In 2013,  the implementation of the health care exchanges in Santa Monica and the rest of California will begin.

 Here is a quick timeline showing  what to expect in 2013.

Health Insurance Agents  will have to get a certification in May or June to be able to sell on the California health care exchange. As early as Fall 2013, (the anticipated date is October 1st 2013), quotes for 2014 should be available on the health exchanges in California.

What will the health insurance exchange in California look like?

The principle is based on a Tier program of insurance plans. There will be four tiers of insurance: Platinum, Gold, Silver,  and Bronze Plans.

Insurers who offer the Platinum Plan can charge higher premiums but will pay 90 percent of the cost of benefits covered by the plan. The patient will pay 10 percent until he reaches the limit on his out-of pocket maximum . The Gold plan will pay 80 percent of the cost of benefits covered by the plan, with  the patient paying 20 percent until one reaches the out-of pocket maximum. Similarily the Silver plan will pay 70 percent, and the Bronze plan will pay 60 percent of the cost of benefit covered by the plan. Patients on the Silver plan will pay 30 percent and Bronze plan holders 40 percent until they reach the out-of pocket maximum. The Silver Tier will serve as the benchmark for tax credits.

Instead of currently approx 15-20 pages of application, you will have to fill out a 2 page application.

Will  I, as an Individual, or my family be eligible for tax credits ?

Many Americans may qualify for some type of subsidy in form from tax credit to pay for insurance premiums. Not only low- income families but also moderate-income families earning up to 400 percent of the Federal Poverty Level will receive subsidies. ( For a family of four that is $ 92,200 ). Eligibility of subsidies will depend on your income, age, the size of your household and where you live. Your eligibility based on the modified annual gross income ( AGI ), which you can find on line item # 37 of your tax return of 2012. Please check with your CPA on your modified annual gross income, and pay extra attention as this could be a significant saving .

The Kaiser Family Foundation has created the Health Reform Subsidy Calculator, which easily shows whether you will qualify for a subsidy. It is estimated that, if you qualify for a federal subsidy  the premium will be  7 -10 percent lower as in the individual market today. But if you do not qualify, you  will  see higher insurance premiums, as the subsidy calculator shows the actual health insurance premium based on a Silver Tier . I encourage you to  use this important tool from the Kaiser Family Foundation to estimate your cost.

For example a family of 4 being 40 years old  with a modified annual gross income of $ 60,000 , the annual health insurance premium will be $ 12130 . The family has to pay $ 4937 , the federal government will subsidy $ 7193 in form of a tax credit or as a direct payment to  the insurance.

For a Single male 20 years old, with  modified annual gross income of $ 25,000 the annual health insurance premium will be $ 3,391 . He will have to pay annually $ 1726 for health insurance and the subsidy will be $ 1664.

As an example, a 50 year single woman who earns $ 50000 will not be eligible for a subsidy. Her  insurance cost  will be almost $6950.- annual on the Silver plan, which is considerably higher than on current individual markets.

The subsidies are not available for employees who receive insurance through their employers. For groups of 50 employees and more, one can go to the exchange if  the employer insurance package is higher than 9.5% of  the employee’s annual income .

What is the penalty if I do not buy health insurance?

The penalty for not having health insurance is in the year of $ 2014 only $ 95 per person per  year. The penalty will increase each year. In 2015 the penalty will be $ 325 and in 2016 $ 695, and will increase each year proportionally to the Silver Level.Please be advised that the penalty cannot be tax deducted and that you can only enroll in a health insurance plan in the open enrollment periods.

For companies over 50 employees the penalty will be $ 2000 per employee, which is not tax deductible.

We hope that this summary will  give you an insight into the health insurance changes which we expect in 2013 and 2014 in Santa Monica and throughout  California. It is still unclear whether all the changes will lead to more affordable health insurance for the middle class. For a quote for 2013 and to stay informed of the upcoming changes , contact us at, Your Health Care Reform Expert.