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The Affordable Care Act (ACA) has changed how individuals, families, and even businesses sign up for health insurance coverage.  Most people know the new law means they have to get health insurance or be fined, but when it comes to understanding the new guidelines, plan tier levels, eligibility for subsidies, tax penalties, doctor networks….it has become very complicated.  It is hard for individuals to brave the health insurance world alone, especially when a mistake can end up costing hundreds and sometimes even thousands of dollars.  We have provided some “must know” information below to get started.  We encourage anyone that needs to make a decision on health insurance to reach out to us during Open Enrollment.

Health Insurance Metal Tiers

Health insurance plans are now required to be divided into metal tiers:  Bronze, Silver, Gold, or Platinum.  The health plans that fall under each metal tier are mandated to cover a certain percentage of the health care costs.  

·         Bronze plans cover about 60%

·         Silver plans covers about 70%

·         Gold plans covers about 80%

·         Platinum plans covers about 90%. 

That means if a family chooses a Bronze plan, the insurance carrier will cover about 60% of the health care costs, and the family is typically responsible for the remaining 40%.  The chart below can be used as a guide for individuals and families to narrow in on the metal tier that might make the most sense for their budget and health care needs.

Tax Subsidy

Another mandatory requirement of the ACA is providing financial assistance to those who qualify.  The tax subsidy is based on a sliding scale and takes into consideration the household size, annual household income, and location of residence.  If an individual or family qualifies for a tax subsidy, this is typically processed “on the exchange” (also referred to as Covered CA) and then forwarded to the private health insurance carrier.  If an individual or family does not qualify for a tax subsidy, the insurance plan is considered “off the exchange” and typically gets processed directly with the health insurance carrier.  Private health insurance carriers, such as Anthem BlueCross, Blue Shield of California, and Health Net, have plans available “on the exchange” through Covered California and also “off the exchange.”  Not all private health insurance carriers have to participate in Covered CA, it is their choice, and this can vary annually. 

Please see a chart below from www.CoveredCA.com that can help someone see if they would qualify for a tax subsidy/credit.

 



Tax Penalty

If an individual or family does not carry Minimum Essential Coverage (MEC), which includes having health coverage through a private insurance carrier (on or off the exchange), through an employer, Medicare, Medicaid, TRICARE, CHIP, or other eligible options, then the individual or family would be required to pay a fee for being uninsured.  The chart below shows the tax penalties surrounding the year 2015.  Starting in the year 2017, the tax penalty will increase by the rate of inflation or 2.5% of a household’s income – whichever is greater.

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