Covered CA announces health plans, premiums
Health plans will offer access to more than 80 percent of practicing physicians, acute care hospitals
Covered California has announced 13 health insurance plans that will be awarded contracts to serve consumers in Covered CA, the state’s new insurance marketplace, starting in 2014.
The tentative selection of health plans is subject to a rate review by state regulators. Nothing is final until the regulators approve the rates, which is expected by July.
Many Californians have been anxiously awaiting this “bottom line” news, because most Americans will be required by the federal Affordable Care Act (ACA) to have health insurance or face a tax penalty beginning in January 2014.
For those workers who do not have access to health insurance through their employer, the Covered CA Exchange offers a new alternative to purchasing health insurance in the individual market. Covered CA will let shoppers compare insurance plans and tap into federal financial subsidies (if they qualify) to help pay for health coverage.
However, it is important to note that while any Californian will be able to purchase health insurance through the Covered CA Exchange beginning in October, the only people who might be eligible for the federal financial subsidies (depending on household income) are those without insurance through their jobs or those whose employer-provided health insurance doesn’t meet the law’s standards of affordability and adequate coverage. For more about this, see the CSEA Guide to the Affordable Care Act (PDF).
Without the subsidies, the health insurance through Covered CA might be more expensive than what is offered through the employer. Employees should also compare out-of-pocket expenses, since the Covered CA plans might have higher co-pays, different benefits and higher annual “maximum out-of-pocket” limits than those typically offered through school and college districts.
New marketplace will offer four levels of health coverage
California went a step beyond the federal law by setting uniform co-pays, deductibles and benefits requirements for new insurance policies sold through the Covered CA Exchange. However, monthly health insurance premiums will still vary for consumers based on age, region, household size and type of coverage sought.
Each insurer will be selling uniform benefits across four broad categories of coverage, known as “the metals”: Platinum, Gold, Silver and Bronze. The coverage varies primarily based on the level of premiums and out-of-pocket expenses that consumers are required to pay. The lowest monthly premiums are for policies with the highest out-of-pocket costs for medical care.
A Platinum plan, the most expensive, would require policyholders to pay higher monthly premiums and about 10 percent of the cost of medical care, while a consumer would pay lower monthly premiums and about 40 percent of medical care under the least expensive Bronze plan. Many people will qualify for federal financial assistance toward their premiums based on their income. Californians can get a sense of the plans and rates by downloading the Plans and Rates Booklet from the Covered CA website.
Sample prices give consumers sense of plan offerings
For a relatively basic policy, a Silver-level plan, the total monthly premium in the Sacramento region for a 40-year-old single individual would range from $332 to $476. Federal subsidies are available on a sliding scale for individuals with incomes up to $45,960. Those individuals eligible for the highest subsidy, $276 per month, would end up paying $56 toward the monthly premium for the lowest priced Silver plan.
In a southern Los Angeles County region, rates for a 40-year-old person purchasing a Silver plan ranged from $242 a month for Health Net Inc. to $325 per month for Kaiser Permanente. Blue Shield would charge $287 a month.
Price comparisons to the current market are difficult because the federal financial subsidies are only offered through Covered CA, and the benefits requirements of Covered CA’s insurance policies are more comprehensive than those currently sold in the state’s individual market. Overall, Covered CA said the rates in the Exchange ranged from 2 percent higher to 29 percent below the average premium for small-employer plans in the state’s biggest metro areas.
Financial help available for many
Individuals earning less than about $16,000 a year could qualify for Medi-Cal, the state's Medicaid program for the poor, through a Medi-Cal expansion bill expected to be passed this year. Above that threshold, individuals making less than $46,000 a year and families earning below $94,000 annually could qualify for federal subsidies. However, these subsidies are only available if your employer does not offer you “affordable” coverage. For more information about this, see the CSEA Guide to the Affordable Care Act (PDF).
Mix of insurers, plans selected
The insurers are a mix of large non-profit and commercial plans, including four of the largest insurers in the individual market, as well as regional plans and new entrants from the Medi-Cal managed care market. Consumers will generally have a choice of Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs) and Exclusive Provider Organizations (EPOs), though in some rural regions only one plan is available.
All policies sold by Covered CA must cover preventive care, prescription drugs, contraception, medical screenings - such as mammograms - and other “essential benefits,” including pediatric, mental health, maternity and rehabilitation services. Californians cannot be denied coverage based on pre-existing medical conditions, prices cannot vary by gender, and insurers are not allowed to set a maximum dollar amount they will pay during a policyholder’s lifetime.
Covered California is scheduled to begin selling policies in October for coverage that takes effect Jan. 1.
For more information, go to Covered CA.
Caution: This is intended to provide only a brief and general summary of CSEA’s current understanding of ACA and related regulations as of May 2013. It is not intended to provide specific legal or tax advice to individuals for their specific situation. Individuals may wish to consult with a tax advisor and/or legal counsel to determine how ACA affects their circumstances. The information contained in this document is subject to change as federal and state agencies continue to issue additional regulations and publish additional guidance on ACA. For up-to-date information, see Latest News.