America's $1.9 trillion COVID-relief act includes $22 billion to increase premium subsidies available to the millions who buy health insurance through the exchanges created by the Affordable Care Act.
The act helps the estimated 9 million people who already buy through health insurance exchanges more-easily afford their coverage and expands the number of people eligible for financial help from 18.1 million to 21.8 million, according to a recent analysis from the nonpartisan Kaiser Family Foundation.
Set to run through 2022, the funding increase impacts about 1.4 million Californians already covered by health plans from Covered California, the state's health insurance exchange. It also increases subsidies, or offers them for the first time, for about 1 million Californians who qualify for coverage but are not yet enrolled or have plans outside the exchange.
Peter Lee, executive director of Covered California, said that premium savings, which will average $180 per month per household, require no paperwork for those already signed up.
"For the people that have coverage with us, they don't need to do anything," Lee said. "Their regular monthly premium notice that will come in late April will deliver the good news that their premiums have been lowered immediately."
Usually, the exchange accepts new enrollees only during its annual open enrollment period in the fall and early winter, also allowing people to join within 60 days of certain "qualifying life events" such as job loss, loss of employer health coverage, marriage, birth and adoption.
In recognition that the recovery act has caused the overall cost of coverage to drop across the board, Covered California announced a new open enrollment period for anyone who does not have employer coverage. Enrollment will continue through the end of the year, and anyone can visit coveredca.com to view plans and premium costs in their areas.
Affordable Care Act premiums are based on total household income and the age of the people covered by each policy.
In some cases, the savings can be dramatic. In California, individuals making between 138 percent and 150 percent of the federal poverty level — between $17,776 and $19,140 per year — will see their already-low premiums eliminated. Those making under that amount already qualify for Medi-Cal and thus are not allowed to buy exchange policies.
Those earning between 200 percent and 400 percent of the federal poverty rate — between $52,400 and $104,800 for a family of four — have a potential to see their premiums shrink significantly due to new lower caps on the maximum percentage of total household income that can be spent on monthly premiums.
For example, a San Diego family making $80,000 per year with adults age 40 and 39 and kids age 12 and nine would see the monthly premium for the cheapest silver plan available on the exchange drop 36 percent, from $519 to $332 per month. Premiums for the most-expensive silver plan would drop 16 percent, from $1,161 to $974 per month, Covered California confirmed in an email.
A couple age 60 and 62 making $65,000 per year would experience decreases 6 percent to 20 percent for silver plans, which cover 70 percent of health care costs. The cheapest silver plan drops from $409 to $324 per month and the most-expensive from $1,290 to $1,204.
The new federal subsidy expansion also caps health care expenditures at 8.5 percent no matter how much money a household makes. Any costs beyond that percentage necessary to buy the second-cheapest silver plan in a resident's home market are covered by a subsidy.
Previously, subsidies were only available to those earning up to 400 percent of the federal poverty rate. That's anything beyond $51,040 for an individual, $68,960 for a couple and $104,800 for a family of four.
Capping premium expenses at 8.5 percent for higher earners eliminates what some call the "subsidy cliff," a phenomenon where, for some residents, subsidies evaporate if enrollees' incomes exceed the 400 percent limits by even one dollar.
The state already offered extra help to certain types of consumers earning above the 400 percent limit, but those benefits have been increased and more broadly applied, meaning that someone earning solid middle-class wages who qualified for little premium help under the old rules may now see their premiums reduced by more than $100 per month.
Lee said the savings are significant enough that Covered California is launching its own television ad campaign to hopefully entice people who are not covered, or who buy their policies outside of the exchange because they previously earned too much to get a subsidy, to check out the new rates.
"Our job is to get every Californian that doesn't have employer-based coverage to check and check again because it is such big savings," Lee said.
This story originally appeared in San Diego Union-Tribune.
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