The Affordable Care Act is rolling out its health insurance program beginning October 1, 2013. This article explains how California real estate agents can get the most out of the program.

About the new health care law

The federal Affordable Care Act will extend insurance coverage to about 25 million people over the next ten years. In California, every resident will have access to health insurance beginning January 1, 2014. Open enrollment for health insurance exchanges across the country begins October 1, 2013.

But does everyone have to acquire health insurance?

Yes, unless exempt. For those without health insurance in 2014 (specifically those who go without insurance for longer than three months in 2014) a penalty will be assessed when filing a tax return. This penalty will increase each year through 2016:

  • In 2014 the penalty will be 1% of the household’s modified adjusted gross income (AGI) or $95, whichever is greater.
  • In 2015 the penalty will be 2% of income or $325, whichever is greater.
  • In 2016 the penalty will be 2.5% of income or $695, whichever is greater.

The following individuals are exempt from compulsory purchase of health insurance:

  • those whose health insurance would cost more than 8% of their income;
  • those below the income threshold for filing taxes ($9,750 for a single-filer and $27,100 for joint filers with two children as of 2012);
  • those with religious exemptions;
  • undocumented immigrants;
  • incarcerated individuals; and
  • Native American tribe members.

Options for Californians

In order to assist those required to obtain health insurance, each state has developed a healthcare exchange to coordinate all of the healthcare options for their residents. California’s exchange is Covered California.

Our state’s exchange offers three solutions for those concerned about the costs of maintaining an insurance plan. California residents must enroll in healthcare through Covered California in order to claim any of the following cost-cutting programs.

  • Tax credits are an option for those who meet certain income requirements* and don’t qualify for insurance under their employer (like most brokers and agents). The tax credit is available even if the individual does not owe income taxes and is applied immediately to lower monthly premiums.
  • Cost-sharing subsidies lower the out-of-pocket expense of obtaining medical care. Individuals and families with incomes below roughly 2.5 times the federal poverty level are eligible.
  • Medi-Cal is free and (beginning in 2014) includes individuals under the age of 65 who are disabled with AGIs below specific amounts.**

Under the Affordable Care Act, health plans are standardized by levels:

  • bronze (which offers the lowest premiums and highest out-of-pocket costs);
  • silver;
  • gold; or
  • platinum (which offers the highest premiums and lowest out-of-pocket costs).

These standardized levels will assist individuals in shopping and comparing plans offered by different insurance providers.

In addition to the above standardized levels, Covered California, also offers catastrophic coverage if an individual cannot afford any level of health plan. This type of coverage insures the covered individual in the event of a medical emergency, but does not cover regular medical costs (like doctor visits).  Individuals 30 years old and under are eligible if they can prove that they lack access to affordable coverage. (Individuals under 26 can be covered under their parents’ plan).

In some cases, an individual switching to an insurance plan under Covered California can keep their same doctor. It depends on what insurances the doctor accepts and the type of new plan chosen.

How agents can get insured

The average cost of a 3-day hospital stay in California is $30,000, according to Covered California. So, coverage is important (not to mention required by law).

Uninsured agents and brokers can enroll in insurance privately, or through Covered California. All California residents are eligible to enroll in healthcare through Covered California. However, enrolling through Covered California mainly benefits those who qualify for the cost-cutting programs and are unable to obtain affordable health insurance through their employer or through another government program.

If you’re already enrolled in independent insurance (such as CAR’s affiliated insurance product, RealCare Insurance), then you do not need to do anything different. However, you can only receive a healthcare tax credit (lower premium) if you enroll through Covered California.

To apply for insurance through Covered California, you may enroll at any time between October 1, 2013 and March 31, 2014. After this enrollment window period, the next enrollment will open in October 2014. However, if you are eligible for Medi-Cal you can apply any time.

Options for small businesses

If you are a broker considering providing health insurance to your employees, there are a few facts to consider.

  • Employers with fewer than 50 full-time employees are not required to provide health insurance to their (full-time) employees.
  • For health insurance purposes, agents are not classified as employees as they are under California labor law and BRE regulations.
  • Employers who contribute at least 50% of the premium costs and have fewer than 25 full-time employees who earn less than $50,000 annually are eligible for tax credits through Covered California.

Again, employing brokers do not need to provide health insurance for their agents. However, providing more options can only help attract the highest-performing agents to your brokerage offices.

For more helpful information for businesses, see The Best ObamaCare Guide by Don Silver, available for download at Amazon.

An example

Under Covered California, a real estate agent in Los Angeles County who has an AGI of $50,000 a year with a spouse and two children qualifies for an Enhanced Silver Plan. Under this plan, they will pay a monthly premium of $189.

Under a similar plan under CAR’s RealCare Insurance, which partners with the same insurance company, the same family pays a monthly premium of $731.

A stark difference. The plan options vary considerably, so be sure to explore and get quotes on all options.

The good, the bad and the unaffordable?

It’s no secret that the Affordable Care Act was initially met with protest and dismay from many California real estate agents and brokers. These misgivings were due primarily to political philosophies, not studied information.

It’s true, there are a few financial and economic drawbacks to the new law:

  • insurance premiums in California will increase across the board an average of 14% in 2014, according to Covered California;
  • employers with fewer than 50 full-time employees who currently provide health insurance might begin dropping their existing plans; and
  • the cost of covering employees under the new law may cause employers to intentionally peak out below 50 employees, (or cut their full-time employees to part-time to avoid the health care requirements) stifling economic growth.


  • insurance premiums have already been increasing beyond the rate of inflation, rising an average of 9.5% for a family of four in 2011;
  • in 2013, the percentage of small employers offering health insurance remained statistically unchanged from the prior year; and
  • businesses with 50 or more employees do have to provide health insurance, but approximately 95% of these employers already do so anyway, according to the Kaiser Family Foundation.

Related article:

Kaiser Family Foundation: 2013 Employer Health Benefits Survey

Even so – like it or not – the changes are just around the corner.  So learning how to work with the new healthcare law is to your best financial advantage.

Related articles:

Health insurance changes are on the way

The healthcare tax: facts not fiction

How does the new healthcare tax affect my home sale?


*Tax credits are available on a sliding scale. Basically, the further below the limit you and your family are, the more tax credit you will receive and the lower your monthly premium. To find your exact tax credit, visit Covered California’s insurance calculator.

Household Size

Annual Income

Yearly Cost of Health Insurance (without government subsidy)

Yearly Federal Government Subsidy

New, Lower Cost of Health Insurance





$1,200 ($100 per month)





$8,400 ($700 per month)





$2,100 ($175 per month)

Table courtesy of Covered California
**To qualify for Medi-Cal, an individual must make less than $15,856. Or, a family of four must make less than $32,499.