California: CoveredCA announces 486,000 enrollees receiving expanded/enhanced state subsidies!

Moments ago, Covered California, the nation's largest state-based ACA exchange, released data via a media teleconference regarding the 2020 Open Enrollment Period.

In addition to being the largest ACA exchange after HealthCare.Gov, this info from Covered California is especially significant for the 2020 OEP due to their newly expanded/enhanced premium subsidies.

To recap: Under the ACA, financial subsidies are available to exchange enrollees earning between 100-400% of the Federal Poverty Level (FPL). That's between around $12,500 - $50,000/yr if you're a single adult, or between $25,000 - $100,000/yr for a family of four. Under the standard ACA formula, enrollees in that income range have their premiums capped at no more than around 2.0 - 9.8% of their income, on a sliding scale.

Unfortunately, this means that people earning more than 400% FPL are eligible for no financial assistance at all, a sudden drop-off known as the Subsidy Cliff.

California is partially resolving that problem this year by adding their own subsidies for people earning between 400-600% FPL...and is also slightly beefing up the assistance for those earning less than 400% FPL.

Via the press release:

Nearly Half a Million Consumers Have Already Qualified for New State Financial Help to Buy Health Insurance; Californians Are Urged to See If They Are Eligible Before Sunday’s Key Deadline

  • With a key open-enrollment deadline coming up, Covered California announced that 486,000 people will receive new state subsidies that will make quality health care coverage more affordable in 2020.
  • In addition, more than 130,000 people have newly selected a plan during this year’s open-enrollment period — up 16 percent over last year.
  • Covered California is the only place where people can see if they qualify for federal tax credits and new state subsidies to lower the cost of their coverage.
  • Consumers must sign up by Dec. 15 to have health care coverage starting on Jan. 1.
  • Covered California is working with the Franchise Tax Board to make sure Californians know that they may have to pay a penalty in 2020 if they can afford insurance but choose to go without coverage.

SACRAMENTO, Calif. — With just four days left until a key deadline, Covered California is urging all Californians to see if they qualify for financial help to buy health insurance. Nearly 500,000 people have benefited from the new state help to lower their monthly premiums.

“Nearly half a million Californians have already signed up and will benefit from new state subsidies in 2020, including tens of thousands in the middle class who are eligible for help for the first time,” said Covered California Executive Director Peter V. Lee.

“We have a key deadline coming up, and we want to tell everyone — whether you need health insurance or know someone who does — that now is the time to see if you are eligible for this new money so you can ring in the New Year with a quality health plan.”

The announcement comes as the first of Covered California’s key deadlines approaches. While Covered California’s open-enrollment period runs through Jan. 31, 2020, consumers must sign up before the end of Sunday, Dec. 15, if they want their coverage to begin on Jan. 1.

Lee said the new state subsidies and the restoration of the individual mandate penalty are key reasons why this year’s new plan selections are up 16 percent over last year, with 133,092 plan selections through Dec. 7, compared to 114,306 for the same time period a year ago. In addition, more than 1.13 million existing consumers have had their plans renewed for the upcoming year. Covered California is still processing its renewals and will have a full accounting at the end of open enrollment.

That means at least 1,263,092 QHP selections total for 2020 to date.

More than 486,000 individuals have been determined eligible for the new state subsidy, including about 23,000 in the 400 to 600 percent range of the federal poverty level, which could extend to an individual making up to $74,940 and family of four with a household income of up to $154,500. Of those in this income range who have signed up through Covered California, 44 percent have been found eligible for the state financial assistance.

OK, so 23,000 are in the "expanded" category; the other 463,000 are in the "enhanced" category.

On the teleconference, Peter Lee says that many of the 23,000 middle-class enrollees are people who were already enrolled at full price but who are now eligible for the new subsidies.

If I'm following correctly, the total breakout is:

  • 777,000 = either 138 - 200% FPL or not eligible for any subsidies
  • 463,000 = 200 - 400% FPL; receiving both federal & state subsidies
  • 23,000 = 400-600% FPL; receiving state subsidies only

I should also note that according to CoveredCA's original analysis, they were hoping that to have perhaps 184,000 newly-subsidy-eligible enrollees in the 400-600% FPL range, plus another 615,000 in the 200-400% FPL range by the time Open Enrollment ends...but they still have seven weeks, so the numbers above don't mean that much yet. I should also note that this was based on the original expanded subsidy formula; the final version is more generous, so presumably they're hoping to have more in each category when the dust settles, though I haven't seen the updated projections yet.

