plans below.
Below is a snapshot of rates for a silver-tier plan in two of the rating regions in California: Alameda and Orange County. The top number in black indicates the amount an individual would pay. The bottom number is the subsidy. "FPL" means "federal poverty level."
Plans have different premiums primarily because of different costs of doctors and hospitals in that plan's network.
As you can see in the charts, the person whose income is 150 percent of poverty qualifies for the largest subsidy. The person whose income is 400 percent of poverty makes too much money to qualify for a subsidy. Please visit Families USA to see where your income would fit in the charts below.
Alameda County Silver Tier Rates for a 40-year-old
150% FPL 200% FPL 250% FPL 400% FPL Blue Shield
Orange County Silver Tier Rates for a 40-year-old
150% FPL 200% FPL 250% FPL 400% FPL Health Net
The health law is using a new calculation of income, called Modified Adjusted Gross Income (MAGI). In general, it's the total of your adjusted gross income — plus any tax-exempt income you might have. But to calculate your subsidy you don't use last year's income. When applying for insurance, you will be asked to state what you expect your 2014 income will be. If you think you will earn roughly the same next year, you can estimate your MAGI by adding lines 8b and 37 from your 1040 tax return. But if you think your income will change, you will need to estimate.
If you want more specifics of what income is counted — and what income isn't — check this helpful summary from the UC Berkeley Labor Center (pdf).
What If My Income Changes During the Year?
If your income changes, your subsidy amount may go up or down. You should contact Covered California right away to adjust the amount of subsidy you receive. If you estimate your income too low — and get a higher subsidy as a result — you could have to pay back some of the subsidy at tax time. Alternatively, if you estimate too high, you could get a refund.
What Kind of Coverage Can I Get?
Any plan offered in Covered California must include a standard set of benefits across 10 categories. These are:
- Ambulatory patient services (that means routine doctor's office visits, lab tests, etc.)
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including vision care. (Parents may buy separate dental plans for their children at additional cost.)
What Is the Difference Between a Silver-Tier Plan and Other Plans?
Individual health plans in Covered California are offered in tiers of coverage: platinum, gold, silver and bronze. The difference between the tiers is not what benefits are covered. Under the health law, each plan must offer the same standard benefits.
The charts above for Alameda and Orange counties show premiums and subsidies for the silver tier of each plan. Say you were interested in Kaiser. You could stay with the silver tier or you could pick the Kaiser plan at a different tier of coverage: platinum, gold or bronze.
The difference between the tiers is cost. If you pay more each month for the premium, you will pay less when you need health care.
The platinum tier has the highest monthly premium, but there is no deductible and you have a $25 copay when you see your primary care doctor.
At the other end of the spectrum, in the bronze tier, you will pay much less each month for the premium. But bronze plans have a $5,000 deductible and a $60 copay when you see your primary care doctor. Silver tier plans have a $2,000 deductible. All plans have a limit on your maximum out-of-pocket costs for the year. What you pay for health care, after your premium, is capped at $6,250 for individuals and $12,500 for families. This is a big change under the health law. In the past, in some cases, out-of-pocket costs could have been tens of thousands of dollars.
You can decide which tier — and which plan — is for you by considering your own finances and health care needs.
The marketplace opened on Oct. 1, 2013.
As noted above, more than 400,000 Californians have enrolled. If you haven't yet, and want to, you can sign up by Feb. 15 for coverage starting Mar. 1, and by Mar. 15 for coverage starting Apr. 1. If you sign up between Mar. 16-31, your coverage will take effect May 1. In 2014, the open enrollment period closes on Mar. 31. You must sign up by then or you will likely pay a penalty.
I Would Like to Talk to Someone in Person. Where Can I Go For Help?
Covered California has certified thousands of people across the state to provide in-person assistance to help consumers enroll. There is help available in both English and Spanish — and some certified counselors speak other languages as well. This page of the Covered California website provides links to certified counselors, insurance brokers trained in Covered California insurance plans and county offices where you can go for help.
I Can't Even Afford the Copayment or Deductible. What Do I Do Now?
In addition to the tax credit, the federal government also offers special subsidies based on income and family size. If your income is less than about 2.5 times the poverty level — $28,000 for an individual or about $58,000 for a family of four — you may be eligible. These subsidies can help reduce what you have to pay when you see the doctor or get other health care.
I'm 28 and Healthy. I Only Worry About What I'd Do If I Were Hit by a Bus. Which Plan Should I Pick?
You can certainly look at the bronze plan and see if the coverage makes sense for you. Covered California also offers a catastrophic plan. It does not cover doctor's visits or even emergency room visits, but is meant to protect you against catastrophic medical bills. This level of coverage is available to people up to age 30. It's also available to other people who can demonstrate that they are experiencing financial hardship and to certain people whose policies were canceled because they did not meet the requirements of the health law.
Even With All This Help, I Cannot Afford to Buy Insurance or Pay The Penalty. What Do I Do?
If you are looking at the least expensive plans, and your cost for the premium is greater than 8 percent of your household income, you are exempt from the requirement to have health insurance. You do not need to pay a penalty.
I Don't Like the Insurance My Employer Gives Me. Can I Buy Insurance on Covered California?
You can, but because you are turning down insurance you already have through your job, you are probably not eligible for the tax credits. But, again, there are exceptions. The insurance offered by your employer must be "affordable" as determined by two criteria. First, the total annual premium you pay for coverage for yourself must be less than 9.5 percent of your income. And, second, the plan must cover at least 60 percent of health care costs. Your employer can tell you how much your plan covers. If you do not meet these two criteria, your plan is not "affordable." You may visit Covered California, buy insurance there and apply for a tax credit.
I'm Covered by My Employer, But My Family Is Not. Are They Eligible for Subsidies?
If your employer does not offer insurance to your spouse and dependents, then, yes, they can buy insurance at CoveredCA.com, and they may be eligible for subsidies.
If your employer does offer family coverage, your family may not be eligible for subsidies — if the insurance for you, the employee, is "affordable" as described above. The "affordable" coverage from your employer negates other family members' eligibility for subsidies — unless your contribution is greater than 9.5 percent of your income and covers 60 percent of costs, as described above. It does not matter how expensive the spouse and dependent coverage is. If the premium for you, the employee, is "affordable," they are not eligible for subsidies with Covered California.
How to Calculate Your Premium
At a Glance
- The federal government is offering tax credits to help you afford health insurance.
- Eligibility is based on your family size and income.
- The tax credit can take effect as soon as you buy health insurance. You do not need to wait until you file your taxes to get the credit.
The federal government offers subsidies to help you afford health insurance.
The subsidies are available as tax credits. But you don't have to wait until tax time to collect this credit. If you wish, you can claim the tax credit on a monthly basis to offset the monthly cost of your premium.
Am I Eligible For a Subsidy?
Your eligibility for the credit is based on your income. If you earn between 138 percent and 400 percent of the poverty level, you may qualify. For 2013, that's about $15,850 to $46,000 for an individual and $32,500 to $94,200 for a family of four. The subsidies are available on a sliding scale. In other words, the lower your income, the higher your subsidy amount.
How Can I Find Out How Much of a Subsidy I Might Get?
Covered California, the state's health insurance marketplace, has an online calculator you can use to estimate the amount of both your premium and your subsidy, if you qualify for one.
Please visit Covered California to calculate your premium, with or without the subsidy. You can also compare different plans available to you.