Since last year, the status of the Affordable Care Act (Obamacare) has been somewhat murky in media coverage. Many of the benefits of Obamacare have already been implemented. Security for health insurance plans, coverage of adult children until age 26, and the requirement that coverage be extended to individuals with pre-existing health conditions are among the benefits of Obamacare that are already in place. Increased, or even free, access to preventive care services is similarly already in effect under Obamacare. The remaining changes are for individuals who do not currently have health insurance, many of whom have difficulty affording coverage in the private market due to their age or health status.
For these individuals, the health insurance industry may change dramatically. States have the option to expand Medicaid coverage (Medi-Cal in California) in order for more people to qualify and create health insurance “exchanges.” The exchange is intended to treat the uninsured as a “group” in order to gain the discounts available to other group plans, such as employer-sponsored group plans. Individuals may go on the exchange in order to purchase their own coverage to meet their needs and their budget. Additionally, subsidies are available if the premiums exceed a certain amount of your income.
Last year, in the Obamacare Supreme Court decision, the Supreme Court altered the law in two, perhaps significant ways. The first is that the individual mandate was upheld as a “tax” rather than as a penalty. Individuals who do not purchase health insurance will be required to pay the tax on their federal income tax returns beginning in 2014. Secondly, the Supreme Court gave states the ability to “opt out” of Medicaid expansion and creating a state-run health insurance exchange. Somewhat paradoxically, states that choose to avoid the burden of being mandated to create exchanges and increase Medicaid coverage must allow their citizens to participate in a federally run program.
California will participate in both the Medicaid expansion and creating its own, state-run health insurance exchange, called Covered California. California is also working on a bridge plan to cover those who are on the cusp of eligibility for each program. Initially, your 2012 income tax return will be used to determine eligibility for health insurance premium subsidies if you obtain insurance through the exchange. Although income affects eligibility for subsidies and Medi-Cal, it does not affect your ability to shop the exchange; in other words, you may purchase unsubsidized insurance through Covered California. The coverage will begin January 1, 2014.
Obamacare does not affect Medi-Cal cost recovery from estates. As such, Medi-Cal funds received may need to be repaid from your estate after death. Proper planning may avoid having the state collect your assets before your heirs may receive an inheritance. Additionally, Obamacare does not affect enrollment in Medi-Cal; you may enroll at any time if you are eligible. However, for the exchange, you must enroll during the open enrollment period, which will begin in late 2013 and continue until March 31, 2014.
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