These numbers appear to be as of December 7th. FWIW, last year Covered California enrolled a total of 1,513,883 people by the January 31st deadline; their all-time record was back in 2016 when they enrolled 1,575,340. They'll need to add another 251,000 between 12/07-1/31 to beat last year's total, or at least 313,000 to beat their all-time high.

“This is great news, and Californians are benefiting from these new policies that are helping them get covered and stay covered,” said Secretary of California Health and Human Services and Covered California Board Chair Dr. Mark Ghaly. “Together we are increasing access to care by making coverage more affordable for hundreds of thousands of people.”

The increase in enrollment over last year is in stark contrast to what is being seen in the 38 states served by the federally facilitated marketplace. The Centers for Medicare and Medicaid Services report a drop of 4 percent from last year in those states.

“The early signs in California are that the state policies are doing just what they were intended to do — boost enrollment,” said Lee. “That means lower costs for all Californians.”

California is the first state in the nation to offer subsidies to eligible middle-income consumers who previously did not receive any financial assistance because they exceeded federal income requirements.

On average, consumers between 200 and 400 percent of the federal poverty level will be receiving $21 per household, per month on top of their federal tax credits. Consumers who earn between 400 and 600 percent of the federal poverty level will be receiving an average of $460 per month, per household.

  • 200-400% FPL enrollees are receiving an additional $21/month in enhanced subsidies (per household)
  • 400-600% FPL enrollees are receiving an avg. $460/month in expanded subsidies (per household)

Note: The "per household" qualifier is important. If you assume 2.5 enrollees per household, that's roughly 185,000 households x $21/mo x 12mo = around $47 million in enhanced state subsidies for those earning 200-400% FPL, plus another 9,200 households x $460/mo x 12mo = $51 million in expanded subsidies for those earning 400-600% FPL.

That's a total of around $98 million in state subsidies so far (of course, this assumes 100% of those enrolled stick it out for all 12 months of the year, which obviously won't happen; there's always some churn throughout the year with a net overall enrollment drop.

Here are a few examples of how the new state subsidies are lowering the cost of coverage for consumers:

  • Don in San Jose is paying about $2,800 per month for COBRA coverage in 2019 for him and his wife. Thanks to a state subsidy of $1,282 per month, starting in January they will see their premium drop to $1,900 per month next year.
  • David from Northridge is currently paying $727 per month for a Bronze plan directly from a carrier. He checked out Covered California and found that he is eligible for a new state subsidy of $509 and will be paying $195 per month for the same plan in 2020.
  • Syd in Elk Grove is paying $1,499 per month for a Bronze plan for him and his wife. They were considering giving up their coverage until they realized they would receive a new state subsidy of $872 per month in 2020, which will allow them to pay $1,184 and upgrade to a Silver plan next year.

See and download Syd’s story here.

“We are seeing a strong increase in new enrollment, with thousands of people signing up each day, but we believe people are still leaving money on the table,” Lee said. “If you have checked Covered California out before, check again, because you could be eligible for new financial help that will lower the cost of your coverage by hundreds of dollars a month.”

Covered California is the only place people can go to see if they qualify for federal financial assistance or the new state subsidies. An estimated 1.1 million uninsured Californians are eligible for health insurance, either through Covered California or Medi-Cal.

Restoring the Individual Mandate

In addition, California restored the individual mandate that was part of the Patient Protection and Affordable Care Act from 2014 through 2018, meaning consumers who do not get covered could face a penalty when they file their 2020 taxes in the spring of 2021.

For those facing a penalty, a family of four would pay at least $2,000, and potentially more, for not having health insurance throughout 2020.

Covered California is working with the Franchise Tax Board, which will administer the penalty, to help alert Californians about the new law and reduce the number of uninsured people in our state.

Getting Help Enrolling

Consumers will need to sign up by Dec. 15 in order to have their coverage begin on Jan. 1. Those interested in learning more about their coverage options can:

Open enrollment runs through Jan. 31, 2020.

About Covered California

Covered California is the state’s health insurance marketplace, where Californians can find affordable, high-quality insurance from top insurance companies. Covered California is the only place where individuals who qualify can get financial assistance on a sliding scale to reduce premium costs. Consumers can then compare health insurance plans and choose the plan that works best for their health needs and budget. Depending on their income, some consumers may qualify for the low-cost or no-cost Medi-Cal program.

Covered California is an independent part of the state government whose job is to make the health insurance marketplace work for California’s consumers. It is overseen by a five-member board appointed by the governor and the legislature. For more information about Covered California, please visit www.CoveredCA.com.