In summary
Covered California has $ 3 billion in federal aid for people who are signing up this year or already are. Savings could be hundreds of dollars a month.
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Californians enrolled in health coverage this year will qualify for substantial savings as $ 3 billion in federal aid comes into play, even for people not currently receiving subsidies.
Covered California, the state’s insurance marketplace, today opened a special enrollment period that allows individuals to sign up for and use designated COVID-19 federal aid dollars for help with health coverage. This money is in addition to subsidies that have already been provided to some low- and middle-income Californians through the Affordable Care Act.
Households already receiving some help could save a couple hundred dollars more on their monthly premiums. Plus, people who currently pay full price for insurance could get roughly $ 700 in savings a month, said Covered California CEO Peter V. Lee.
Experts expect this increase in aid to translate into a significant drop in the number of Californians living without health insurance, especially once the word gets out.
“This is great news for middle-class Californians who pay huge checks to insurance companies,” Lee told CalMatters. Affordability, he said, is the number one reason people go without health coverage.
The new aid, part of the American Rescue Plan, makes the grants available to many more Californians. Covered California estimates that about 2.5 million people will benefit from the new and expanded aid. That includes some 810,000 people currently uninsured.
“This is great news for middle-class Californians who pay huge checks to insurance companies.”
peter v. Lee, CEO of Covered California
For individuals who wish to enroll, their coverage can be effective as of May 1 if they enroll before the end of April. People will be able to register for the rest of the year. However, this enhanced federal aid has an expiration date – it will run through the end of 2022.
For people who are already enrolled in a health plan through Covered California, their share of out-of-pocket will be adjusted automatically; They should see savings starting next month.
Federal law expands eligibility for federal assistance and sets a maximum for how much of their own money families and individuals can spend on health coverage: 8.5% of their income.
For example, for a household with $ 70,000 in annual income, your health insurance cost would be limited to $ 5,950 per year. A household making $ 200,000 per year would not have to pay more than $ 17,000 per year for health insurance.
“The American Rescue Plan limits the subsidy to amounts greater than 8.5% of household income, so for a millionaire it would be premiums greater than $ 85,000 (per year) and American medical care is expensive but not so expensive, Joseph Newhouse , a professor of health policy and management at Harvard University, said during a press call with Covered California.
Previously, households with incomes above the 400% federal poverty level (approximately $ 51,040 for an individual or $ 104,800 for a family of four) were not eligible for federal assistance. Those families and individuals often buy their health coverage directly from insurers, but now those same people can pay part of their premium cost if they go through the state exchange.
Last year, California became the first state nationwide to offer assistance to middle-income residents who were earning too much to qualify for federal subsidies. The state raised the threshold for income assistance to 600% of the poverty level. Lee said about 50,000 more Californians signed up for coverage through the state market when that assistance came online.
The new federal grants will be greater than those provided by the state and will replace state aid. Now “California doesn’t have to write the check,” Lee said.
The new federal grants will be greater than those provided by the state and will replace state aid.
According to the state Department of Finance, it may take about a month before the state knows exactly how this will be reflected in the state budget.
California has wholeheartedly embraced the ACA and passed several laws to improve the health law. In addition to creating its own subsidy cube, it also created its own tax penalty when the previous administration eliminated the federal one. Surveys and polls have shown that forcing people to have health insurance through a fine is unpopular, but Lee and other insurance market experts say it pushes people to enroll.
LA Care Health Plan, which serves Los Angeles County, has about 100,000 people enrolled through Covered California. Lower-income people who are just above the threshold to qualify for Medi-Cal could see their share of the premium cut to near zero, said John Baackes, LA Care Health Plan CEO.
The vast majority of LA Care enrollees “were receiving some type of subsidy, but none had a $ 0 payment,” Baackes said.
During 2020, as many people lost their jobs during the pandemic and with it their employer-sponsored health insurance, more people fled to Covered California and Medi-Cal, the state’s health insurance program for low-income people.
Historically, people leave Covered California because they get coverage through a job or become eligible for Medi-Cal. Typically, about 10% of those who drop out are left without insurance, Lee said. Last year, that number grew: About 25% of those who left Covered California lost coverage entirely.
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