Editor's note: For people buying on the individual market who want health insurance starting Jan. 1, the deadline to sign up is Monday, Dec. 23. We will run one post a day with questions and answers on the Affordable Care Act and Covered California until that deadline. Today's installment comes from the Center for Health Reporting's Ask Emily column. Readers can also consult KQED's Obamacare Guide, written specifically for Californians.
By Emily Bazar
Q: If my husband’s employer offers health care insurance but it is unaffordable, where does that leave us? Will we qualify for help under Obamacare or will we be out in the cold? We make about $45,000 annually.
A: Apparently, lots of you dislike the health insurance options offered by your employers.
Carrie from the Sacramento suburbs submitted this question, but I’ve received a crush of similar queries from all over the state.
Your most common complaint? The coverage is too expensive. The runner-up: The plans your employers offer don’t cover certain benefits, doctors or hospitals.
Work is where most of us get our health insurance (if we have it). Though the rate has dropped over time, 53 percent of Californians received their coverage through an employer (or the employer of a family member) in 2010-2011.
Starting Jan. 1, when the major provisions of the Affordable Care Act take effect, you’ll be free to ditch your employer’s coverage and shop for plans on your own, either through the state-run insurance marketplace called Covered California or on the open insurance market.
Whether you will be eligible for tax credits to offset your premiums is a whole other matter.
Covered California will offer 2-6 health plans in each region of the state that cover a standard set of benefits. Individuals and families who earn between 138 percent and 400 percent of the federal poverty level will be eligible for sliding-scale tax credits. That's about $15,800 to $46,00 for an individual or $32,500 to $94,000 for a family of four.
Do you clear the income hurdle? Don’t get too excited yet, because even if you fall within that income range, you’re not automatically eligible for the tax credits through Covered California.
Instead, you qualify for the credits if your employer’s insurance is considered “unaffordable.” That happens when:
- The employee’s share of the insurance premium to cover him- or herself only is more than 9.5 percent of annual household income. If the employer offers multiple plan options, the test applies to the lowest-cost option.
- Your employer’s insurance covers, on average, less than 60 percent of your medical expenses, leaving you with expenses of 40 percent or more.
The income and affordability tests are two big hurdles. You’d need to clear them both if you want the tax credits. (For more details, check out this Internal Revenue Service Q&A.)
In Carrie's case, the employer-sponsored health plan options for herself, her husband and their 14-year old daughter run from $677 to $924 each month, which is expensive for them. But then Carrie told me this: “In fairness, the company DOES cover the employee alone much more generously.”
That last sentence may put Carrie and her family in a category of people -- specifically spouses, children and dependents -- who will not be able to take advantage of affordable options under Obamacare.
Here’s the glitch: If coverage for the employee alone is less than 9.5 percent of household income, then that employee AND his or her family members are ineligible for tax subsidies. Not even if the cost of family coverage exceeds 9.5 percent of household income.
“You’ll end up with some kids who would have gotten subsidized coverage from the exchange on a family plan who won’t because the employer is offering single coverage that’s affordable, but family coverage that is not,” Roby explains.
So, where does that leave Carrie and others in her situation? They need to do the math –- carefully -– and cross their fingers that they’re not victims of the kid glitch.