Vista, California—With private medical insurance costing upwards of $1,200 monthly per employee, many small businesses had foregone offering such benefit to their employees.
Beginning October 1, 2013, all U. S. citizens and legal residents can obtain affordable individual and family medical insurance coverage from health insurance exchanges in their state of residence. In California, the healthcare exchange is called "Covered California". This exchange provides a single, streamlined application to determine an applicant's eligibility and to collect information necessary for enrollment into a qualified health plan, for subsidy, for cost-sharing reduction, for Medi-Cal or Children's Health Insurance Program. The cost of medical insurance is strictly dependent on whether or not the applicant's employer is offering an affordable plan that meets all essential benefits, where the applicant lives, size and "modified adjusted gross income" (MAGI) of the household. MAGI is the total household members' income from the IRS tax form 1040, line 37, or form 1040A, line 21, or form 1040EZ, line 4. The income threshold is higher for Native American employees than non-Indian employees.
In recent years, many employers only paid part of the medical insurance cost for the employees. With Obamacare, if the employee's portion of the insurance is all covered by the employer, or if the employee pays 9.5 percent or less of gross income for coverage, the employer's medical insurance plan is deemed "affordable". There would be no subsidy for the employee to buy medical insurance through the health exchange. For example, a tribe requires an employee to pay $100 a paycheck toward medical insurance. With a full time employee earning $15/ hour, this amount is below 9.5 percent of gross income and will not be eligible for assistance to buy insurance through the health exchange. But if the employee's portion of the insurance cost exceeds 9.5 percent, it is no longer deemed "affordable". The employee can go through the Covered California health exchange. So, if the above tribal employer requires the same employee to pay $125 from each pay period, the employee can now qualify to buy from the health exchange because the medical premium now exceeds 9.5 percent of gross income.
Once eligible to buy from the health exchange, financial assistance is available to all non-Indian households whose modified adjusted gross income does not exceed 400 percent of federal poverty level (FPL). The types of assistance include free Medi-Cal, cost-sharing reduction and premium assistance. Medi-Cal is California's Medicaid health care program for low income people, such as children, pregnant women, the elderly and the disabled. Other qualifications include low income refugees, adoptees and people with certain diseases such as tuberculosis, breast/cervical cancer or HIV/AIDS. To qualify for free Medi-Cal, a person must be disabled or have an annual income of $15,856 or less for a single individual and $32,499 or less for a family of four. Premium subsidy reduces the cost of medical insurance premiums each month. To qualify, a person must earn between $15,857 and $45,960 annually. Or, a household of four must earn between $32,500 and $94,200. Cost-sharing assistance further reduces the out of pocket amount, such as copayments, coinsurance and deductibles. To qualify, a husband and wife must file tax returns jointly and have MAGI at or below 250 percent of federal poverty level. For example, for a single person, that income cannot exceed $28,735.
Covered California's standard plans are intended for households with MAGI income above Medi-Cal levels. There are four standard plan options or tiers: bronze, silver, gold and platinum. The bronze plan covers 60 percent of covered costs and is the cheapest. The silver plan covers 70 percent of costs. The gold plan covers 80 percent of costs. The platinum plan covers 90 percent of costs. Premiums go up with the higher levels of benefits.
Small businesses and organizations with 50 or fewer full-time employees are not required to provide medical insurance. However, for employers interested in offering this benefit, Covered California's SHOP (Small Business Health Options Program) provides affordable group plans that can cover both full-time and part-time w-2 employees. For employers with 25 or fewer employees and an average annual wage of less than $50,000, up to 50 percent advanced premiums tax subsidies are available to help pay for medical insurance. For non-profit organizations, up to 35 percent tax credit is available.
Seventy percent of eligible employees must participate in the Covered California SHOP plan. Employers are to choose the tier (bronze, silver, gold or platinum) level of option and must contribute at least half of the premiums for the cheapest plan. Employees choose the insurance company and a HMO or PPO plan. For a multi-state tribe, at least 51 percent of employees must reside in California. While employers receive the tax credit, employees will not receive other subsidies themselves. However, the employee's household members can buy medical insurance through Covered California and possibly qualify for subsidies.
Eligibility to buy any exchange plans include all un-incarcerated legal residents and those intended to become legal residents of California. Social security number, identification and proof of residency will be used for individual and family applications. DE-9C will be required for employers to submit as proof of employment.
Undocumented immigrants are not allowed to buy medical insurance through the health exchanges. They are eligible for emergency care under federal law or Emergency MediAid if they have low income. The lawfully present children (including those born in the U. S.) of undocumented immigrants are eligible for Medi-Cal and Covered California programs.
Covered California currently offers only medical insurance policies for adults, but both dental and vision plans for children under age 18. Premiums must be paid in full before the policy takes effect. The deadline to apply for January 1, 2014-coverage is December 15, 2013.
Cynthia Tam is a licensed insurance agent (CA 0D69514) an Enrolled Agent authorized to practice before the Internal Revenue Service. For a FREE analysis of your tribe's medical insurance policy, contact Cynthia Tam at (619) 200-6277 or firstname.lastname@example.org.