The Affordable Care Act of 2010 made it possible for millions of uninsured Americans to obtain health insurance through new government marketplaces. And when open enrollment for 2023 begins today, a recent change in ACA rules may mean even more families can get coverage.
According to an estimate by Covered California, the state’s ACA marketplace, the new rule could benefit 615,000 residents, most of them women and children. That’s in addition to the 1.7 million already receiving policies through Covered California.
It’s about government premium subsidies and something called a “family bug.”
The Court of Auditors grants limit health insurance premiums to a percentage of your household’s annual income. The less you earn, the lower the percentage you have to pay – in fact, you could get coverage with no monthly premiums if your income is near the poverty line.
However, the subsidies are not available to people who can enroll in affordable “minimum care” through an employer health plan. That’s roughly half of the US population.
One of the few exceptions to this ban applies to workers who would have to pay more than 9.12% of their earnings over the next year to be insured at work. Such coverage is not “affordable” as federal agencies define it.
Open enrollment bases
Covered California is the health insurance market of the state Affordable Care Act.
The open registration period is from November 1, 2022 to January 31, 2023.
Fill out an application or find someone to help you with the process at coveredca.com.
However, the Internal Revenue Service stated in 2013 that the affordability test applies only to the cost of a single policy. If adding coverage for your spouse or children pushed the cost of your family policy beyond affordability, it didn’t matter – you weren’t eligible for premium subsidies.
In mid-October, the IRS finalized a rule that fixes this error and allows workers to receive family insurance grants if it would cost more than 9.12% of their income to enroll everyone on their employer’s health insurance. Although some critics say the new rule violates the ACA, some consumer advocates and members of Congress counter that the IRS’s original rule misunderstood the intent of the law.
Jessica Altman, executive director of Covered California, said the problem for many workers in the state is that their employer will help them pay for their policy but won’t help them get coverage for their spouse and children.
According to UCLA and UC Berkeley estimates, Altman said, nearly half a million Californians have employer-sponsored coverage that is less affordable than what they can get now with Covered California. Another 87,000 Californians who could be helped by the new rule are uninsured today, and about 35,000 have policies that are not currently subsidized.
Read on for more information on how the change will affect you and how to enroll in Covered California.
Am I eligible for premium subsidies?
The answer depends on your employer, your income and the amount you would have to pay for insurance, and the number of people in your household.
The first question is whether you can get comprehensive coverage – that is, a policy covering 10 essential health services – from your employer that is affordable. As mentioned above, this means a policy that costs less than 9.12% of your household’s modified adjusted gross income. That’s all of the taxable income you report on your federal return, plus certain amounts that have been deducted or excluded (such as interest on student loans).
Most employers’ health plans are affordable for their employees because employers foot most of the bill. Nevertheless, employees pay a significantly higher price for family insurance than for individual insurance. According to the latest Kaiser Family Foundation survey, employees pay an average of $1,327 per year for individual insurance and $6,106 for family insurance.
If your employer’s premiums for both individual and family insurance are not affordable for you, your entire household is eligible. And according to the Inflation Mitigation Act, you have to pay a maximum of 8.5% of your modified adjusted gross income for the standard Silver plan. The grants cover the rest.
(You can enroll in a coverage level other than Silver, which is designed to cover 70% of anticipated medical expenses. However, the amount of grants you receive is always based on the price of the second cheapest Silver plan in your area.)
If your employer’s individual insurance premiums are affordable but family premiums are not, only your spouse and children are eligible for Covered California grants. So if you enroll your entire household in Covered California for family insurance, you are legally responsible for the unsubsidized cost of your portion of the coverage, which would likely be significantly more expensive than enrolling in a separate, individual policy at Work. Your family members’ expenses are still tied to a percentage of your household income, up to 8.5%.
According to James Scullary, a spokesman for Covered California, “90% of Covered California enrollments receive financial assistance that covers an average of 80% of their monthly premium. As a result, two-thirds of our consumers can get comprehensive coverage for $10 or less a month.”
