Love it or hate it (or dont know anything about it), Obamacare is here. And President Barack Obamas new health care law, known officially as the Affordable Care Act, confronts a critical first test in a matter of days.
On Oct. 1, something called Covered California, the states health insurance exchange, will begin selling health care plans to millions of residents, with coverage to begin Jan. 1. As it scrambles to meet the deadline, this new state agency faces a monumental task.
So do consumers. Many Californians will be making big decisions about health insurance in the coming months, even though most dont understand what Obamacare is or does.
How do I know? My biweekly column called Ask Emily runs in newspapers and on radio station websites across the state. The column debuted in April, and almost 500 readers already have swamped me with questions and comments.
I dont blame you for being confused. The law is long, complex and riddled with exceptions.
So today, Im going to try to cut through the complexity and describe 10 important pieces of the law, including key dates, how it may affect you and where you can turn for help.
Q: Why should I care?
A: Excellent starting point. Why? Because Obamacare changes the rules of the health insurance game. From Jan. 1 forward, you will have to have a minimum level of health coverage or pay a tax penalty.
The tax starts at $95 per adult in 2014 (or 1 percent of annual household income, whichever is greater) and grows to $695 by 2016 and beyond (or 2.5 percent of income). The penalty for children is half the adult rate.
The penalty will be assessed on your federal income tax return. You wont have to account for your 2014 coverage or pay the penalty until you file your tax return in 2015.
If you have health insurance, you probably already meet the requirement and wont have to pay a penalty. This includes Medicare, Medicaid (called Medi-Cal in California), certain types of coverage for veterans, coverage through your employer and coverage purchased on the individual market.
But wait! What would any complicated health care law be without exceptions? There are several categories of people who dont have to comply with the Obamacare insurance requirement. This isnt a full list, but youre among them if:
• youre a member of a federally recognized American Indian tribe,
• youre incarcerated,
• youre not in the country legally,
• youre a member of a religion that opposes accepting benefits from a health insurance policy (as recognized by the Social Security Administration),
• you cannot find affordable coverage, meaning the cost of your premium would be more than 8 percent of household income, or
• your household income is low enough that youre not required to file a federal tax return. (Click here to find out if this means you.)
Be warned: These wont apply to most of you.
Q: But Ive had cancer. What if I try to buy insurance and health plans refuse me?
The rules for insurers also change. Starting on Jan. 1, health plans no longer can deny anyone coverage because of health status or previous diagnoses. Nor can they charge more because of pre-existing conditions.
Plans will be able to charge families more than individuals, and older people who generally have more health problems can be charged up to three times more than younger ones. Premiums also will vary based on medical costs in your region.
Health plans also must cover at least 10 categories of services, known as essential health benefits. They include emergency care, hospitalization and prescription drugs.
Q: So what is the exchange anyway?
A: Think of Covered California as a new mall for health insurance, with discounts available for some shoppers.
The mall will offer 12 health plans across the state (not all in every region) that cover a standard set of benefits.
There will be four tiers of plans that offer the same benefits but differ in cost according to the amount of medical costs they cover. Bronze plans cover the least (60 percent) and platinum the most (90 percent).
Now, about those all-important discounts: Individuals and families who earn between 138 percent and 400 percent of the federal poverty level (FPL) may be eligible for tax credits to offset the cost of premiums. The less you make, the larger your subsidy.
This year, 400 percent equals $45,960 for an individual or $94,200 for a family of four. (Click here for FPL guidelines.)
The tax credits are applied directly to the premium when you enroll through Covered California. You dont need to wait until you file tax returns to square that up.
Californians will be able to shop for plans online, by phone, by mail and in person at a range of locations, from retailers to tax prep offices.
Want to know how much plans will cost in your area and find out whether youll be eligible for tax credits? Try Covered Californias rate calculator at CoveredCA.com. Or, call Covered Californias customer service line at (800)300-1506.
Q: What if I make less than 138 percent of the FPL?
A: The first of the year is also a big day for Medi-Cal, the states health program for low-income residents.
On Jan. 1, Medi-Cal will expand coverage, making more than 1million Californians newly eligible to join.
The expansion raises the income threshold to qualify to 138 percent of the FPL. This year, that is up to about $15,800 for an individual and $32,500 for a family of four.
Also, childless adults, who were previously ineligible, will be able to enroll.
Q: What about me? I make more than 400 percent of the FPL, but dont have work-based insurance.
A: You can still purchase a plan from Covered California; however, you wont qualify for tax credits. Youll have to pay full freight.
