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How will California's health care exchange work?

Peter Lee, Covered California executive director, will oversee implementation of the Affordable Care Act in California.
Peter Lee, Covered California executive director, will oversee implementation of the Affordable Care Act in California.
Peter Lee

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In just two weeks, residents of California will be able to begin shopping for health care coverage, and find out about subsidies and credits, at the state's new health care exchange.

It's part of the Affordable Care Act, better known as Obamacare. Officials have been working hard to get out the word about the program, known as Covered California.

RELATED: FAQ: Is Obamacare a good thing for California's small businesses?

But as the launch approaches, there's still a lot of confusion about what the exchange will do, and who can benefit from it. Joining us for some help, KPCCs health care reporter, Stephanie O'Neill.

An overview of the change

In two weeks, individuals can go on the Covered California website, a state-run marketplace for health insurance. 

"This is the open enrollment period, and it lasts through March. It's during this time you can get on to the marketplace and shop for different plans, and see what works for you," said O'Neill.

The plans will then take effect Jan. 1.

"Beginning Jan. 1, nearly every American must have health insurance or face an annual fine," she said.

The fine starts out around $95, and then it climbs to $700 in a few years.

There will be subsidies as well

Individuals who buy their insurance through the state-run exchange and make a certain income can qualify for these subsidies, which are basically upfront discounts.

Examples of people who qualify:

·      Individual who makes $46,000 a year

·      A family of four who makes $94,000 a year

What if you still can't afford it?

California is one of the states that has agreed to expand MediCal. So, if you make about $16,000 or less, you won't be required to purchase health insurance.

Who gets to buy insurance through Covered California?

Uninsured individuals and businesses will be eligible to buy health insurance through this new program. Also important to note: Small business, which are 50 or fewer full-time employees, will not be required to purchase health insurance.

Is it better than what's available?

It's not exactly clear. All the plans must have essential benefits, like free preventive care. Also, insurances can't turn you away or raise your rates if you have a preexisting condition. They also can't place annual or lifetime caps on the coverage they provide.

Flipside: One way that the insurance companies keep prices down is by narrowing the provider network in the plans offered by the state-run marketplace. BlueShield, for instance, has announced that Covered California customers will not have access to its full, robust physician network that you would have otherwise.

"So, you want to make sure to find out, before you buy insurance, whether your doctor and your hospital are on the plan you're looking at," said O'Neill. 

With contributions from Nuran Alteir