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Covered California Q&A

Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.


December 2011 Archives


Question: My wife lost her job and the medical insurance was through her employer. My job offers it but they are making me wait 6 months in my new position before I can sign up. Is that legal in Minnesota? Thank you, Jason.

Answer: Yes. Employers can set the new-hire waiting period up to 6 months before becoming eligible for the company’s health plan. Suggest you take your COBRA health insurance option for 6 months until you are covered under your employer-sponsored group plan.


Question: What is catastrophic coverage under ACA?

Answer: The affordable Care Act states that health benefit exchanges will be required to offer 4 tiers of coverage plans (bronze, silver, gold, and platinum) and a catastrophic plan. The catastrophic plan can be offered only in the individual exchange and only for young adults, those under age 30 before the plan year begins. These young adults must also be exempt from the individual mandate (to obtain insurance) because affordable coverage is not available or they have a hardship exemption.

The catastrophic plan will be the lowest priced health plan available within the guidelines of essential benefits. Catastrophic plans will have an actuarial value of less than 70% (bronze level).


Question: Are chiropractic benefits covered under the essential benefits plan of the affordable care act.

Answer: We don’t know for sure, but probably some chiropractic benefits will be included in California’s version of the essential benefit plan. In mid-December 2011 HHS announced that it was passing the responsibility for defining essential benefits to the states. HHS guidance says states can define their own set of essential benefits by using an existing major health benefit plan in the state as a benchmark. California benchmarks would include one of the three largest federal employee health benefit plans by enrollment, one of the three largest state employee health benefit plans by enrollment, one of the three largest small business plans by enrollment, and the largest HMO plan offered in the state’s commercial market by enrollment. All of these benchmark plans contain some chiropractic benefits.


Individual Mandate Penalties

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Question: What is the individual mandate health care reform amount of tax?

Answer: The Affordable Care Act specifies that the “applicable dollar amount” of the tax is generally $695, to be phased in and adjusted as follows:

ACA Individual Mandate Penalty.png


Question: Do California employers have to provide health insurance to their employees?

Answer: The is currently no requirement for California employers to provide health insurance for their employees. Health care reform places no requirement on small business employers (less than 50 employees) to provide employer-sponsored health insurance in 2014 and beyond.

The Affordable Care Act (ACA) mandates that larger employers (50 or more employees) provide health insurance starting in 2014 or pay a penalties called the play-or-pay tax. The play-or-pay tax is one of the most significant tax consequences of health care reform. The tax will take effect in 2014, and it will have a significant impact on large employers subject to it. Both applicable large employers that offer coverage, and those who do not offer coverage to their employees will be subject to this tax. Employers will face another big decision due to this tax. Their question will be, “Should we offer healthcare coverage to our employees at all, or just simply pay the applicable tax?”


Navigator Program Status

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Question: What is the Echange board doing about the navigator program?

Answer: The issues surrounding the Navigator Program are on the back burner. The Exchange Board expects to begin addressing Navigator issues sometime in the spring of 2012. We also await more direction from Health and Human Services (HHS). The Affordable Care Act (ACA) states that the “Secretary (HHS) shall establish standards for navigators… including provisions to ensure that a navigator is licensed if appropriate.” How specific the proposed HHS regulations are will significantly affect this question.


Question: How can I get health insurance for a newborn child when mother is unmarried.

Answer: The marital status of the mother is not a factor. You can purchase child-only health insurance coverage for this newborn baby. If you are a grandparent or other interested party, you can be responsible for paying the premiums. Health insurance rates for infants under 1 year old are higher and this is understandable, because all health insurance plans now include well-child baby visits and routine exams that include blood tests and other diagnostic tests. Start by getting a health insurance quote now.


Question: I have insurance through my job. My kids are under my husband’s job insurance. I just received information that my job’s insurance is going to change the plan … It is way too expensive for just one person. My question is, do you think that my husband’s insurance would insure me?

Answer: Your husband’s employer has the option of not adding you on your spouse’s coverage if you have coverage offered by your own employer. You should ask your husband to inquire with his employer if you can be added. If so, you may have to wait until his next open enrollment period.


Diagnosed with Cancer While on COBRA

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Question: I have recently been diagnosed with breast cancer. I am currently on COBRA. What happens to me when it expires.

Answer: I’m so sorry about your bad news. At least your ability to remain insured is protected by federal laws. However you must take the right steps to protect your rights. First and foremost, stay on COBRA until your coverage expires. If you do that you will qualify for HIPAA guaranteed coverage after your COBRA coverage expires. Most health insurance companies who market individual health insurance offer HIPAA qualified coverage. HIPAA guaranteed plans are usually high deductible plans at a substantial rate-up over the standard rate for a “healthy” applicant. You may be able to purchase a HIPAA plan from your current insurer, but can shop for HIPAA plans from any other carrier in your state. Contact them directily about 60 days before your COBRA expires.The PCIP plan will not work for you because they require an applicant to be uninsured for 6 months prior to enrollment. In January 2014, your preexisting condition will no longer be a consideration in obtaining health insurance thanks to the Affordable Care Act. I wish you the best of luck.