Heres an example: A 45-year-old Sacramento resident who makes $50,000 a year and therefore doesnt qualify for a tax credit would have options ranging from $283 each month for a bronze-level plan to $777 for a platinum plan.
You also can shop for plans on the open market.
Q: What about seniors and Medicare?
A: If you have Medicare, you are considered covered under the Obamacare mandate and dont need to buy other insurance.
Federal officials say theyre not cutting your existing Medicare health benefits, but pay attention to these changes:
• The new law eliminates out-of-pocket costs for most preventive services, such as mammograms, colonoscopies and an annual wellness visit.
Also, you wont be able to buy Medicare Advantage, supplement and prescription drug policies from Covered California. Youll have to look for them elsewhere, as you do now.
Still have questions? The Health Insurance Counseling & Advocacy Program offers free, unbiased Medicare counseling to Californians. Call (800)434-0222 or click here to find contact info for your county.
Q: Im a 23-year-old college student. Where do I fit?
A: Young adults and college students may have more options under the law than just about any other group.
One provision that already went into effect allows parents to keep their young-adult children on their insurance policies up to age 26.
Also, many universities offer health insurance that will meet Obamacare requirements.
But shop around because Obamacare brings two new options to young adults:
• The Medi-Cal expansion: This could be promising because young adults often dont work full time whether theyre attending college or not and may soon qualify for the low-income program.
Please note that if your parents claim you as a tax dependent, their income will count toward yours for Medi-Cal eligibility purposes. The result? You may not qualify.
• Covered California: Young adults, even those who have access to college health plans, can purchase a plan from Covered California instead.
But beware the dreaded tax caveat: For a student to be eligible for tax subsidies, no one can claim him or her as a dependent on tax returns. In fact, the student wont even qualify for tax credits if he or she is merely eligible to be claimed as a dependent.
Finally, Covered California will offer a low-cost catastrophic plan for young adults under 30 and for individuals who cannot find affordable health coverage. (Click here to learn more about whats considered affordable.)
All costs (except for preventive care and the first three office visits each year) will be out-of-pocket until the $6,400 annual deductible is reached.
Q: What if I have insurance through my employer but dont like it?
You can ditch your employers coverage and shop for plans on your own, either through Covered California or on the open market. Whether you will be eligible for tax credits to offset your premiums is a different matter.
Remember those income guidelines I mentioned earlier? Even if your income falls between 138 percent and 400 percent of the FPL, youre not automatically eligible for tax credits.
You also have to prove that your employers insurance is considered unaffordable. That happens when:
• The employees share of the insurance premium to cover only him- or herself 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 employers insurance covers, on average, less than 60 percent of your medical expenses, leaving you with expenses of 40 percent or more.
If youre looking for coverage for spouses and children as well, watch out for something called the kid glitch, which may make some families ineligible for tax credits.
Heres 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 credits not even if the cost of family coverage exceeds 9.5 percent of household income.
Q: When can I sign up for Obamacare insurance?
That all depends on what you mean by Obamacare insurance. The law is made up of several pieces that Ive just described. (And more.)
And wouldnt you know it, each piece comes with different rules. Here are pertinent dates:
• Covered California: The open-enrollment period for individual and family plans will last six months the first year, from Oct. 1 through March 31, 2014. In subsequent years, open enrollment will last from Oct. 15 through Dec. 7.
Small businesses that buy plans for employee coverage on the exchange, on the other hand, are allowed to sign up for coverage year-round.
• The open market: If you buy individual or family plans outside of the exchange, a big change is coming. You used to be able to sign up anytime.
Not anymore. Beginning with plans that take effect next year, you must sign up during an open enrollment period that will take place at the same time as exchange open enrollment.
• Medicare: Open enrollment is from Oct. 15 through Dec. 7.
• Work-based insurance: Open enrollment periods vary by company. Check with your boss.
• Medi-Cal: You can enroll at any time.
Q: If insurers can no longer deny me coverage because of my health condition, why cant I just wait to buy insurance until I have an accident?
A: You wont be able to sign up for individual or family health plans through Covered California or on the open market outside of open enrollment, unless you experience a legitimate change-of-life event such as divorce or the birth of a child.
Having a car accident or unexpected heart attack is not one of them.
So, if you get sick or have an accident, youd be responsible for the bills. If thats OK with you, then by all means
Questions for Emily? Contact her at AskEmily@usc.edu.
Emily Bazar writes for the CHCF Center for Health Reporting, which partners with news organizations to cover California health policy. Located at the USC Annenberg School for Communication and Journalism, it is funded by the nonpartisan California HealthCare Foundation.