California health insurance    Health Reform in California    Exchange subsidies

California Health Reform Subsidies


We're starting to get into the grist of the new health reform changes coming to the California health insurance market and none are bigger (perhaps outside the mandate) than the subsidies available from purchasing coverage within the exchange.  Back in June (2012), the Exchange gave some guidance on what these subsidies might look like and it's pretty telling and incredibly important to anyone who qualifies.  Let's take a look.

A Quick Explanation of the Subsidies

Part of the health reform bill established that people would receive help paying for their insurance premium based on income levels.  Up to 138% of the Federal poverty level, a person can enroll on Medi-Cal fully paid.  In 2014 (when the Exchanges come online), that's $35K annual income for a family of four.  From the 138% to 400% of the poverty level, people would receive subsidies up front when purchasing their health insurance plan on a sliding scale.  As your income goes up from 138% to 400%, the subsidy goes down.  400% is about $93K annual income for the same family of four mentioned above.  The subsidy can only be received inside the Exchange (called Covered California) and on one of the metallic plans:  Platinum, Gold, Silver, and Bronze. 

So What Are the Subsidy Amounts?

Let's break down 4 different expected situations to look at subsidies based on a family of 4 (two adults age 45).  Keep in mind that family size and age will affect pricing and these are just estimates (but State estimates).

138% poverty level or $35K annual income
Expected monthly total premium of $1200; Monthly subsidy of $1100;  Monthly premium of $100

200% of poverty level or $47K annual income
Expected monthly total premium of $1200;  Monthly subsidy of $950;  Monthly premium of $250

300% of poverty level or $70K annual income
Expected monthly total premium of $1200;  Monthly subsidy of $630;  Monthly premium of $570

400% of poverty level or $94K annual income
Expected monthly total premium of $1200;  Monthly subsidy of $450;  Monthly premium of $750

We don't have subsidy amounts for individual adults but let's assume it roughly 1/3 of the annual income and subsidy since adults are more expensive to insure than children.     Beyond 400% of poverty level (over $93K for family of four), there is no subsidy and you would pay the full premium amount.  There may also be plans available off the exchange and we fully expect that the only reason a person would buy in the exchange would be due to subsidies.  We'll have to see how this plays out.  So what do we make of all the numbers?

Our main concern has always been affordability.  We're hearing rumors of a "rate shock" with rates increasing 30-50% depending on age bands (higher increase for younger people due to 3/1 banding requirement).  We think the Silver rate will be closer to $1300.  Based on this, $200 will be out of a pocket per month for a family that earns roughly $3K monthly.  This is definitely more manageable but still a concern at almost 10% of take home pay.  At the other end, the monthly premium will be almost $1000/monthly which is a big hit.  If you receive no  subsidy at all (roughly $30K annually for an adult), the costs are going to be very high.  Obviously, some changes will have to be made so people can afford the new rates and we'll update this site as that information comes in.   

NEW!  California Health Subsidy Calculator  (until we have exact rates October 1st, 2013)

Related Page:

Health Reform Penalties
Final Health Exchange Plan Benefits
The Health Reform "Pump Fake"
Federal Poverty Level and Subsidies
Website devoted to health subsidies






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