On March 23rd 2010, President Obama signed into law a bill called Patient Protection and Affordable Care Act or later known as Health Care Reform. The Goal of this law is to make health care affordable and accessible to all citizens. The bill had several critics and for a while the future of the bill was uncertain.
With the re-election of President Obama, one thing we know for sure is that Affordable Care Act (ACA) also known as Health Care Reform law is going to be implemented. Come Jan 1st 2014 and all states are required to create what’s called a “Health Insurance Exchange” where Individuals and Businesses can buy health Insurance. Many states have opposed the Affordable Care Act specially the “Individual Mandate” that requires all citizens to buy insurance or pay penalty. For the states that decide not to open their own exchange will have the exchange run by federal government. State of CA has decided to run its own Health Insurance Exchange from the very beginning. This exchange must be ready by October 1st 2013.
Types of Exchanges:
- American Health Benefits Exchange: Where Individuals and Families will be able to buy coverage and their premiums will be subsidized based on their income levels. Insurance will be sold by private insurance companies within the exchange. Exchange will be billing the individuals for their share of the premiums.
- SHOP: Small Business Health Options Programs will be available to small employers upto 50 employees. Starting Jan 2014 Small Business Health Care Tax credit will only be available to businesses that buy insurance through the exchange.
Obtaining Individual health insurance is very difficult especially if you have pre-existing medical problems. One of the core provisions of the Affordable Care Act (ACA) is that individuals should not be denied coverage because of pre-existing medical problems. Effective Jan 1st 2014, insurers are not allowed to deny coverage based on the pre-existing conditions. Not only that, they can’t charge extra premiums from the individuals who may have these pre-existing conditions so all individuals will get same rates irrespective of their health. Also, annual physical must be provided at no charge to all individuals.
Currently, State of CA has established a Pre Existing Conditions Insurance Plan called PCIP. It is up and running and individuals who are uninsured for past 6 months and have been denied from private insurance companies can obtain affordable coverage. Your local broker can help purchase the plan within this exchange if needed.
Effective Jan 1st 2014, Individuals falling within household income of 133percent to 400 percent of the federal poverty rate will be eligible for credits or subsidized premiums within the exchange.
Essential Coverage and Types of Coverage
Most plans are required to provide atleast a minimum essential coverage like
- Ambulatory services
- Maternity and Newborn care
- Emergency services
- Prescription drugs
- Preventive and wellness checks
- Pediatric services
In addition, all plans will have to adhere to a standard benefits design. The benefits designs will be broken into 4 categories
- 1. Bronze Level – Provides 60/40 coinsurance
- 2. Silver Level – Provides 70/30 coinsurance
- 3. Gold Level – Provides 80/20 coinsurance
- 4. Platinum Level- Provides 90/10 coinsurance
Effective Jan 1st 2014, ACA requires all individuals to acquire insurance. It can be obtained through employment or exchanges. Failure to obtain proper health insurance by Jan 2014 will require individuals to pay penalty on their tax returns. Below is the schedule for Penalty:
- 2014: $95/Individual or $285 for Family
- 2015: $325/Individual or $975 for Family
- 2016: $695/Individual or $2085 for Family
Small Business Health Care Tax Credit:
Effective Jan 1st 2010, Employers with fewer than 25 workers and an average salary of less than $50,000 can receive up to 35% in tax credits. They must provide health insurance to their employees and must contribute at least 50% of the employee premiums. Starting Jan 1st 2014, only small business within exchange (SHOP) will be eligible to get Subsidy.