The California Guide to Health Insurance Subsidies

t’s that time of year! As soon as October closes out and Halloween is over, Open Enrollment 2020 begins on November 1, 2019. Health insurance is important, but costs continue to rise. The Affordable Care Act (ACA) purports to make healthcare accessible to all and subsidies supplement the costs. It can be a confusing process, but here is what you need to know about subsidies and Covered California in 2020. 

​The Affordable Care Act provides federal subsidies for families who pay a high percentage of their income toward health insurance premiums. A subsidy is money granted by the state or federal government that is distributed in order to keep prices competitive and low. In California, a law was recently passed to help individuals and families bear the burden of health insurance costs. Dubbed California State Premium Assistance, the plan addresses the federal subsidy cliff, which is the point at which the federal subsidy ends and can result in a huge hit to the pocketbook in excess of $10,000 a year. 

​The Affordable Care Act Subsidy

 
The ACA subsidy is for people who make between 100 and 400 percent of the federal poverty level (FPL), and there are two types of federal subsidies: a premium tax credit subsidy and a cost subsidy. The former goes toward your monthly premium amount, and the latter goes toward things like your deductible and other expenses. It is possible to qualify for both subsidies depending on your income level. However, if you make one dollar more than 400 percent of the FPL, then you are no eligible for any federal subsidy, which can significantly impact your finances if you were previously eligible.

California State Premium Assistance

California’s new legislation is effective for three years beginning in 2020, and it will help supplement the federal subsidy and avoid the cliff. The state subsidy will extend the subsidy ceiling to those earning up to 600 percent of the FPL. The 2020 Covered California income limits are captured here: