In 2010, President Barack Obama signed into law a federal statute called the Patient Protection and Affordable Care Act (PPACA). Further in 2014, The congress implemented a “Mandate” which requires U.S citizens or legal residents to maintain qualifying health insurance or pay a tax penalty. Although President Trump has repealed the Act on a federal level, many states including California are still implementing this mandate.
The Tax Penalty refers to a provision made in the ACA that requires individuals to pay a penalty if they don’t carry qualifying health coverage and they do not qualify for any exemptions. The Penalty is paid at tax time when you file your federal tax return and is calculated in one of two ways.
For 2021, the Tax Penalty will be the greater amount of one of the methods below:
- Percentage method: 2.5% of your household income above your filing threshold*
- Flat dollar amount method: $695 per adult and $347.50 per child (family maximum is $2,085)
Qualified health plans
Since 2014, all new plans for individuals and small groups are required to include the following 10 essential coverages:
These plans are divided into four metal tiers plans and one catastrophic plan(for 30 years old and under):
The actuarial value represents the percentage of total average cost for covered benefits that the plan will pay. Each plan include 4 important features that you should understand:
- Copay(Copayment) – a fixed amount of money you have to pay your doctor or facility for each visit
- Annual Deductible – a fixed dollar amount that you have to pay out of your pocket before insurance will start sharing the medical cost with you. Deductible is on an annual basis, so every penny you pay to the doctor or facility will count toward the deductible.
- Coinsurance – the percentage of medical cost that you will need to share after you have met the annual deductible requirement
- Out-of-Pocket Maximum: This is the total amount that you have to pay in a policy year before insurance will start to pay 100% of the medical cost. This will include all the copays, deductible, and coinsurance that you have paid out of your pocket. It’s a safety net and the maximum you will have to pay for your medical cost with the insurance.
There are generally 3 types of provider networks offered by different companies.
Kaiser is famous for its HMO plans, because you can take care of everything at one hospital or facility, but they require you to choose a primary doctor.
Oscar leads the low cost EPO. You can see specialists directly, but there is no coverage for out of network providers.
Blueshield PPO is the premier choice because it provides the largest network of providers, but it’s the most expensive.
How to purchase these plans?
Generally, California Residents can purchase these plans through the following:
- Individual/Family plans from Insurance Companies
- Covered CA if you qualify for low income premium tax credit
- Employer-Sponsored Group Plans
At CKS Insurance, we partner with all major health insurance companies to help you compare and choose the best plan that suits your needs.