Frequently Asked Questions

The landmark federal health care law is comprised of two pieces of legislation that President Obama signed into law in March of this year: The Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010.  

The new law is predicated on the principle of shared responsibility - it requires health plans and insurers to provide access to insurance to individuals, regardless of their health status, age or occupation; it requires individuals to purchase and maintain insurance coverage for themselves and their families; it requires government to set the rules for the insurance marketplace and to support access to affordable coverage for our lower income residents; and, it requires individuals, families and communities to assume more responsibility to manage their health and be more involved in health care decisions.

Key elements (many of which go into effect in 2014) include:

• New rules in the health insurance market designed to improve coverage and protect patients.
• Creation of state-based health insurance exchanges to make it easier to shop for and buy insurance using federal tax credits to be made available to:
  • Small businesses with fewer than 25 employees who have low-to-moderate incomes, and
  • Individuals and families earning up to 400 percent of federal poverty level (in 2010, $43,300 for an individual and $88,200 for a family of 4).
• Incentives to promote health care quality, care-coordination, and preventive care.
• Expansion of the Medicaid (Medi-Cal in California) program to all citizens and qualifying immigrants who earn up to 133 percent of the federal poverty level.
• Grants and incentives to expand access to primary care, build the health care workforce, and improve prevention and quality of health care.
• A requirement that businesses with more than fifty employees provide affordable coverage or pay a fee.
• A requirement that individuals and families to purchase insurance if it is affordable for them, or pay a penalty.
• New taxes on certain health sector business, high-income families, and high-cost health plans.

• California is focused on four priorities for implementation:Improving Access to Private Health Insurance for Persons with Pre-Existing Medical Conditions; Improving the Quality and Security of Private Health Insurance by Enforcing New Federal Insurance Rules; Developing a Health Benefit Exchange to Make it Easier to Shop For and Buy Insurance; Focusing on Prevention and Wellness.
• In September, California established the new Pre-Existing Condition Insurance Plan, for people previously unable to obtain private health insurance due to preexisting medical conditions.
• On January 1, various new state laws go into effect implementing health reform in California, including the creation of the California Health Benefit Exchange, an entity that will help California consumers and small businesses shop for and buy affordable health insurance starting in 2014. California was first state in the nation to enact legislation creating a health benefit exchange under federal health care reform.   For more information on state legislation related to health care reform, check out our State Legislation page.

For more information on the priority areas for implementation, check out the Priorities page.

• State departments and agencies are aggressively pursuing Patient Protection and Affordable Care Act Grants across program areas, from prevention, to public health infrastructure to insurance plan rate review.  To see a complete listing of submitted and successful grant applications, visit the Grants page.
• As implementation of the new law progresses, federal agencies have requested comments on draft rules and policies.  State departments and agencies are analyzing the draft rules and providing comments to the federal government with a focus on ensuring that states have the resources and flexibility to responsibly implement the new law.  To view published federal guidances related to the Patient Protection and Affordable Care Act, visit http://www.healthcare.gov/center/regulations/index.html

• Federal law prohibits the use of federal funds to provide health care services to undocumented immigrants.  This same provision applies to the tax credits and eligibility expansions contained in the Patient Protection and Affordable Care Act.
• Federal law requires hospitals to provide care to anyone needing emergency treatment, regardless of citizenship, legal status or ability to pay.  The requirement to provide emergency care will continue.
• The Patient Protection and Affordable Care Act does not change the eligibility requirements for existing state or locally funded programs that provide health care services to all.

• Visit our grants section
• Visit the federal website dedicated to Patient Protection and Affordable Care Act Grants

• As of September 23, 2010, insurance companies are prohibited from denying coverage to children under the age of 19 due to a pre-existing condition.
• Beginning in 2014, insurance companies will be prohibited from refusing to sell coverage or renew policies to adults because of pre-existing medical conditions.  
• If you are an adult who has been declined for coverage due to a pre-existing condition, check out the Pre-Existing Condition Insurance Plan.

