What is the Affordable Care Act (ACA)?

Affordable Care Act Summary for Individuals and Families

Health insurance is getting more complicated and most people are confused about the Affordable Care Act or “Obamacare.” Here is a brief summary of how the Affordable Care Act will affect individuals and families not covered on a group health insurance policy.

Please keep in mind that changes to the Affordable Care Act are still possible and some details have not been finalized.

Grandfathered Status

If you started or changed your individual/family health insurance policy after the Affordable Care Act was signed on March 23, 2010 then you are on a non-grandfathered policy. Everyone on non-grandfathered policies will be forced to switch to a new Affordable Care Act policy effective 1/1/14.  If you are on a grandfathered policy that started before March 23, 2010 and you have not made any changes to it, then you do not have to change plans.  Check with your health insurance company if you are unsure about your grandfathered status.

Guaranteed Issue

All legal U.S. residents that apply for health insurance during the open enrollment period will be approved and no one will be charged more for pre-existing conditions.  These new policies start January 1, 2014.

Open Enrollment

There will be an initial six month open enrollment period for the new health reform plans starting October 1, 2013 and ending on March 31, 2014. In future years there will be a three month open enrollment period from October to December. During open enrollment you will be able to apply for a new policy or change to a different plan regardless of any pre-existing conditions. This is similar to the open enrollment period that group health insurance policies have.

Individual Mandate and Penalties

Everyone is required to buy health insurance.  Anyone that does not buy health insurance will be subject to a tax penalty. The 2014 penalty for not signing up for health insurance will be $95 or 1% of income, whichever is greater.  In 2015, the penalty goes up to $325 or 2% of income. In 2016, the penalty will be $695 or 2.5% of income.


Each state has an online health insurance exchange, in California the exchange is called Covered California www.coveredca.com.  The exchanges give individuals and families a second marketplace to shop for and buy health insurance.  The biggest advantage to buying a policy on an exchange is to take advantage of a premium subsidy.  If you qualify for a subsidy the only way to get it is to buy a policy through an exchange.   We can help you purchase your coverage through Covered California and it costs you the same versus going direct without our help.  Why not have experienced professionals help you with no cost to you?


Premium subsidies will be available to people making between 138% and 400% of the federal poverty level. For a single person 400% of the federal poverty level comes to about $46,000 per year and for a family of 4 it comes to $94,000 per year. You can go to the Covered California website www.coveredca.com now and take a look at the plans and rates and get estimates on subsidies.  We are Covered California certified insurance agents so we can help you determine if you qualify for a subsidy and apply for a plan on the exchange.  There is no cost to you for our help.

Purchasing Options

Starting October 1, 2013 individual and family health insurance policies can be purchased two ways, on and off the exchange. The Affordable Care Act requires insurance companies to offer identical plans and rates on and off the exchange, but they will also be able to offer additional plans with additional benefits off the exchange.  If you don’t qualify for a subsidy you will still be able to buy health insurance the same way you have in the past, off the exchange.   So regardless of where you buy your health insurance, we can assist you and make the process as easy as possible.

Please feel free to contact us if you need help with health insurance.  We can show you all your options and help you determine if you qualify for a premium subsidy, making make the process of applying for health insurance as easy as possible.


Here at Santa Barbara Health Insurance Services we know that no web site can substitute for courteous service from an experienced professional. Our staff is always happy to help with your California health insurance, California dental insurance, or term life insurance needs. Feel free to call us any time at (800) 765-1540.