What the Affordable Care Act means to you

Skye Kinkade
Joanna Fawzey Morales, Esq., an expert in consumer health law, stands with Elizabeth Mitchell Collord, executive director of Klamath Health Services, last Wednesday. Morales gave an overview of the Affordable Care Act and what it will mean for the average American when it is fully implemented on Jan. 1, 2014.  Photo by Skye Kinkade

Beginning January 1, 2014, Americans who choose not to purchase some form of health insurance will be charged a penalty when they file their income taxes with the IRS.

Though the penalties are what many focus on when discussing the federal Affordable Care Act – which is sometimes called Obamacare or the Healthcare Reform Act – the legislation is also designed to make health insurance more affordable with federal subsidies and by making Medi-Cal available to a wider range of Californians.

Tuesday of last week, Klamath Health Services hosted Joanna Fawzy Morales, Esq., who explained what the Affordable Care Act will mean for consumers.

A cancer rights attorney with expertise in consumer health law, Morales said there are currently 50 million Americans who have no access to medical coverage and nearly half of the population is unaware the Affordable Care Act is law.

Signed by President Obama on March 23, 2010, Morales said the Affordable Care Act is “extremely complicated” and its details are changing daily.

The original bill consists of more than 1,000 pages of legislation, which she said is just a “skeleton” that gives direction on how to implement the Act, but leaves others to fill in the details.

Over the past three years, that’s what the federal government and individual state governments have been doing, Morales said, and now Act is scheduled to go into full effect nationwide on Jan. 1, 2014.

Penalties assessed to those who choose not to purchase insurance will be to provide subsidies for those who wish to purchase plans through a “Health Insurance Exchange,” explained Morales.

These “Shared Responsibility” payments will begin small when the first ones are paid in the tax season of 2015, but will increase until 2017, when they will be tied to the cost of the cheapest 60/40 insurance plan, or “Bronze” plan, available in your geographic area (See fact box).

The penalties

Morales stressed that those who already have insurance will not be required to change, and nearly all types of insurance policies meet coverage requirements under the act, including COBRAs, HIPAA, veterans policies, major risk policies, Medicare and Medi-Cal.

When taxes are paid to the IRS, people will certify they were adequately insured and if so, will owe no penalty, Morales said.

People can have up to a three month gap without insurance coverage during the year without penalty. If you are covered at least one day in a month, that equals a month of coverage, Morales said.

The Shared Responsibility payment is pro-rated by the number of months without coverage.

There are some exemptions, Morales said, including religious conscience or financial hardship (if the cheapest plan would cost more than eight percent of household income). People making less than $9,750 annually, members of federally recognized Indian tribes and incarcerated individuals will not be required to purchase insurance plans.

Owners of large businesses will have the responsibility to offer health insurance coverage to their employees. Small employers may receive a tax credit for a portion of their costs, Morales said.

Enrollment starts Oct. 1

To offer affordable healthcare options, the Affordable Care Act creates a Health Insurance Exchange. In California, this “Travelocity of health insurance coverage” is called “Covered California,” Morales said.

In Siskiyou County, there are three insurance carriers which will offer plans to individuals and families through Covered California and accept federal subsidies, including Anthem Blue Cross, Blue Shield and Kaiser Permanente, according to Morales.

Open enrollment will begin October 1 and stretch through March 31, 2014. Coverage will begin January 1, 2014.

By going to, you can use a “Premium Cost Calculator” which will calculate approximate monthly premiums for a “Silver” 70/30 plan and subsidies you may qualify for.

Morales said of the monthly premiums offered through the marketplace are “considerably cheaper” than what you’d pay in the open market when federal subsidies are applied.

Consumers may also access coverage by telephone or in person through certified agents or a network of trained “application professionals” which should be in place before Oct. 1, Morales said.

More adequate coverage

Morales said 62 percent of bankruptcies in the US are based on medical debt, and of those, 78 percent had health coverage.

The Affordable Care Act made (or will make) the following changes to make health insurance more adequate:

• No recissions – Insurance companies are no longer allowed to cancel insurance coverage when a person goes to use it, unless there is fraud or intentional misrepresentation of a material fact or if they don’t pay premiums.

• No lifetime limits

• No annual limits for group plans

• Sets a “medical loss ratio” – insurance companies may use only a certain percentage of premiums for administrative costs or issue a rebate to consumers.

More affordable coverage

The Affordable Care Act did (or will do) the following to make health insurance more accessible:

• Free preventative care – A list of procedures and tests such as colonoscopies and mammograms are now offered at no cost. These procedures do not go toward copays, coinsurance and are not applied to deductibles.

• Less stringent requirements for premium rating – On Jan. 1, insurance companies will only be able to look at whether coverage is sought for an individual or family, their geographic location and age.

Those with preexisting conditions cannot be denied health insurance coverage and, in California, insurance companies cannot use tobacco use as a determining factor for rates.

• On Jan, 1, more people will be eligible for Medicare and Medi-Cal. Those who make up to 138 percent of the Federal Poverty Level will now be eligible to receive Medi-Cal.

• Subsidies to help afford a plan – Those whose household modified adjusted gross income is between 100 and 400 percent of the Federal Poverty Level will qualify for federal subsidies to purchase a policy. The amount of the subsidy will be calculated from information on your federal tax return.

• Young adults can stay on a parent’s insurance plan until age 26. When this part of the Affordable Care Act went into effect in September of 2010, it resulted in three million more young Americans with access to health insurance, Morales said.

Young adults can stay on a parent’s policy even if they are not full time students or if they are married.

Young adults are known to be “chronically underinsured,” Morales said, because they may feel “invincible,” or have entry level jobs that don’t offer insurance plans.

What to do now

If you are interested in finding out what insurance options are available to you now, before ACA is enacted next year, visit, which can direct you to insurance plans which you may qualify for in your area. You can also peruse Covered California plans at

For local assistance with health insurance resources, contact a local health insurance agent.

Adults who choose not to purchase insurance in 2014 will be required to pay a $95 “Shared Responsibility” payment, beginning in 2014. The fee per child in 2014 is $47.50, up to $285 per family, or one percent of family’s income, whichever is greater.

In 2015, those numbers jump to $325 per adult and $162.50 per child, up to $975 per family, or two percent of the family’s income.

In 2016, the penalties make another jump, to $695 per adult, $347.50 per child or up to $2,085 per family, or 2.5 percent of the family’s income.

In 2017, the penalty will be tied to the amount of the cheapest 60/40 (or “Bronze”) insurance plan available in your geographic area.

What the uninsured will pay