On February 13th, Covered California (our state’s health insurance exchange) released its standardized plan benefit structure for plans offered under the Affordable Care Act starting in 2014. These benefits must be offered in the individual and small group (under 50 employees) markets both inside and outside of Covered California’s marketplace. California is the first state exchange in the nation to announce a standard benefit structure.
Covered California’s website, www.CoveredCA.com was launched to assist Californians who may be eligible for subsidies to calculate the potential financial support and benefits that they are eligible for.
- Platinum 90% paid by health plan/10% paid by consumer
- Gold 80% paid by health plan/20% paid by consumer
- Silver 70% paid by health plan/30% paid by consumer
- Bronze 60% paid by health plan/40% paid by consumer
Thirty-three plans (carriers) have expressed an interest in the Covered California exchange program but none are contracted as of yet.
Do you have to buy health insurance?
Starting in January 2014, most people will be required to have health insurance or pay a penalty if they don’t. Coverage may include employer-provided insurance, coverage someone buys on their own, Medicare or Medi-Cal.
The penalty phases in for three years and becomes increasingly more costly. In 2014, the penalty will be 1 percent of annual income or $95, whichever is greater. By 2016, the penalty will be 2.5 percent of your annual income or $695. This means that if you do not have coverage in 2014, you will be required to pay a penalty when you file your taxes at the end of the year.
Some people do not have to pay a penalty, including:
- People who would have to pay more than 8 percent of their income for health insurance
- People with incomes below the threshold required for filing taxes (in 2012, $9,750 for a single person and $27,100 for a married couple with two children)
- People who qualify for religious exemptions
- Undocumented immigrants
- People who are incarcerated
- Members of Native American tribes
Businesses with 50 or more full-time equivalent employees may be subject to a penalty beginning in 2014 if they do not offer health insurance to employees (and their dependents).
Tax credits are available for individuals and families who meet certain income requirements and do not have access to affordable health insurance through their employer that also meets minimum coverage requirements.
Eligibility for tax credits is based on a standard, called the “federal poverty level,” that looks at the family income and the number of people in the family. The size of the tax credit is based on a sliding scale, with those who make less money getting a larger financial assistance to lower the cost of their insurance coverage. Individuals and families who make between 138 percent and 400 percent of the federal poverty level may be eligible for a tax credit. This means that an individual making up to $44,680 and a family of four earning up to $92,200 may be eligible for a tax credit.
There are some key facts about tax credits.
- Tax credits lower the cost of your premium.
- Tax credits help low- and middle-income individuals and families who meet certain income requirements.
- Tax credits can be used when you enroll. You do not need to wait until you file a tax return at the end of the year.
- Tax credits are only available through Covered California. You must enroll in a health plan through Covered California if you want to use your tax credits.
- Tax credits are paid directly to your health plan.
- Tax credits will be adjusted at the end of the year based on your actual income.
Small businesses with 25 or fewer full-time equivalent employees are also eligible for tax credits if they meet certain criteria. To learn more about small business tax credits, you can read the Small Business Tax Credit Fact Sheet.