Those who drifted away from buying Covered California health insurance policies in 2019 because Congress dropped the tax penalties for going uninsured will face an entirely different situation in 2020.
That's because the state Legislature, expressing concern that allowing some to skip coverage could eventually cause premiums to increase, decided in June to mandate coverage. It instituted statewide penalties very similar to those in the Affordable Care Act before Congress removed them in 2017.
So under the new rule, anyone in California who goes without health insurance in 2020 will be subject to penalties that can total more than $2,000 per family. The main difference is that the new fines will be assessed on Californians' state income tax filings in 2021 instead of their federal returns as was the case from 2014 through 2018.
While many may be upset that their state representatives have decided to undo what their federal representatives did, there is a sweetener designed to make coverage more affordable. It is targeted at Californians who previously had household incomes too high to qualify for federal premium subsidies.
The new state-level subsidies will be available to individuals earning about $50,000 to $75,000 in modified adjusted gross income, and between $103,000 and $155,000 for a family of four.
Those in this income bracket will receive an average of $172 per month in premium assistance, an amount that is expected to shrink premiums by about 23 percent. The health exchange estimates that about 235,000 Californians in the individual market --- those who don't already receive health coverage from an employer — will newly qualify for financial help.
Federal subsidies will still help defray costs for those who earn between $25,000 and $49,000 annually for an individual, and $51,000 to $102,900 for a family of four. An additional state subsidy, granted on top of federal payments, of up to $15 per month will be granted to this group. That additional revenue is expected to reduce out-of-pocket premiums by about 5 percent.
Peter Lee, Covered California's director, said that no one should underestimate the changes that are taking place this year.
"These policies from the state are, I would say, the biggest changes we've seen, in many ways, since our first year of operation," Lee said.
Statewide, rate increases for 2020 are estimated to increase just 0.8 percent over 2019 premiums. Lee estimated that in San Diego County, it will be just 0.2 percent. But these are also just averages.
The eight different plans offered by Covered California in the county will see a range of premium changes: from a 15.7 percent percent decrease for some plans offered by Sharp Health Care, to an 18.2 percent increase for some Molina Healthcare customers.
In San Diego, the McLane family found out in September that their bronze-level Kaiser plan will be in the upper end of the range. The family was notified that their monthly premium will jump 11.4 percent -- from $1,281 per month in 2019 to $1,428 in 2020. While a significant federal subsidy brings that amount down to about $670, it's still a large-enough chunk of change that Adam McLane and his wife, Kristin, again find themselves looking south.
When interviewed last year, the couple said they were seriously considering moving their coverage to a Mexican health insurance company or simply paying out-of-pocket for care in Tijuana. That thought is even stronger now with the latest looming increase.
The family stuck with its Kaiser plan in 2019, Adam McLane said, because they were so pleased with a specialist who helped treat a son's severe asthma. But those doctor visits are less frequent now that a better plan of care is in place. So that makes finding coverage in Tijuana, where costs are much, much cheaper, very appealing.
Already, McLane said, the family has been filling prescriptions at a CVS drug store in Mexico with much cheaper prices.
Noting that the family out-of-pocket maximum for his bronze Kaiser plan has now hit $15,600 per year, McLane said paying the penalty for remaining uninsured in 2020 might be a better idea.
"What are we likely to do?" McLane asked. "Probably pay the premiums, hope we don't ever have to use it, and vote for a candidate that's for Medicare for All and against the individual mandate in the meantime."
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