Health Insurance, COBRA and the American Rescue Plan. OBAMACARE & YOUR COVEREDCA SUBSIDY

April 5, 2021|Health Insurance

The American Rescue Plan Act of 2021 was signed into law by President Biden on March 11, 2021. Among other things, it provides additional federal premium assistance to many Americans, including to current Covered California members. This legislation allows many individuals who never qualified for any subsidies or discounts, to qualify for the first time for a reduction in their health insurance premium. For some individuals, this will happen automatically, for others not, so please make sure to update your information in the CoveredCa. If you do not have a health plan via CoveredCa, I will explain later what you need to do.

In order to understand what the income limits are to qualify for extra savings on health insurance, it is worth looking at the Program Eligibility by Federal Poverty Level for 2021, which is worth more than a thousand words!

This table is revised every year to keep up with inflation, but this year this is the second time the FPL (CoveredCa and Medi-Cal) is slightly adjusted. If you are one of my clients, most likely I’ve sent you this table before and I work with it on a daily basis when helping my clients. This is a very useful tool and it helps you understand what programs you and your children qualify for before submitting the application for eligibility. If your income is higher by even one dollar, the entire eligibility will be different oftentimes not in your favor.

So, this new updated version of the FPL table got rid of the California state subsidies, increased the income limits slightly for Medi-Cal eligibility, and extended the Federal Premium Tax Credits for health insurance beyond the 600 percent of the federal poverty level.

If you are single and your income is below 138 percent of the FPL, in other words, the income is less than $17,775 — then you qualify for Medi-Cal.

If your income is above this amount then you qualify for a private health insurance plan via CoveredCa with subsidies.

The amount you pay for your health insurance increases as your income does and based on the new legislation you should not have to pay more than 8.5 percent of your income for health insurance premium even if your income is very high.

Here is an estimate of how much you will have to pay for your health insurance based on the various income levels of the FPL percentage.

If you currently work with a licensed agent, feel free to reach out directly to your agent and they will explain in detail the rules of this new legislation. If you don’t have an insurance agent and are on your own, I am happy to be your agent of record in the CoveredCa. There is no additional cost for this and you can easily delegate us from your account dashboard or by asking the Customer Service Representative to delegate us to your case. Here is how to delegate an agent to your CoveredCa account: https://insurancecenterhelpline.com/our-blog/f/how-to-designate-a-certified-insurance-agent-in-coveredca

O.k. so no, moving on … one more thing I have to mention that is kind of a big deal. If you received unemployment benefits anytime in 2021, make sure to report this to CoveredCa. Starting in the summer of 2021, your eligibility will be redetermined and you will receive extra benefits and you will qualify for the enhanced silver plans. Even if you had other income that is higher, you will still qualify for the enhanced silver benefits. These plans are way better than the platinum or gold plans. If you are not sure if you qualify, this table will help you with that. Look at the top of the table the income limits to qualify for Silver 94, Silver 87 or Silver 73 based on your household size. If you are confused, talk to us and we will help!

Let’s say that this is a single 50-year-old individual residing in San Francisco with an annual income of $80,000/year. Prior to the American Rescue plan, this individual wouldn’t have qualified for any subsidies and had to pay the full premium for their health insurance. Good luck surviving in San Francisco on an 80k salary while paying over $600 for health insurance every month.

So, as you can see from my estimates, this is a typical health insurance premium for a bronze plan. I haven’t even included a PPO plan here, as those are even more expensive.

As you can see the new premiums have dropped dramatically… So a 50-year-old single individual living in San Francisco and making $80,000/year will pay almost half for their health insurance premiums. If they had a bronze Kaiser plan and paid $605/month now the premium will be $374 for the same plan.

I have to say that these are estimates and it’s not a guarantee that you will be paying the same. There is no one shoe fits all approach here and in order to get the correct estimate you will have to run your own numbers. You can reach out to us and we will gladly do that for you.

Now, one more thing… if this person loses their job sometime in the year 2021 and starts receiving unemployment, then their health insurance premium will be reduced again! This is what they will pay — — $1/month for a bronze plan and this person will likely qualify for enhanced silver benefits.

Keep in mind, that CoveredCa does not have a crystal ball, so if you become unemployed no one will know to reduce your health insurance premium until you update that information in your case. The same goes for those who buy their health insurance directly from Kaiser, BlueShield, Oscar, HealthNet, Sutter Health, and so on… if you want to pay less for your health insurance, you will have to apply via CoveredCA.

You can even keep the same health insurance plan (if it’s available in the CoveredCa) and if you’ve paid part of your deductible you won’t have to start all over, it will be accounted for… Now, I don’t know how this accountability of deductible will be implemented by the health insurance companies, they will certainly have to do lots of hard work and spend the big bucks to make sure that the process goes smoothly… I don’t know about you, but I’ve been in this business for a while and I’ve seen issues with simple things like paying a premium where health insurance companies messed up even this simple transaction. I pray that they won’t mess up this entire thing… In theory, it looks really good, let’s see if in practice it will be as easy and we won’t have to spend hours on the phone with the insurance companies resolving these issues.