• As of September 23, 2010, for new or renewing health plans, young adults are allowed to stay on their parents’ plan until they turn 26 years old (this right does not apply if the young adult is offered insurance at work).

• Preventive medicine or preventive care refers to measures taken to prevent (or detect early) diseases or other issues affecting your health.  As of September 23, 2010, all new or renewing plans must cover certain preventive services such as mammograms, colonoscopies and immunizations without charging a deductible, co-pay or coinsurance.

• The Office of the Patient Advocate has a website to help you choose a health plan: http://www.opa.ca.gov/healthcare/health-plan/right-plan.aspx. 
• The federal HealthCare.gov site also has resources to help. 
• As the Patient Protection and Affordable Care Act is implemented over time and as the Exchanges develop, additional resources will be available to help you find the right health plan.
• For more resources, check out the Health Care & You section of this site.

• The Patient Protection and Affordable Care Act contains a variety of provisions aimed at protecting consumer rights.  These new rules which will help children (and eventually all Americans) with pre-existing conditions gain coverage and keep it and end lifetime limits on the care consumers may receive. For a complete list, visit: http://www.healthcare.gov/law/provisions/billofright/patient_bill_of_rights.html

• The Department of Managed Health Care operates a Help Center to help you if you have a problem or complaint with your health plan.  You can reach the Help Center by visiting the link above or calling 1-888-466-2219.

• Applications are available now.  For more information visit the Pre-Existing Condition Insurance Plan website.

• No, federal law requires individuals to be without insurance for six months prior to enrollment in the Pre-Existing Conditions Insurance Plan.

Beginning in 2014, two provisions of the new federal law are designed to assure that affordable health coverage is available:

• The Act provides federal tax credits to low to moderate income people (133-400 percent of the federal poverty level) who do not receive employer provided health benefits.  
• The Act authorizes the state to establish a Health Benefit Exchange so that Californians buying insurance using the federal tax credits have access to high value health plans.  

The Exchange represents an important component of health care reform.  Planning is underway to establish the California Health Benefit Exchange to help foster an organized, transparent marketplace for coverage and provide a choice of plans for individuals and employees of small businesses eligible for tax credits and cost-sharing subsidies.

• Effective January 2014, the uninsured and self-employed will able to purchase insurance through state-based exchanges with tax credits available to individuals and families with income between the 133 percent (in 2010, $14,400 for an individual and $29,000 for a family of 4) and 400 percent (in 2010, $43,300 for an individual and $88,200 for a family of 4) of the poverty level.   
• A separate exchange will be created for small businesses to purchase coverage -- effective 2014.
• To learn more about the exchanges, visit the Health Benefit Exchange page.

• Generally speaking, tax credits will be available for individuals and families with incomes between 133-400 percent of the federal poverty level to help them purchase insurance through the Exchange. These subsidies will be offered on a sliding scale basis and will limit the cost of the premium to between 2 percent of income for those at 133 percent of the poverty level and 9.5 percent of income for those between 300-400 percent of the poverty level.  See the Kaiser Family Foundation’s premium subsidy calculator to determine if you will be eligible for tax credits.
• Individuals who are offered coverage by an employer are not eligible for tax credits unless the employer plan does not have meet minimum federal criteria.  See question regarding mimimum benefit levels for further information.

• Basic Facts about Medi-Cal
• The largest change in Medi-Cal will be effective in 2014, when eligibility is expanded to all legal residents with incomes up to 133 percent of the federal poverty level (in 2010, $14,400 for an individual and $29,000 for a family of 4).  Currently, most low-income childless adults are not eligible.
• Medi-Cal eligibility is being simplified and streamlined to make it easier for individuals and families to accurately document their eligibility and enroll in the program. 
• In 2013, the Patient Protection and Affordable Care Act requires states to pay primary care physicians no less than 100 percent of Medicare payment rates for primary care services.