Effect of Health Reform on Brokers

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Question: What is the health care reform impact on California health care brokers?

Answer: California health insurance brokers and agents have already been negatively affected by health reform. One of the first provisions of the Affordable Care Act (ACA) was the Medical Loss Ratio (MLR) regulation which has reduced the commission rate for brokers in the individual and small group market by 30% or more.

In 2014, brokers may find themselves excluded from commissions in the individual Exchange in California. And while the Shop Exchange for small businesses will most likely want brokers to participate. the small group market may be decimated by the exclusive availability of subsidies in the individual Exchange causing many small groups to become collections of individual plans funded by defined employer contributions.

We at CAHBA believe that these forces will drive those brokers who wish to thrive in the post health reform world to adopt fee-based business models because individuals and employers will need guidance that goes beyond eligibility and enrollment assistance available at the Exchanges.


Question: I am very confused by the deductibles on my family’s health insurance. Does the whole family meet the deductible or just one person?

Answer: I don’t blame you for being confused. There are differences in how health plans work for families versus individuals. The main difference between individual and family coverage is how the annual deductible is computed.

Individual Deductible Family Plans: Some family insurance has separate deductibles for each individual and then a family deductible limit. For example. a plan might have a $5000 deductible for each family member and a $10,000 deductible limit for the whole family. What that means is that any given individual in the family must reach $5000 in covered medical expenses before the health plan begins to pay. Also, let’s say that this family has 3 individual members and that the total in family expenses exceeds $10,000, from this point on through the end of that calendar year all family members will have been deemed to have met their deductible. Statistically, only one family member usually has major medical expenses in a given year, so the individual deductible plan is generally recommended.

Aggregate Deductible Family Plans: Some family health plans have one deductible for the whole family. For instance, a plan might have a $10,000 deductible for the family and each family member’s covered medical expenses are combined to meet the $10,000 family deductible. Statistically, only one family member usually has major medical expenses in a given year, so the $10,000 family aggregate deductible is usually harder to reach. We generally recommend family health plans with this type of family deductible, but there are situations when an aggregate deductible is preferable, for instance a large family would have a greater chance of meeting the family deductible with no single individual accounting for $5,000.


Active Purchaser

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Question: What is an active purchaser health exchange?

Answer: A health insurance exchange’s 
active 
purchaser 
role 
is primarily the power to be selective about plans that qualify to be in the exchange - as opposed to simply providing a marketplace for any plans offered by the health insurance carriers in a given state. The California Health Benefit Exchange will develop a competitive process to select health insurers who will become certified to participate in the Exchange. It can stimulate price competition because health plans will want to get their products on the shelves of the Exchange. Carriers will compete on price to be selected. The more value a health plan offers the Exchange users, the more the Exchange is going to want these plans. First they have to compete to become qualified health plans in the Exchange and then they have to compete again to be selected by the individual healthcare shopper. Currently, the California Department of Insurance does not negotiate health insurance rates with the carriers. In its role as active purchaser the California Health Benefit Exchange can become a proactive force of change in the California health insurance market.


Insure My Baby

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Question: Should i put my baby on my work insurance or a private plan?

Answer: If your employer pays a substantial portion of the cost for your baby’s coverage and the portion that you have to pay is affordable for you, then go with the employer-sponsored plan. But you may find that your employer does not contribute toward an employee’s dependent coverage. If that is the case you should shop for a child-only health insurance for your baby. Child-only health insurance is a health plan for a child, or children, without an adult on the same policy. Health insurance rates for infants under 1 year old are higher and this is understandable, because all health insurance plans now include well-child baby visits and routine exams that include blood tests and other diagnostic tests. Once beyond the toddler stage, children’s health insurance is more affordable.


Insurers Offering HRAs?

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Question: Do you have a list of insurance companies in California that offer HRA plans?

Answer: HRAs are usually offered by third-party administrators like 105 Concepts, TASC Benefits, and Zane Benefits. In the past, some of the major insurance carriers in California have tried offering fully-insured high deductible health insurance plans packaged or "wrapped" with an HRA plan, but they really were not equipped to handle the medical expense reimbursement part of the arrangement. Typically, third-party administrators will charge a set-up fee to create the documentation and a monthly administration fee to handle the employee reimbursement. In addition, year-end tax-reporting documents are prepared as part of the service. Annual costs for a for a fully administered HRA start at about $1,000 for a small business. Self-administered or document-only HRA plans are available starting at $200.


Question: Will I be able to keep major medical insurance if i am not employed or being offered group insurance after the age of 65 if i only have an individual policy?

Answer: Yes. You can keep your individual health insurance after age 65. However, you would be wiser to take Medicare coverage (assuming you qualify). Medicare coverage is more comprehensive than most individual health insurance plans and the cost of Medicare coverage would be a small fraction of the cost of a private plan post 65.


Question: What is the minimum employer contribution per employee for group health plans in California?

Answer Employers must pay at lease 50% of employees’ premium for lowest cost plan offered by the plan’s carrier(s). There is no requirement for the employer to make any contribution to the employees’ dependents.


SHOP Exchange Eligibility Criteria

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Question: What will the eligibility criteria of the SHOP Exchange be? Will associations qualify for group coverage?

