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Affordable Care Act/Obamacare in California Frequently Asked Questions

What are the major reforms in the Affordable Care Act?

The ACA, or Obamacare, was a national piece of reform legislation and the greatest change we have seen to the healthcare system since the creation of Medicare. The ACA will end denial of insurance for individuals with pre-existing conditions, prohibits lifetime or annual dollar limits for provided care, caps out-of-pocket expenses, allows states to create health insurance exchanges for purchasing insurance in the individual and small business market, establishes the right for young adults to remain on their parent’s insurance plans until the age of 26, enhances Medicare coverage in terms of preventive, wellness and prescription benefits, and requires health insurance companies to spend 80% of premiums on patient services. In California, we will see these major reforms begin in 2014.

What is Covered California?

Covered California is California’s Health Care Exchange. Covered California will allow for one-stop shopping, price comparison and subsidy calculation. The stated goal of Covered California is to be like is to the shoe business or for books. Covered California is also overseeing massive outreach to uninsured Californians. They contract with the plans and sell insurance; they are not the regulator of plans.

How many people are eligible for insurance?

There are 5.3 million Californians uninsured and eligible for health care in CA. 2.6 million people qualify for Covered California subsidies, and 2.7 million will be required to purchase insurance without a subsidy. A change in eligibility requirements will allow an additional 1.4 million people to be accepted into nearly fully-subsidized care through the Medi-Cal program.

Is there a mandate to purchase insurance in California?

Yes, state legislation implements the individual mandate clause-which will become effective on January 1, 2014. State legislation also prohibits insurers from denying or discriminating for pre-existing conditions in the health exchange and individual market plans. The hope is that by mandating insurance for everyone, a larger “pool” with many levels of risk will be created. This will likely make premiums more affordable. Nearly 90% of currently insured individuals will not change insurance or providers, as they are currently on a state-subsidized program, have employer-based coverage or purchase insurance in the individual market.

When is Open Enrollment “open?”

Open enrollment is a period from October 1, 2013 through March 31, 2014 where individuals can purchase health insurance through Covered California. All policies will begin on January 1, 2014 (or from when they are purchased if after January 1). Purchasing will not be year round. The second open enrollment period will begin on October 1, 2014.

What is the penalty for not getting insurance?

 If you choose not to purchase coverage, you will have to pay a $95 tax penalty in 2014, to be deducted from your 2015 tax return. It is up to the individual to report coverage on your 2014 tax return. The penalty will increase over the next several years, with a maximum of 2.5% of your income.

What do the plans look like?

Covered California will offer plans by various insurance providers, each with four levels of coverage. The levels, and basics levels of coverage, are as follows:

  • Bronze
    • Covers 60% average annual cost
    • No co-pay for preventive visits; Higher co-pays for visits/Rx
    • $6,350 individual and $12,700 family out-of-pocket limit
  • Silver
    • Covers 70% average annual cost
    • No co-pay for preventive visits; General higher co-pays for visits/Rx
    • $6,350 individual and $12,700 family out-of-pocket limit
  • Gold
    • Covers 80% average annual cost
    • No co-pay for preventive visits; Lower co-pays for visits/Rx
    • $6,350 individual and $12,700 family out-of-pocket limit
  • Platinum
    • Covers 90% average annual cost
    • No co-pay for preventive visits; Lowest co-pays for visits/Rx
    • $4,000 individual and $8,000 family out-of-pocket limit

What are the premium rates and how are they determined?

 The rates are based on age and geographic location; rates are NOT based on health status or gender. California is divided into 19 health care regions, and each region is required to offer between 3-6 plans, aimed at providing the consumer with a fair amount of choice.

The statewide average monthly premium for a mid-level plan is approximately $275 per member, per month. Subsidies will be applied for many individuals to reduce this expense. Rates will vary by region. As an example, the average monthly premium for a 40-year-old individual in a Silver plan in Los Angeles County is:

$325 for a Kaiser Permanente Plan  
$287 for a Blue Shield Plan
$242 for a Health Net Plan

Who qualifies for subsidies and how do they get them?

Subsidies will be available to anyone earning up to 400% of Federal Poverty Level (FPL).  This equates to $45,960 for 1 person household and $110,280 for a 5 person household. The law places caps on percentage of income that can be spent on a premium. Tax credits will be immediately applied and paid directly to the health plan.

Who can purchase insurance through Covered CA?

 Everyone! If you do not qualify for a subsidy, you can still purchase insurance through the Exchange and may have better benefits and more competitive pricing. Individuals who currently purchase insurance on the individual market may switch to a Covered California plan and be eligible for a subsidy.

Is Mental Health a covered benefit?

Yes. Ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, including behavioral health treatment, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, and pediatric services (including oral and vision care) were passed into legislation as the Essential Health Benefits in California. CPA was a major stakeholder fighting for mental health inclusion in the Essential Health Benefits. 

What plans are in the Exchange?

The following plans have been approved to participate and sell insurance in the Exchange in the Individual Market:
Alameda Alliance for Health, Anthem Blue Cross of California, Blue Shield of California, Chinese Community Health Plan, Contra Costa Health Plan, Health Net, Kaiser Permanente, L.A. Care Health Plan, Molina Healthcare, Sharp Health Plan, Valley Health Plan, and Western Health Advantage.

The following plans have been approved to participate and sell insurance in the Exchange in the Small Business Market: 
Blue Shield of California, Chinese Community Health Plan, Health Net, Kaiser Permanente, Sharp Health Plan, and Western Health Advantage.

These plans will have to meet strict quality measures. They will no longer be allowed in the Exchange should they not be in good standing. 

Will plans outside of the Exchange continue to exist in California?

 The existing plans in the individual and group markets will continue to operate in California, should the marketplace dictate it.

Existing insurance practices, such as carving out mental health services to another plan, contracting with panel providers, and allowing consumers to seek an out-of-network provider will also continue to exist, should the marketplace dictate it.

Who has oversight of the plans?

The California Department of Insurance ( regulates PPO products and oversees payment, compliance, access issues, and maintains a consumer and provider complaint system.
The California Department of Managed Health Care ( regulates HMO products and oversees issues of unfair payment practice, parity compliance, network adequacy, and maintains a consumer and provider complaint system.

What will my reimbursement rate be? Will it increase or decrease?

There is nothing explicit in the Affordable Care Act calling for an increase or decrease in reimbursement rates for health care providers. Plans will continue to establish contracts with individual psychologists for panel inclusion or out-of-network rates. Certain plans, such as Kaiser, will continue to employ psychologists at a specific salary. If contracts are negotiated at higher or lower rates, it will be due to marketplace forces. This answer further depends on your location, availability of mental health providers in the area, how many additional people in the region will be joining the insurance plans and the demand for mental health services, and the skills/background of the individual psychologist. 

Are the plans mandated to contract with enough providers to make for adequate networks? What happens if plans don’t meet adequate network standards?

Under California law, plans are currently required to maintain adequate networks of panel providers, in addition to meeting access, geographic, and parity standards. Under Covered California, a plan will no longer be able to sell insurance if they are found to have inadequate networks of mental health providers.


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