• California’s Medicaid Waiver is a bridge to 2014, when the full Medi-Cal eligibility expansion takes place.  Ten California counties currently have coverage initiatives to provide some health care to low-income uninsured adults who do not have children and are not eligible for Medi-Cal.  The Waiver will provide financial support to expand these county programs to more uninsured low-income adults, most of whom will become eligile for Medi-Cal in 2014 under the new federal law.

• Currently, Medi-Cal covers more than 7.5 million people.  With the Patient Protection and Affordable Care Act-mandated eligibility expansion in 2014, California will likely see an additional 1.6 million to 1.9 million people join Medi-Cal.  Current estimates indicate that the general fund cost will be between $2 billion and $3 billion.

• California’s Medi-Cal Waiver will act as a bridge to Medi-Cal expansion between now and 2014.  Some California counties currently have programs to provide some health care to low-income uninsured adults who do not have children.  The Medi-Cal Waiver is aimed at expanding these county programs between now and 2014.

• Medi-Cal offers comprehensive health care services for low-income families, pregnant women and children, children receiving foster care and adoption assistance, certain low income Medicare recipients and seniors and people with disabilities participating in the Supplemental Security Income (SSI) program. 
• Healthy Families Program offers health care services for children aged 0-19 in families with incomes up to 250 percent of the federal poverty level who aren't eligible for Medi-Cal.
• The California Pre-existing Condition Insurance Plan offers health coverage for Californians who have pre-existing medical conditions and are U.S. citizens, nationals or lawfully present; who have had no creditable health coverage for six months prior to application; and have been denied insurance within the past 12 months or have been offered only unaffordable options.

Beginning in 2014, these additional options will be available:

• The new law expands Medi-Cal eligibility to all individuals under age 65 with incomes up to 133 percent of the federal poverty level based on modified adjusted gross income.
• Effective January 2014, the uninsured and self-employed will able to purchase insurance through state-based exchanges with tax credits available to individuals and families with income between the 133 percent and 400 percent of the poverty level

For more information visit the Health Care & You section of this site.

• As part of the Patient Protection and Affordable Care Act, the US Department of Health and Human Services (HHS) has made grants available to the states for premium rate reviews.  On August 16, the California Department of Managed Health Care (DMHC) received an initial grant amount of $1 million, to be divided with the California Department of Insurance.  The DMHC will use the grant money to retain actuarial services and provide necessary information technology upgrades to conform to the federal reporting system.  
• For more information, visit the DMHC website.

• In 2011, individuals will no longer be allowed to use FSA, HSA or health reimbursement account funds to purchase over-the-counter drugs not prescribed by a physician. In addition, the penalty for distributions from a HSA or Archer MSA that are not used for qualified medical expenses is doubled to 20 percent. By 2013, FSA contributions by employees will be capped at $2,500 per year.

• Beginning in 2014, out-of-pocket limits that are greater than the limits for Health Savings Accounts (2010: $5,950 self, $11,900 family) will be prohibited.
• In the small group market, the new law prohibits deductibles that are greater than $2,000 for individuals and $4,000 for families. It also indexes the limits and deductible amounts by the percentage increase in average per capita premiums and limits cost-sharing for such coverage (deductibles, coinsurance, copayments, or similar charges – does not include premiums).

• Effective January 1, 2014, most individuals will be required to obtain basic health insurance coverage.  People with existing health coverage will be able to maintain their current policies. 
• To ensure that coverage is affordable, the Patient Protection and Affordable Care Act contains a variety of provisions designed to assist individuals and families with the cost of coverage:
  • People who earn less than 133 percent of the federal poverty level (approximately $14,400 for an individual and $29,000 for a family of four) will be eligible to enroll in no-cost Medicaid (Medi-Cal in California).
  • Youth ages 0-19 in families with incomes up to 250 percent of the federal poverty level who aren't eligible for Medi-Cal will be able to enroll in the Healthy Families Program.
  • Beginning in 2014, people with incomes above 133 percent and below 400 percent of poverty will be eligible to receive tax credits if they are not covered through their employer sponsored plan and purchase coverage through the Exchange. 
• Beginning in 2014, individuals who do not purchase health insurance for themselves and/or their dependents will face a tax penalty.
• If affordable coverage is not available to an individual, he or she will be eligible for an exemption from the requirement to purchase coverage.

