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Health Care Reform

Overview of the Health Care Reform’s (ACA) Affordable Care Act

On March 23, 2010 the Patient Protection and Affordable Care Act (PPACA) 2010 HR3590, or Affordable Care Act (ACA) for short, is the new health care reform law in America and is often called by its nickname Obamacare. The Patient Protection and Affordable Care Act is made up of the Affordable Health Care for America Act, the Patient Protection Act, and the health care related sections of the the Health Care and Education Reconciliation Act and the Student Aid and Fiscal Responsibility Act. It also includes amendments to other laws like the Food, Drug and Cosmetics Act and the Health and Public Services Act. Since being signed into law, additional rules and regulations have expanded upon the law. The new law impacted the Individual Plan Marketplace from the date of passage and mostly impacted All Health Plans since January 1st 2014.  Individuals and ALE Applicable Large Employers are subject to the Individual / Employer Shared Responsibility Provisions of the ACA also known as the ACA Mandate.  Those who do not comply with the ACA Mandate will pay a Penalty Fee.


The New ACA Qualified Health Plans

The ACA requirements began in 2014 for All New Individual and Small Group Plans to have certain Qualified Health Plan Standardizations across All States.  California then passed a Law known as the Grandmother Option allowing Small Group Employers to extend their 2013 Plans until their 2015 Renewal to allow for more time.  The 3 Coverage Standards are Actuarial Value, Essential Health Benefits and Maximum Out-of-Pocket requirements.   Actuarial Values are arranged in 4 Tiers by the percentage of total average costs they cover for specific benefits as illustrated below.   

Coverage Tiers

Actuarial Value Levels

Benefits required

Required limitations


90% (+/-2% = 88%-92%)

Essential Health Benefits

Maximum Out-of-Pocket


80% (+/-2% = 78%-82%)

Essential Health Benefits

Maximum Out-of-Pocket


70% (+/-2% = 68%-72%)

Essential Health Benefits

Maximum Out-of-Pocket

Bronze Minimum Value

60% (+/-2% = 58%-62%)

Essential Health Benefits

Maximum Out-of-Pocket

 There is an exception for Individual Plans for individuals under age 30 and financial hardship which has a 5th class called Catastrophic.  


All Individual and Small Group Plans must meet Maximum Out-of-Pocket 2020 Requirements.

  • Out of Pocket Maximum $8,150/yr. for Individual
  • Out of Pocket Maximum $16,300/yr. for 2 or more


Adjusted Community Rating

The Rates for All Plans have changed to what is called Adjusted Community Rating. 

Rating Factors

2013 and Prior

2020 and Beyond

Risk Adjustment Factor

.90 to 1.10 factor (small group only)

1.0 to 2.0 factor to declination

No risk factor


Varies by Carrier: Employer or Individual Zip Code

Employer Zip Code   /   Individual Zip Code

Rating Areas

9 rate areas

19 rate areas

Age Rating Ratios

No ratio rules but it is about 6 to 1

Ratio Rule is 3 to 1

Employee Rates

9 age banded rate brackets                (5 to 10 year bracket)

46 age banded rates   (age 21 - 64, > 65) (15 - 25 adult child) (<14 youth child)

Family Rates

4 tier age banded rate brackets

Each Member is rated

Family Rating Tiers

Member only

+ Spouse (based on EEs age)

+ Children (1 or more)

+ Family (Spouse and Children)

Member only

+ Spouse (based on their age)

+ Each Older Child (15 - 25)

+ Each Younger Child (under 15 up to 3 max)

Age changes

Rate will change if EE enters a new rate bracket

Rate will change at each renewal date.



Since October 1st 2013 an additional New Marketplace was opened to accept Individuals and Small Business Groups.  See the comparison below for the difference between the Traditional Open Market to the New Marketplace called Covered California.


What are the differences?



Off Exchange

?         Current way to purchase your 

Individual and Small Group Health Plans

?         Open Market Health Plans are different from CoveredCA

?         Open Market Plans can be purchased from JIA Insurance  




On Exchange

?             Additional Away to purchase your 

Individual and Small Group Health Plans

?         CoveredCA Health Plans are different from Open Market

?         CoveredCalifornia can be purchased from JIA Insurance


The differences from the Covered California Market?

?       Additional Health Plans will be available from the Health Insurance Carriers not offered in Covered California

?       Individual and Employer Tax Credits will not apply to the Open Market Plans

The differences from the Open Market?

?       Additional Health Plans are not available and is only offered in the Open Market.

?       Individual and Employer Tax Credits will only be applied to Covered California Market Plans.*

For more information about Individual and Employer Tax Credits go to:

 ACA Affordable Care Acts Individual Tax Credits Information 

 ACA Affordable Care Acts Employer and Employee Information 


Contact me if you have questions about any affordable Individual and Group Plans or to obtain a Quick Quote from my Website here at www.jiainsuranceservices.com



James I. Aoki

 Insurance Brokerage Services

Independent Insurance Broker 39 years

   805 962-2277 Office      805 962-9928 Fax

Email:  jim@jiainsuranceservices.com