For an unofficial estimate of how much help you could get from Covered California, check out the online calculators provided by the Kaiser Family Foundation and Healthinsurance.org.
(If your household income is at or below 138% of the federal poverty line, Covered California will help you enroll in Medi-Cal instead of a private insurance plan. For a single person, the income limit is $18,755; for a family of four, it’s $38,295.)
How do I log on?
You can register online at coverdca.gov. The website also provides links to applications in 12 languages that you can print out and send to the Agency.
Alternatively, there are more than 11,000 insurance agents who can provide personal assistance, as well as enrollment advisors. The district social welfare offices can also keep you informed about your options. Coveredca.gov has directories to help you find these resources.
Open registration ends on January 31st. After that, you cannot take out a Covered California policy unless you lose your employer protection, marry, relocate, or experience some other significant change in your circumstances.
Do I have to take out insurance? In California, every member of your household must be insured for at least nine months a year. If you are uninsured, you will face a minimum penalty of $850 per adult and $425 per dependent child under the age of 18. the amount is higher for households with higher incomes. The state issued the mandate after the federal government lifted its penalty for non-compliance, on the grounds that it would motivate younger, healthier people to sign up for coverage. It also provides exceptions to the mandate for various groups, including Californians who do not earn enough money to pay income taxes, whose premiums would be deemed prohibitive, or who are members of state-recognized Native American tribes.
What if I’m not a US citizen? Under the ACA, only citizens and legal residents of the United States can purchase subsidized coverage through the state marketplaces. However, according to Covered California, if your child is a citizen and you are not, you can apply for subsidized coverage for your child without affecting your immigration status or your ability to become a permanent resident or citizen.
What information do I have to provide for enrolment?
- Social Security numbers for applicants who are US citizens, or proof of legal residency for applicants who are not citizens.
- Information on the income and employment of each family member.
- Information from your federal tax forms, including the names of the person listed as the head of household and the claimed family members.
- Information about employer-provided health insurance available to each family member.
What if I already have a Covered California policy? In this case, Covered California will automatically renew your policy if you do nothing, provided your insurer continues to offer it. However, this is a risky decision if your household size, income or address has changed, which could change the amount of subsidy you should receive. Under federal law, once you receive a subsidy, you are required to report any such changes within 30 days (or 10 days if you are in Medi-Cal). If your grants are not adjusted and you receive too much grant, you may have to pay back the difference on next year’s taxes.
Are the premiums higher this year?
Covered California’s Altman said premiums for 2023 across the state are on average 5.6% higher than this year, a larger increase than in the recent past. This is consistent with a national trend of higher increases; According to the Kaiser Family Foundation, the average benchmark premium increase nationwide is about 4%.
“The last few years have not been normal years because of the pandemic,” Altman said; Ironically, people sought less care from their doctors, causing premiums to remain stable or even decrease. Even taking into account the increase projected for next year, she said premiums have increased by just 2.3% on average over the past four years.
That’s well below the national average, Altman said, thanks in part to Covered California’s negotiations for better rates and aggressive marketing to state residents, which have helped attract a large and comparatively healthy enrollment population. However, she added, “The healthcare system is not immune to cost increases that are occurring more broadly in society.”
The ACA’s subsidies increase as premiums rise, so the vast majority of Covered California clients will feel little of the pain caused by healthcare cost inflation. But remember, unless Congress renews them, those subsidy increases in the Inflation Reduction Act expire in three years.
About the Times Utility Journalism Team
This article is from the Times’ Utility Journalism team. Our mission is to be essential to the lives of people in Southern California by publishing information that solves problems, answers questions, and aids in decision making. We serve audiences in and around Los Angeles—including current Times subscribers and diverse communities whose needs have not been met by our coverage in the past.
How can we be useful to you and your community? Email Utility (at) latimes.com or one of our journalists: Matt Ballinger, Jon Healey, Ada Tseng, Jessica Roy and Karen Garcia.
https://www.latimes.com/california/story/2022-11-01/covered-california-open-enrollment-begins-what-to-know-about-signing-up-subsidies-and-more Covered California open enrollment begins. What to know