• The federal law permits plans to be grandfathered (i.e., you can keep the coverage you have with respect to the new essential benefit package and certain insurance market reforms).  However, the law requires grandfathered plans to make certain changes over time, including changes immediately to extend dependent coverage to adult children up to the age of 26, prohibit rescissions of coverage, eliminate waiting periods for coverage greater than 90 days and eliminate pre-existing condition exclusions for children. By 2014, all plans will also have to eliminate lifetime and annual limits on coverage.

• In 2014, all health insurance plans will be required to offer a new federal essential benefit package. “Grandfathered” plans will be exempt.  The essential benefit package will provide a comprehensive set of benefits, including Ambulatory patient services (i.e. outpatient services), emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services (including behavioral health treatment), prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services and chronic disease management, pediatric services (including oral and vision care). In addition, the essential benefit package must cover 60 percent of the actuarial value of the covered benefits and limit annual cost-sharing to the current law HSA limits ($5,950/individual and $11,900/family).

• There are four levels of coverage specified in federal law: Bronze, Silver, Gold, and Platinum. Each level requires the plan pay for a specified percentage of costs: Bronze (60% actuarial value), Silver (70%), Gold (80%), Platinum (90%).

• “Bare-bones” refers to insurance policies that offer minimal benefits at a low cost.  There is no bare-bones policy under the new law effective 2014. All individuals must carry a health insurance policy that meets the requirements of essential minimum benefits package, unless he or she has a grandfathered plan. However, individuals under 30 years and not using the tax credit to obtain coverage can enroll in a catastrophic plan to satisfy the individual responsibility requirement. A catastrophic plan must cover essential health benefits and at least three primary care visits, but must require cost-sharing up to the Health Savings Account out-of-pocket limits.   However, a catastrophic plan is not minimum essential coverage and therefore cannot be offered by an employer to meet health coverage requirements.

• Actuarial value is an estimate of overall percentage of medical expenses that a plan is likely to cover.  For example, an actuarial value of 60 percent means that a plan is estimated to pay 60 percent of covered medical expenses.  An individual’s personal experience might vary from this estimate.

• The Patient Protection and Affordable Care Act provides a Small Business Tax Credit to eligible small businesses for contributing toward their workers' health insurance premiums. This new credit is specifically targeted for those with low- and moderate-income workers. The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees. Learn more by browsing the IRS page on the Small Business Health Care Tax Credit for Small Employers.
• Beginning in 2014, the tax credit increases to up to 50 percent of the qualified small employer’s contribution to health insurance for employees purchased through the new Exchange.  There is also up to a 35 percent credit for small non-profit organizations.

• The IRS provides a checklist to determine if a small business is eligible for the tax credit. Additionally, the IRS explains the tax credits further here.

• Employers with more than 50 employees who DO NOT offer insurance to their employees, but have at least one employee who receives a federal tax credit  through the new Health Benefit Exchange (link) will be required to pay a penalty of up to $2,000 per employee for each employee over 30 employees.
• Employers with more than 50 employees who DO offer insurance to their employees, but have at least one employee who receives a federal tax credit  through the new Health Benefit Exchange will be required to pay the lesser of $3,000 for each employee receiving tax credits OR $2,000 for each full-time employee.
• *The term “free rider” is an economic concept that refers to the problems that develop when everyone does not pay their fair share for public services.  The federal health care law is based upon the principle of shared responsibility in which individuals, families, employers, health plans all contribute to the system.

