The Challenge of Getting Affordable California Health Insurance

by John Hansen

The Challenge of Getting Affordable California Health Insurance

When Employee-Only Coverage = “Affordable”, High Dependent Costs Often Make Insurance Un-Affordable

How can I get affordable California health insurance for my dependents? Due to Obamacare’s definition of “affordable”, often it’s difficult for employed families in California to achieve true affordability in health care.

Some have called it a glitch in the Affordable Care Act (ACA). When an employee has “affordable” employee only coverage, this disqualifies the spouse and children from getting subsidized government health insurance on the exchange.

Affordable = 9.5% of Employee Only Income

If the employee only coverage is less than 9.5% of the household income, then no one in the family qualifies for a government subsidy. Many times when you add in the health insurance California premiums for the spouse and children, the cost of coverage is anything but affordable.

However, since the employee technically has “affordable health insurance coverage”, the spouse and children will not be able to get a subsidy. Employers of small businesses are not required to contribute toward the coverage of dependents. This can create a serious financial burden for California families.

No One Wants to Pay for Dependent Health Insurance Coverage

The 9.5% affordability definition was designed to put pressure on businesses to pay for dependents, so the government did not have to pick up the tab. However, many small businesses feel that they cannot afford the cost either, so they are not responding to this pressure.

The result is that employed low income families are having a hard time finding affordable California health insurance. Instead of getting support from government health insurance (like Covered California or Medi-Cal) or their employers, they are left to shoulder the burden of heavy health care costs for dependent coverage.

According to President Michael Lujan, of the California Association of Health Underwriters (CAHU), “This is not a glitch.” It’s a problem, but not a glitch. The political leaders who designed the Affordable Care Act understood the incredible burden paying for dependent coverage, and decided that they could not afford that cost. According to Lujan, “It would blow up the budget.”

Could a 1332 Innovation Solve the Affordability Problem?

At this point there is no hope in sight. Some suggest that the State Congress file a 1332 innovation to remedy this. However, that becomes very difficult due to the restrictions of the 1332 innovation waiver:

  • The waiver cannot reduce health insurance coverage.
  • The waiver cannot reduce the number of insured.
  • The waiver cannot add to the federal budget.

Top leaders in government and health care are not seeing any way to remedy this situation without adding to the federal budget. This means to achieve affordable California health insurance for dependents, the state would have to look to Washington D.C.

What if the business stopped offering health insurance to dependents?

If the employer is willing, this can solve the problem. If a small business offered California group health insurance through Covered California, the employer would have the option of not offering coverage to dependents. Since the dependents are “not offered affordable health insurance”, then they might qualify for subsidized government health insurance through Covered California or low cost/free coverage through Medi-Cal.

What if we got legally divorced?

Unfortunately, the difficulty in getting affordable California health insurance has led consumers to consider more extreme non-standard remedies such as getting a divorce. If a couple legally divorced and filed taxes separately, then the 9.5% affordability definition would not apply to the dependents. The unemployed spouse could claim the dependents so they would no longer be legal dependents of the employed spouse. Then, the unemployed spouse and dependents could get subsidized or free government health insurance through Covered California or Medi-Cal.


Not sure how Obamacare affects your health care plans in California? Learn how the ACA works in California, including benefits, costs and enrollment.

Covered California is the Golden State’s official health exchange marketplace where individuals, families and small businesses can find high-quality, low-cost California government health insurance.

Learn about Obamacare income guidelines in California using our income limits chart, and see if you’re eligible for government assistance.

Learn about the Covered California website. Find easy online enrollment. Set up your account, log in, buy insurance and more on the California health marketplace website.