Healthcare Reform: Know Your Options

What options do I have that will help me avoid the penalty of the ACA?

In 2014, when the Affordable Care Act is fully implemented, you can avoid Health Care Reform penalties as long as you have coverage in place for at least eight months. That means your Obamacare approved coverage (with Kaiser Permanente or another carrier) must begin no later than May 1, 2014. You can apply for coverage under any of these options:

Medicaid or Medi-Cal (if you are a California resident): In 2014, you may be eligible for coverage under Medicaid. If your state has agreed to the new expansion plan that extends Medicaid, your income will need to be 138 percent or less of the federal poverty level. Currently at 138%, the income threshold for Medicaid is $14,856 for one person or $30,656 for a family of four. If your state has chosen not to expand Medicaid, then your income will need to be 100% or less of FPL. Some states are opting out of the Medicaid expansion due to the added cost.

Health Insurance Exchange Plans: If you are not eligible for Medicaid in 2014, you can enroll in an exchange plan. Depending on your income and assuming you are not being offered group health insurance, you could qualify for government subsidies, which could drastically reduce your premiums. You can get quotes on Kaiser Permanente exchange plans online or by phone.

Off Exchange Health Plans: For the most part, the health plans offered off the exchange will be the same plans that are available on the exchange and the prices will be the same. The insurance carriers, including Kaiser Permanente, are required to keep the prices the same when they offer a plan on and off the exchange. Off exchange you will find a few more plan options, but the benefits won’t usually be much different than those offered on the exchange. If your income is under 400% of the Federal Poverty Level, you’ll want to get on an exchange plan, but if you’re over 400% it may be to your advantage to check out the additional options that are available off of the exchange.

Group Insurance: If you own a business and have at least one employee that is not your spouse that is paid on a W-2, you also have the option of group insurance. Again, this option makes the most sense in the case that you would not qualify for a subsidy on the exchange. If you or your employees make under 400% of the Federal Poverty Level, it may make sense for you to drop your group coverage and purchase an exchange plan so you can get a government subsidy. If you are an employee and you have health insurance coverage through your employer, this allows you to meet the mandate as long as the coverage has the minimum essential benefits as required by the Affordable Care Act.

Beware that the fact that your employer offers group coverage actually disqualifies you from being able to get a subsidy on the exchange. If you make under 400% of FPL, you might consider asking your employer to stop offering group coverage so that you can get a government subsidy. You’ll have to consider how much your employer contributes towards your premiums. If your employer contributes less than the subsidy you’d qualify for, then it would probably be to your advantage to get your employer to stop offering group coverage so you can enroll on an exchange plan and get a government subsidy.

If you are a small business owner (with under 50 employees), you are not obligated to provide health coverage for your workers. However, you personally and your employees individually are all required to have coverage in 2014. That coverage can be on a group health insurance plan or on a private medical plan.

Health Reform Penalties for Uninsured and Exemptions

In 2014, if you are uninsured for 8 months or more in 2014 and you do not meet any of the exemptions below, you will be penalized. The Health Reform penalties for uninsured people will be $95 per adult ($47.50 per child) or 1 percent of an individual's annual income, whichever is more. The penalty will increase every year. By 2016, the Health Care Reform penalty will be $695 or 2.5 percent, whichever is greater.

The following people are exempt from the Health Care Reform mandate:

  • Members of an officially recognized Native American Tribe
  • Those with financial hardship: health insurance premiums would exceed 8% of household income
  • Those who are incarcerated
  • Those who have religious reasons for not getting health insurance coverage: The government is in the process of determining which religious groups or sects will qualify for this exemption. Clarification is anticipated as we get closer to 2014.