The Patient Protection and Affordable Care Act (PPACA), also commonly referred to as: Obama Care, Health Care Reform, or the Affordable Care Act (ACA) was signed into law on March 23, 2010 and upheld by the Supreme Court on June 28, 2012. The majority of the provisions went into effect January 1st 2014. Exchanges or market places have been established to assist people in obtaining health insurance. States that have not set up their own exchange can use the national exchange at HealthCare.gov to obtain coverage. California has set up their own exchange at Coveredca.com and that should be used by those residing in California rather than the national exchange.
Important Changes for Consumers Under PPACA
More Health Insurance Options.
The Affordable Care Act establishes state marketplaces, where individuals and small businesses can shop for health insurance on the Internet, in person or by phone. These marketplaces will help make health insurance much more reasonably priced and easier to get. California’s marketplace, named Covered California™, will offer millions of Californians a variety of health insurance plans available for purchase.
Affordable Coverage and Financial Assistance.
Covered California will help individuals and families determine whether they may get federal financial
assistance that will cut the cost of health insurance or whether they qualify for free health insurance through Medi-Cal. Qualified Households may obtain “Premium assistance” which will lower the amount paid for health insurance. Premium assistance is calculated based on where you fall in the the table below( up to 400% of the federal Poverty level). Health Insurance sponsored by your employer where your contribution toward the employee-only coverage is below 9.5% of your income is considered affordable and would preclude you from obtaining premium assistance.
(click on table to enlarge)
Calculating Income: (Click image below)
Many small businesses will also be able to provide employee health insurance, using federal tax credits to reduce premium costs.
The Affordable Care Act strengthens Medicare, Medicaid (Medi-Cal in California) and other very important programs for millions. In addition, those who have not yet turned 26 and whose parents have health insurance can now be included in their parents’ health insurance plan.
Protections for Consumers.
All health insurance plans (not counting most plans sold before March 10, 2010) must provide health insurance for individuals and their families even if someone has a health condition such as diabetes or asthma. That health insurance cannot be dropped if someone gets sick. Consumers also cannot be denied a health insurance plan if they make an honest mistake when filling out the application.
Fines for No Coverage.
Individuals who do not have health insurance with Minimum Essential Coverage(MEC) as per ACA may have to pay a fee on their taxes; unless they are exempt.
In 2016 and beyond, the annual penalty is the greater of (for later years, the penalty will be indexed based on the cost of living):
- $695 for each adult and $347.50 for each child, up to $2,085 per family.
- 2.5 percent of the tax filer’s total household adjusted gross income.
What Businesses Will Need to Do.
Employers with 50 or more full-time employees that do not offer health insurance that employees can afford, or that offer a health insurance plan that does not meet certain requirements, may receive a fine starting in 2015.
Some Changes for Health Insurance Plans
The Affordable Care Act requires that health insurance companies change some of their practices. At the same time, it protects the consumers’ rights to keep the coverage they already had before the law was passed. Under the Affordable Care Act, all health insurance plans must follow certain rules.
Health insurance companies must give a reason for any increase in premiums. Insurance companies must spend 80 percent of the money they receive from premiums on delivering quality health care, not on costs such as salaries and advertising.
No Limits to Health Care an Individual Receives in His or Her Lifetime.
Health insurance companies cannot set a dollar amount limit for key health benefits during a person’s lifetime.
All new health insurance plans must cover preventive care and medical screenings, like mammograms and colonoscopies, as well as women’s services such as breast-feeding support, contraception and domestic violence screening. Health insurance companies cannot charge copayments, coinsurance or deductibles for such services.
Essential Health Benefits.
Newly sold health insurance plans must cover services that fall into these 10 categories of essential health benefits:
•ambulatory patient care
•maternity and newborn care
•mental health and substance abuse disorder treatment
•rehabilitation and habilitation services and devices
•preventive and wellness services and chronic disease support
•children’s services, including dental and vision care
Covered California insurance plans will be grouped by cost and value, using consistent information so that Californians can make apples-to-apples comparisons among plans, see expected costs more easily and get the coverage they need.
There will be four basic levels of coverage: Platinum, Gold, Silver and Bronze. As the coverage increases, so does the monthly premium payment, but the cost when a person receives medical care is usually lower. Californians can choose to pay a higher monthly cost so that when they need medical care, they pay less. Or they can choose to pay a lower monthly cost, which means that when they need medical care, they pay more. Each person has the choice (See Table below). Families can also seek insurance through Medi-Cal.