• Full-time employees are defined as those working at least 30 hours a week. Additional federal guidance is expected on how to calculate full time equivalents for employees who are not paid on an hourly basis.  Businesses can employ over 50 employees (including part-time, seasonal and full-time) and not be counted as such as long as they don’t work longer than 120 days out of the calendar year. Seasonal workers are counted as full-time employees (for the purposes of determining whether a business employs 50 or more employees) if they work more than 120 calendars days in the year. Part-time employees are counted as “full-time equivalent” employees by dividing the total number of hours of service of employees who are not full-time employees for the month by 120.

• The free-choice voucher provision requires employers that offer coverage to their employees to provide a voucher to employees with income less than 400 percent of the federal poverty level, whose share of the premium is 8-9.8 percent of their income and who choose to purchase coverage through Exchange. The voucher must be equal in value to what the employer would have contributed otherwise to the employee’s health care coverage. Unlike the free-rider provision that requires employers to pay a penalty if employees get premium subsidies in the Exchange, employers providing free choice vouchers will not be subject to penalties.

• No, there is nothing in the new federal law that requires an employee to accept health coverage their employer offers. An individual could receive health benefits through a spouse or through the Exchange.
• Employers with over 200 employees are required to automatically enroll their employees in their health insurance coverage, but the employee may opt out.
• Individuals will be responsible to maintain health coverage and will be subject to penalties if they cannot show proof of insurance or documentation that they qualify for an exemption.

• A full-time equivalent is determined by dividing the total hours for which the employer pays wages to employees during the year (but not more than 2,080 hours for any individual employee) by 2,080. See the IRS Web site’s FAQs with regard to additional information on determining full-time equivalents for the small business tax credit.

• Seasonal workers are not used in the calculation of full-time equivalent employees for purposes of the tax credit if the worker works for the employer on less than 120 calendar days during the tax year. If the employee works more than 120 days, they will be counted towards full-time equivalents.

• Average annual wages are determined by dividing the total amount of wages which were paid by the employer to employees during the taxable year by the number of full-time equivalent employees.

• The Patient Protection and Affordable Care Act contains a number of provisions and incentives designed to expand the number of doctors, nurses and physicians assistants. In 2010, the Patient Protection and Affordable Care Act provides $250 million nationwide to boost the supply of primary care providers in this country by providing new resources for:
  • Creating additional primary care residency slots
  • Supporting physician assistant training in primary care
  • Increasing the number of nurse practitioners trained
  • Providing States with resources to plan for and address health professional workforce needs
  • Expanding tax benefits to health professionals working in underserved areas
  • Building primary care capacity through Medicare and Medicaid
  • Making health care education more accessible and providing financial assistance for students

  To learn more, visit the Strengthening our Health Care Workforce page.

• The Health Care Reform Workforce Workgroup, chaired by Office of Statewide Health Planning and Development and The California Workforce Investment Board, will focus on the health training and workforce development provisions in Title V of the Patient Protection and Affordable Care Act. To learn more, check out the Strengthening the Health Care Workforce page.

• The guaranteed Medicare benefits you currently receive will remain the same. Medicare will continue to cover your health costs the way it always has, and there are no changes in eligibility. 
• If you enter the Part D “donut hole” or coverage gap this year, you will receive a one-time, $250 rebate check if you are not already receiving Medicare Extra Help. 
• In 2011, if you reach the Part D coverage gap, you will receive a 50 percent discount when buying brand-name prescription drugs.  Over the next 10 years, you will receive additional savings until the coverage gap closes. 
• For more information, check out the federal Medicare and the New Health Care Law Factsheet.
• If you need help with your Medicare coverage, visit the federal Medicare website or call 1-800-MEDICARE,

• No, Medi-Cal eligibility rules remain the same for people who receive SSI/SSP.