Affordable Care Act: The Patchwork Quilt of Coverage

One thing the Patient Rights and Affordable Care Act (Health Care Reform) did was expand coverage to Americans. Some of those provisions have already gone into effect. People can stay on their parents’ coverage until age 26; people cannot be turned down for existing medical conditions, and the law makes it harder for insurance companies to find pretexts for ending coverage to a premium payer who develops a medical condition and might cost the company some money.

All of those are good things for people who already had coverage. One of the abiding problems in America, though, is that of people with no coverage.

The simplest solution, everyone knows, would be  a system like Canada has, where the government provides a minimum level of health insurance for everyone. People who want so-called “Cadillac plans” can still pay for them, but everyone gets basic medical. Of course, this well-tested model is not available here, so instead the bill provides a patch-worked model of coverage. I’m using that term descriptively, not pejoratively.

Low Income:

Medicaid already provides medical coverage to low income children and parents, disabled adults and people over 65. Medicaid is a federally funded program that is available in all 50 states. The programs differs from state to state in what is covers.

With the ACA, Medicaid will be expanded to include people whose adjusted annual income* is less that 133% of  federal poverty level (FPL). This will include childless adults.

In case you’re wondering how much that is:

2012 FPL for 1 person  = $11,170

133% of FPL for 1 person = $14,856

2 people = $15,130            133% =$20,123

3 people = $19,090           133% = $25,390

The 2012 FPL is available here.

Working Poor and Working Class:

People who have annual income that is higher than 133% of FPL, up to 400% of FPL, may qualify for premium tax credits ( these credits can be paid in advance).  The government set a specific tax credit amount, which is determined by using what’s called a “silver” coverage plan in their area (a “silver” plan pays at least 70% of covered benefits). The credit amount is the difference between that premium amount and the percentage set below.

Individual with income:

–between 133% and 150% of FPL will not pay more than  3-4% of income for premiums

Betweeen 150-200% of FPL                                   4-6.3% of income for premiums

Between 200-250% of FPL                                    6.3-8.05% of income for premiums

Between 250-300% of FPL                                    8.05-9.5% of income for premiums

300-400% of FPL                                                       9.5% of income for premiums

Confusing? Yes. Here’s an example, courtesy of the Kaiser Family Foundation benefit calculator:

I’m a 40 year old making $17,000/year. No insurance is provided through my employer.

The premiums of the 2nd cheapest “silver” plan in my region would be $5,609 annually. I am required to pay 4% of my income toward premiums, so I’ll pay $690/annually. My tax credit (and I can get it in advance) will be $4,918.

Kaiser Family Foundation has some great fact sheets on Health Care Reform. Check them out.

Employers are required to provide health benefits, and there are tax credits available also to small business to defray this expense. Employers grumble about having to do this, and I predict we definitely  will see some big companies lay people off and reduce people’s hours to work around the law. That won’t be all of them. Smart businesses and employers will figure out pretty quickly that if they band together they have incredible purchasing power in a field that is going to  become more competitive.

But I Don’t Have Coverage!

This is where those “Exchanges” come in. Some states chose to set up their own Health Exchanges, who will provide information about low-income health coverage. Other states have declined to exercise this right and are waiting for the Federal Government to do it for them.

California already has an Exchange Board. They are looking at a toll-free number and online access and will provide data on private insurance, federally subsidized coverage and Medicaid (called Medi-Cal in California). For people who appear to qualify for Medi-Cal, the Health Benefit Exchange will immediately transfer the call or the inquiry to the appropriate California county to process the application. People who are applying for Medi-Cal will be able to look at information about low-cost private insurance at local county human services departments. California’s slogan for this is, “No Wrong Door,” but several counties have modified that slightly to, “All Doors Lead to Coverage.”

Early enrollment for these programs is supposed to be available in California in October, 2013. I won’t be holding my breath, but in many counties there is already an expanded Medicaid program available through the Low Income Health Plan. Call your local human services department to find out more information.


This is an intricate and elaborate way to offer coverage to more Americans, and certainly government health care would be simpler and probably more efficient. Still, this is what we have and it has the benefit of allowing people different choices. A patchwork quilt can be just as warm as a polar-fleece lap-throw, after all.

 * Often when you read or hear about the FPL percentage for expanded Medicaid, you will hear “138%.” This is an oversimplification. The formula uses an IRS methodology called Modified Adjusted Gross Income (MAGI). Then the ACA gives a 5% discount off the income. If that discounted amount, 95% of the person’s annual adjusted income, is less than 133%, they qualify. It is easier to do than it is to write out, but careless people have morphed that into 138%.



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