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In General an HSA is a medical savings account available to taxpayers who are enrolled in a High Deductible Health Plan. The funds contributed to the account are not subject to federal income tax at the time of deposit. Funds must be used to pay for qualified medical expenses. Unlike a Flexible Spending Account (FSA), funds roll over year to year if you don’t spend them. The annual contribution limitation for calendar year 2016, for an individual with self only coverage is $3,350 & for an individual with family coverage $6,750. (Please refer to the link above and/or consult with your tax adviser for further details that may apply to your situation)
Premium assistance to help reduce the cost of health care is available to individuals and families who enroll in a Covered California health insurance plan and meet certain income requirements.
Even though premium assistance is a tax credit, it is available to eligible consumers whether or not they have filed taxes for the previous year. However, to receive it, individuals must confirm that they will file taxes for the year that they will be enrolled in a Covered California plan and will be receiving the premium assistance. It is only available for health plans purchased through Covered California or other federally operated or state-operated marketplaces. To be eligible for premium assistance, an individual must:
- Be a U.S. citizen, a U.S. national or a lawfully present immigrant buying coverage through Covered California.
- Have an annual household income between 138 percent and 400 percent* of the federal poverty level (FPL). Estimate your FPL here.
- Not be eligible for other public health coverage** — including full-scope Medi-Cal, premium-free Medicare Part A or military coverage.
- Not have access to affordable, minimum-value health insurance through an employer.***
*Premium assistance is also available to lawfully present immigrants with incomes below 138 percent of the FPL who are not eligible for Medi-Cal because of their immigration status.
**Individuals eligible for or enrolled in certain employer or government insurance options still qualify for premium assistance through Covered California. These health programs include:
- Retiree health coverage offered by a former employer.
- Coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA).
- Student health plan coverage.
- Medicare Part A that requires consumers to pay the premium.
- Veteran’s coverage.
- Coverage under certain Tricare programs, such as the Continued Health Care Benefit Program, Retired Reserve, Young Adult and Reserve Select.
***Employer coverage is considered affordable if the premium for the employee only (not including dependents) is less than 9.5 percent of the employee’s household income. The employer’s plan is considered minimum-value if the plan pays at least 60 percent of the average cost of covered benefits
Source: Covered California 11/14/2017
For 2018, certain federal funds that have supported Covered California enrollees’ access to affordable care in recent years are now in jeopardy, but it will not affect the quality of the health insurance consumers received through Covered California. In 2018, a cost-sharing reduction surcharge will be added to rates for consumers with Silver plans. It will raise the price that some of these consumers pay for their health insurance, but most consumers will not see a significant change in the net price of their monthly premium because their financial help will increase as well. Otherwise, Covered California will keep offering the same affordable, quality health coverage it has offered since 2014.
Source: Covered California 11/14/2017
What is the cost-sharing reduction surcharge?
The federal government has not committed to providing ongoing funding for certain health care costs for Covered California enrollees, requiring Covered California to take steps to ensure stability and good health coverage through 2018. The cost-sharing surcharge will increase premiums for those with Silver-tier coverage, but most consumers will see their financial assistance rise to help cover the increase, meaning no significant impact on a consumer’s monthly cost.
Source: Covered California 11/14/2017
I have a Silver plan and I don’t get financial help to pay my premium. Is there any way I can avoid paying the surcharge in 2018?
Source: Covered California 11/14/2017
If You Received Too Little Premium assistance?
If your actual income for the year is less than the projected income your premium assistance was based upon, you will receive a tax credit when you file your tax return for any additional amount you would have been entitled.
If You Receive Too Much Premium Assistance?
If your actual income for the year is higher than you projected, then you likely will have received too much premium assistance. If so, when you file your taxes you will have to pay back the premium assistance that was received in excess of what you were entitled to, up to a limit.
The table below shows the repayment limits.
|Household income percentage of federal poverty level (FPL)||Limit on repayment amount — single person||Limit on repayment amount — family|
|Less than 200 percent of FPL||$300||$600|
|At least 200 percent of FPL but less than 300 percent of FPL||$750||$1,500|
|At least 300 percent of FPL but less than 400 percent of FPL||$1,250||$2,500|
|Greater than 400 percent of FPL (i.e., the person was not eligible for premium assistance)||All premium assistance received||All premium assistance received|