Individuals may want to reconsider Covered CA

As the saying goes, Nothing is so constant as change!” This year is no different. There are many changes relative to health insurance in California for 2020.

Readers may recall that the Federal government issued a statement that they would not enforce the individual health insurance mandate in 2019. However, the State of CA passed legislation requiring that individuals have health insurance for 2020. Non-compliance will result in penalties similar to those that we saw in the Federal rules. The penalty for an individual without insurance is the greater of $695 per adult ($347 per child) or 2.5% of annual household income. The good news is that the State of CA is offering additional subsidies for those that purchased coverage through Covered CA, also known as the Exchange.

Under Federal rules the subsidies drop to zero if the applicant’s income is even $1 over the threshold. The Federal threshold is 400% of the Federal Poverty Level (FPL). In 2020 that number will be $49,460 for an individual, $67,640 for a couple and $103,000 for a family of four.

The state of California will supplement those subsidies for taxpayers with higher incomes, up to 600% of Federal Poverty Level. The formula is complicated, so the best way to determine if you might qualify is to visit www.coveredca.com and look at the Shop and Compare site. Be very careful to insure that you are on the actual website, not some advertising redirect. We are told that the estimator will be live for the public on 10/1/2019.

The income thresholds to qualify for the additional help from the State are $74,940 for an individual, $101,460 for a couple and $154,500 for a family of four. To qualify, the coverage must be purchased through Covered CA.

These additional subsidies may make it attractive for an “off-exchange” insured to consider reapplying through the Exchange.

It’s important to note that if you currently have coverage and wish to apply through Covered CA, you will need to terminate the off-exchange coverage. New ID numbers will be issued for the Exchange coverage and there will not be coordination at the insurance carrier. If “off-exchange” coverage isn’t cancelled prior to 12/31, an individual could end up paying double premiums.

We have run a few sample calculations and the greatest benefits seem to be to older folks. For example a 60 year old single person with income of $60,000 would pay $880 for the lowest cost plan off the Exchange. But on-exchange the same plan would cost $297. A couple age 60 with combined income of $80,000 would pay $68 monthly for the same plan. The state estimates that 922,000 individuals will qualify for the additional state subsidy, about 25% of which are middle income Californians who don’t receive any federal help.

There are some tricky components of the calculation that could still give off-exchange coverage a lower premium. That is why it’s important to have a solid estimate of your 2020 taxable income and check the Covered CA website for the estimator.

Individuals currently covered on the Exchange may have already received a “consent for verification” request. This allows Covered CA to verify the taxpayer’s income. It’s important that this be granted or coverage could be cancelled.

Active renewal for those currently covered will begin 10/8/2019 and ends 12/15/2019. Open enrollment for new participants starts 10/15 and currently ends 1/15/2020. New members must submit a binder payment with the application. Renewing members will only submit binders if they change carriers.

It’s important to remember that one must file a tax return to be eligible for subsidies. If no return is filed, enrollees may have to pay back the entire subsidy to the IRS.

These new state subsidies could be very valuable to individuals and families who do not have group insurance, so it is well worth checking out.

Press Release

-from press release

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