Reform in California
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.
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
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
200% of poverty level or $47K annual income
Expected monthly total premium of $1200; Monthly subsidy of $950; Monthly premium of
300% of poverty level or $70K annual income
Expected monthly total premium of $1200; Monthly subsidy of $630; Monthly premium of
400% of poverty level or $94K annual income
Expected monthly total premium of $1200; Monthly subsidy of $450; Monthly premium of
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
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.
Health Subsidy Calculator (until
we have exact rates October 1st, 2013)
Final Health Exchange Plan Benefits
Reform "Pump Fake"
Federal Poverty Level and Subsidies
Website devoted to health subsidies