Answer: The Affordable Care Act leaves the definition of small group size and up to the states - limited to either 50 or 100 full time employees. In California, small groups will be limited to those with 50 employees or less initially, with the option to raise it to 100 in 2017. The existing California state laws must also be observed, that means associations are not eligible for new small group coverage in the SHOP Exchange. Finally, the the Department of Health and Human Services (HHS) will issue regulations that could further define Shop Exchange eligiblity.


Question: Do you have to be an “uninsured” resident of Utah for 12 months? I am uninsurable but currently have cobra through my husband. When it runs out how much would the premium be for the high risk insurance? What is it based on?

Answer: That is correct. The HIPUtah Major Risk Health Insurance plan requires that you be uninsured for 12 months before applying. So that’s not for you. When you have exhausted your COBRA benefits, you will qualify for federal HIPAA coverage. That’s high deductible coverage offered through the insurance carriers in each state by federal law.You may be able to purchase a HIPAA plan from your current insurer, but can shop for HIPAA plans from any other carrier in your state. It’s more expensive than regular individual health insurance, but they must cover you. Remember you only have to get to January 2014 - two years form now - when you will no longer have to worry about being “uninsurable” and can buy health insurance without regard to your pre-existing medical conditions at the same price as everybody else. Hang in there. It will get better.


Question: Our company health insurance is only offered as high deductible, What can i do with costs that I can’t afford?

Answer: Your dilemma is very common nowadays. On the one hand, your employer is probably doing the best he or she can by providing health insurance coverage of any kind. On the other hand, you, the employee do not perceive it as much of a benefit because the high deductible means high out-of-pocket expenses for covered medical expenses. Expenses your are afraid that you cannot afford.

It’s understandable that you feel like you are not getting much of a benefit, but here’s are couple things to remember: First, high-deductible health insurance is a whole lot better than no insurance at all. Even though you may never reach your deductible amount, you still get a big discount on covered medical expenses within your network, in some cases the negotiated amount that your end up paying is less that half the original billed amount. Secondly, if you were to have a catastrophic medical expense, say $50,000, the maximum out-of-pocket amount on your policy, probably no more that $10,000, would at least set a limit on what you owe that you could reasonably expect to pay off over time. So that high deductible insurance could make the difference between having to file for bankruptcy or not.


Question: What are the tax implication if my employer offers a health insurance plan and I decided to delcine and purchase my own? They do not offer an FSA.

Answer: If you opt out of your employer's group health plan in favor of your own personal health insurance plan, your health insurance premiums will be lumped together with your medical expenses and listed on your federal 1040 form as itemized deductions. You may deduct only the amount by which your total medical care expenses for the year exceed 7.5% of your adjusted gross income. Usually, only people with unusually high expenses and low income will find premiums to be tax-deductible.

I understand, that many employers are reacting to ever increasing group health insurance costs by asking employees to make greater contributions to the premium. Even though your share of the premium is a lot more than it used to be, it's usually a better deal to take the group coverage than to purchase personal health insurance. That's because state laws require the employer to pay a substantial percentage of the premium - usually at least 50% - for each employee. So even though you can find individual health insurance plans at lower premiums, they don't cover as much. The average group health plan has an actuarial value of 80% or more. That means the plan will cover 80% 0f the typical medical costs. Individual plans can have an actuarial value as low as 55%. Dependents are a different matter. Employers are not required to pay anything toward coverage of an employee's dependents and smaller employers typically do not.

So, bottom line, take another look at the employer sponsored health plan for yourself, but shop for personal coverage for your spouse and kids. Families do not all have to be on the same plan.


Ex-wife is Uninsurable

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Question: Husband company not insuring divorced spouse who is uninsurable

Answer: Your ex-husband’s employer no longer has an obligation to offer coverage to the ex-wife under the company’s group health insurance plan. In fact, the insurance company would not allow it even if the employer wanted to. However, the ex-wife does have some coverage options even if she is “uninsurable” due to pre-existing conditions. My first suggestion would be the Pre-Existing Condition Insurance Plan (PCIP), one of the early benefits of health care reform. It’s very good coverage at a fair price.


Health Insurance for Infants

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Question: Can infants be insured with their own health insurance?

Answer: Yes. An infant can be insured on their own health insurance policy. A parent or guardian must complete an application for child-only health insurance.

A provision of the Affordable Care Act already in effect requires that children under 19 years of age in are eligible to enroll in an health plan without regard to any preexisting medical conditions. Enrollment guidelines vary by state. The California guidelines are listed below.

  1. Annual Open Enrollment Period during the month of the child’s birth date.
  2. Late Enrollment Period, within 63 days of any of the following conditions:

    • Loss of group health coverage because of termination or change in employment,
    • Loss of employer contribution,
    • Death of primary insured,
    • Legal separation or divorce of primary insured causes loss of coverage,
    • Loss of Healthy Families, AIM, or Medi-Cal coverage.
    • Recently became a resident of California,
    • Newborn in California but did not enroll in birth month,
    • Coverage of child mandated by court order,
    • Child is newly adopted.

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