If you are coming to this page, then you want answers to your questions about how to buy individual health insurance for you and/or your family.
1. What is Covered California?
Covered California is the state run insurance exchange of the Federal Patient Protection and Affordable Care Act (PPACA) otherwise known as “Obamacare”. Most states have opted out of creating their own exchange so consumers in those states must go to the federal exchange, you know the one that was a complete mess last year. California being a consumer friendly state decided to create their own exchange for their state residents.
The first thing to understand is what is an exchange? An exchange is a marketplace where buyers and sellers come together to do business. If you want to buy stock in Coca Cola or Exxon Mobil, you go to the New York Stock Exchange to negotiate the price and away you go. Covered California is the exchange where health insurance companies come to offer their products for you the consumer to buy. So you sign up on the exchange at www.coveredca.com and buy the insurance policy that you want. That sounds great except that the site is difficult to navigate and the products are not fully explained there.
With all the administrative and technical problems that are happening with the site, having a broker like me help you is the conservative smart play. If you got a discount to do it without a broker, then sure why not do it yourself. But that is not how the game is played. The insurance companies pay me a commission to help you and do not offer you a discount if you shop it yourself. So if you get all messed up, then you are on your own as it is really hard for a broker to help you once you have tried it yourself.
2. What is a subsidy?
A subsidy is a government payout to help a consumer afford a product or service. Consumers get food stamps or housing assistance all the time from the Federal Government. Health insurance became so expensive that the government passed the PPACA to help people pay for it. So if you buy a policy in the exchange and you meet the income qualifications, then you can get some free government money. In fact, the closer your adjusted gross income is to the Federal Poverty Limit, the more money you get. I have lots of clients that are paying less than $10 a month for coverage. For example, a one person household that makes just above $16,105.00 per year would pay very little for good quality insurance. There is a table which shows the income level for all the various household sizes be it a one person household or a married couple with four children.
The subsidy is based upon your Adjusted Gross Income from your federal tax return with some modifications to it. Calculating that is something that consumers are having problems with and that is another good reason to have someone like me help you. If you make a mistake on your subsidy level and overstate how big a payout you are supposed to get, then you can end up with a big bill from the IRS down the road. Yes, that is right, the collection agency for the government if you overstate your subsidy is the IRS.
3. Do I want to participate in the exchange?
Anyone can go to the exchange and buy a policy. But not everyone can get a subsidy. The reality is that unfortunately the doctor networks and hospital networks are more limited in the exchange. Part of the purchasing decision with the exchange is finding out if your doctor participates in the insurance company’s Obamacare product. So if you cannot get a subsidy from the government, then I can help you buy a policy outside the exchange just like you used to do before the PPACA came along. That way you can be sure that you get to keep the doctor that you like.
4. How do I qualify to participate in the exchange?
The major issue to first address is if your employer OFFERS you minimum essential coverage that is AFFORDABLE? Notice that I did not say whether the employer paid for it or not. If your employer OFFERS you and your dependants minimum essential coverage that is AFFORDABLE, then you are NOT ELIGIBLE TO GET A SUBSIDY for you and all of your dependants. For the most part, almost all coverage offered by companies to their employees meets what are called the minimum essential coverage standards for deductibles and copayments and things like that and they are for the most part required to OFFER dependant coverage. Employers are not required to pay for dependants under the PPACA. So the issue is if the employee’s coverage is affordable. Again, the standard is not if the total family premium is affordable, the standard is if the EMPLOYEE’S insurance premium is affordable.
The calculation is quite simple. You take your TOTAL family monthly income and multiply that times 9.5%. If the amount the employee has to pay out of his or her own pocket just for his own individual coverage is less than that number, then the employer coverage is affordable and you cannot get a subsidy and neither can your spouse and dependents.
For example, if your family income is $2,000.00 per month, then your limit is $190.00 per month. So if what you pay out of your own pocket for your individual coverage (not including your spouse and kids) is less than that which happens almost all of the time, then no subsidy for you or your family. If your employer does not pay for your dependents insurance coverage, then you have to pay out of your own pocket for them. This is the very unfair part of the PPACA and a lot of people are going to have big problems down the road because they did not understand this.
The good news is that you get coverage from your employer, the bad news is that if your coverage is deemed affordable and you cannot pay for your spouse and kids insurance because you just simply cannot afford it, then you are stuck and are going to pay the penalty for not having insurance. I know this sound ridiculous, but it is the reality of Obamacare. I have met a lot of people who have affordable coverage from their job and were told by some uneducated or unethical person to go get their spouse and kids covered in the exchange and went and did it. Unfortunately for them, they are in for a really big surprise when they get caught.
5. How much is the penalty for 2015?
If you do not have insurance in 2015, then you will pay a penalty of 2% of your 2015 adjusted gross income on April 15, 2016. The only exception is for people that are below the specified poverty limits as they do not have to pay the penalty.
6. When can I purchase health insurance?
The government made it a lot more difficult to purchase health insurance. Before the PPACA you could purchase health insurance anytime you wanted to during the year. That is not the case anymore. Now, you can only buy it from November 15th to February 15th which is called the “Open Enrollment Period”. So unless you have a special circumstance such as moving to a new state, becoming a permanent resident, getting fired from your job or losing your health insurance coverage because your employer stopped offering it, then if you did not buy insurance during open enrollment, then you will not have insurance that year and will have to pay the penalty. If you purchase insurance before the 15th of the month, then your coverage will be effective on the first day of the next month. If you wait until after the 15th of the month, then your coverage will be effective the month after the next month.
7. What are the types of plans that are available?
There are five plan options. the plan with the lowest benefits is the catastrophic plan. It is available only to individuals under age thirty. The next level up from that is bronze. The price difference between catastrophic and bronze is not significant enough to justify not taking bronze in my opinion. The bronze plan is a high deductible plan and is good for people who are healthy and rarely go to the doctor. An annual physical is covered so you do get something for your money.
The next level up is silver and that is a quality product. It has good benefits including a copayment of $45.00 to go to your primary doctor and copays to go to urgent care and the emergency room as well as generic prescriptions for $15 or less. If you meet certain income levels, then your doctor visit copays can be as low as $3.00. Those are what are called “cost sharing reductions” and are only available in the silver plan purchased through the exchange.
The two premier plans are Gold and Platinum and they are for people that are willing to pay high premiums for top tier coverage. They have low copays and no deductibles and are good for people that go to the doctor or hospital a lot. I have found that a lot of consumers are in the wrong plan because no one ever explained their options to them properly. So take advantage of my expertise and let me help you get the best insurance for you at the best price.
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