If you have an enhanced silver plan 94 and haven’t updated your income for the last few years, do yourself a favor and update that as soon as possible…Maybe 5 years ago when you just graduated from college your income was $18,000/year but if your income is half a million dollars a year now, and you haven’t updated that information in the system you will be eligible for Medi-Cal and then good luck convincing the social worker that you are making the big bucks now and don’t qualify for Medi-Cal.

Again, please update your household income as soon as possible if you currently have a CoveredCa account.

The income limits for children to receive Medi-Cal also has been updated. So carefully look at the table to see if your children may or may not qualify for Medi-Cal. For those who don’t know, Medi-Cal is a government program the same as Medicaid in other states.

It’s very easy to check on the eligibility, just look at the household size and if the household income is below 266 percent of the Federal Poverty level, then children younger than 18 years old will qualify for Medi-Cal. If the income is above 266 percent, then children will be included with the parents and qualify for private health insurance plans with subsidies.

I have to mention that if you currently live in San Francisco County, San Mateo County or Santa Clara County, you will also want to check the eligibility for the County Children’s Health Initiative Program. This is the same thing as Medi-Cal but it cost more money and families in these counties won’t be able to take advantage of the subsidies and get full tax credits if their income is between 266 percent and 322 percent of the federal poverty level. This may be very important for some people, so I encourage you to take a look at the eligibility.

If you’ve lost your job and enrolled in COBRA, the American Rescue Plan provides federal subsidies to cover 100% of COBRA premiums for up to six months from April 1 through September 30, 2021.

(if you are not familiar with what COBRA is, you can refer to our article: https://insurancecenterhelpline.com/our-blog/f/what-is-cobra

This is also kind of a big deal. If at the time of application for health insurance in the year 2020 you stated that your income is let’s say $30,000 but your income ended up being $60,000 in a normal year you would have had to pay back all the big bucks that helped you lower your health insurance premiums; However, for the tax year 2020, the American Rescue Plan suspends repayment of excess advance premium tax credit (APTC) owed to the IRS. If you’ve rushed and filed your taxes before this legislation was signed into law, and had to pay back the Advance Premium Tax Credit, you may want to talk to your accountant and revise your 2020 filed tax return.

You can refer to our previous article with more information on how your income affects how much you pay for your health insurance: https://insurancecenterhelpline.com/our-blog/f/how-your-income-affects-how-much-you-pay-for-health-insurance

If you are currently enrolled in a CoveredCa health insurance plan or one through the marketplace, then CoveredCa will automatically redetermine your eligibility and provide updated subsidy amounts.

If your CoveredCa is not up to date or you did not provide consent for verification or your coverage is terminated at the moment you may have to take extra steps to secure a lower monthly premium as in your case, it will not happen automatically. So, I urge you to check your CoveredCa account or reach out to your favorite insurance agent and if you don’t have an agent, then I can happily help, so please reach out! I am very nice and I love helping people!

If you get your health insurance directly from the insurance companies, then you may want to get an estimate and see if this new legislation will help you save big bucks on your health insurance. I can run the estimates for you, so .. you know what to do.. Here is my website for your reference: www.InsuranceCenterHelpline.com

If it turns out that you may benefit from this, you will have to apply via CoveredCa. You may be able to keep the same health insurance plan and even account for your deductible and out-of-pocket max. This is fair and I think it’s an awesome idea if implemented! There might be situations where you have a health plan that is not offered in the CoveredCa. If that’s the case, carefully look at the benefits and compare it with what you can get on the marketplace.

If one or more family members is offered a health insurance plan through their job that is considered affordable, then no other household members or dependents who are also offered employer-sponsored insurance through the same employer are eligible to receive financial help if they purchase their insurance through Covered California. Employer-sponsored insurance is considered affordable if the employee’s share of the premium for the lowest-priced plan available to cover just the employee — not their dependents — is 9.83% or less of their household income for 2021. The American Rescue Plan did not change the 9.83% of household income determination for ESI affordability.

So, I believe I’ve covered everything that is currently available on this topic as it relates to health insurance. Keep in touch, and I will definitely make available new information on this topic as it becomes available. I hope that you found this information helpful and I hope that you will like it, share the content with your friends or those who might also benefit from it, and consider subscribing to our YouTube Channel. I appreciate and thank everyone who helps me and supports my content!

Below is a recording of the above and posted on my YouTube channel:

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Entrepreneur and emerging author on a lifelong mission to motivate, educate, and inspire as many people as possible.

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Diana Polyakov

Entrepreneur and emerging author on a lifelong mission to motivate, educate, and inspire as many people as possible.