Understanding Obamacare: Its Impact on You in California

Obamacare, also known as the Patient Protection and Affordable Care Act or the Affordable Care Act, is a re-design of the U.S. healthcare system that was implemented in March of 2010. Over a 10-year period, the changes brought on by Obamacare will be some of the most sweeping changes to the health insurance industry in almost 50 years.

One of the main features of the Affordable Care Act is the establishment of the Health Insurance Marketplace in 2014. The marketplace will allow individuals and businesses the opportunity to compare prices and coverage between plans. Additionally, middle- and low-income families will be able to get significant tax credits to help offset the cost of insurance. Medi-Cal coverage will be extended up to 133% of the poverty line.

Besides encouraging businesses to offer healthcare, the Affordable Care Act also rewards individuals who take an active role in their own health. Successful enrollment in a company wellness plan can potentially save an employee between 35 and 50 percent off their insurance costs.

Key Features of Affordable Care Act in 2014

With so many components to the Affordable Care Act, it can be hard to pin down the main elements, particularly when they are being rolled out gradually over several years. Here are the main changes that will take effect in 2014:

• There are exceptions, but generally speaking, you must have insurance, or you will face a penalty
• Insurance cannot be denied on the basis of preexisting conditions or gender
• Insurers cannot impose yearly or lifetime financial limits on medical care
• Dependents can be covered on a parent’s plan until age 26
• Preventative care and essential health benefits must be covered by all small group plans
• Creation of an independent review panel to contest coverage denials
• More robust consumer protections and transparency from insurance companies to prevent “price gouging”
• Establishment of a Health Insurance Marketplace for consumers to buy insurance directly (enrollment begins Oct. 1, 2013)
• Increased tax credit for small businesses offering health insurance, as well as for individuals and families who need help affording healthcare
• Extend Medicaid (Medi-Cal in California) to cover more people

Obamacare and the Individual Mandate

One of the most widely misunderstood elements of the Affordable Care Act is the individual mandate and the cost–sometimes referred to as a penalty or tax–of going without insurance. Generally speaking, you will need to buy insurance or pay the penalty.

If you opt to go without insurance, the penalty you are assessed will rise gradually through 2017 and increase in line with inflation thereafter. In 2014, the penalty will be $95 for an adult or one percent of your income, whichever is higher.

The Covered California website has an online calculator to help determine what your costs will be in 2014. For a more detailed breakdown of the penalties, please see the individual and employee section of the guide.

What Obamacare Means for Businesses in California

Similar rebates are in place to incentivize businesses to offer coverage to their employees, though small businesses, defined as companies with under 50 employees, get more significant rebates.

The increased tax credit for small businesses could potentially be as much as 50% of an employer’s contribution to employee healthcare costs. It’s important to note that these credits will only be in place for two years.