What would you do if you got a letter from your insurance company telling you that your insurance was about to go up by $500 a month? If you’re enrolled in health insurance through Covered California, there’s a chance you did get that letter, or one very similar.
Covered California will see the largest jump in rates in its short history. Here in the Northern California region, the cost of insurance plans are expected to spike 33 percent.
Despite that frightening number, almost all consumers won’t end up paying for that difference, because as their rates go up, their subsidy will increase too. That’s according to James Scullary, who is a spokesperson for Covered California.
“So while the gross premium of a consumer's plan may be going up this year, as it would normally from year to year, they're actually going to see a much larger increase in the amount of financial help that they receive,” Scullary said.
With all the talk in Washington about dismantling the Affordable Care Act, plus this unprecedented spike in prices, Californians are understandably very confused this year.
Take Josh Mills for example. He owns The Bookstore in downtown Chico. He and his family of four have been enrolled in a Covered California Bronze Plan since the exchange first opened in 2014. Bronze plans are supposed to have the lowest upfront costs, but typically cost the most to actually use, due to higher copays and deductibles. This year, Mills got a letter from his insurance provider, saying that the monthly cost of his insurance would increase exponentially. The letter read that his payment would increase from around $96 a month to $566 a month. His income hasn’t changed. Nothing has — other than everyone in the family is a year older. The letter has left him completely stunned and confused.
“I don’t know what I’m going to do but I’m pretty sure my family is not going to have health insurance.” Mills said.
The situation is nightmarish on the surface. But after looking into the letter, it’s not as bad as it seems. It’s very unlikely that Mills will actually end up paying that. When Anthem calculates its prices, they’re assuming that everyone will receive the same subsidy that they did last year. Which isn’t happening, because again, subsidies are rising with the cost of insurance. But Mills doesn’t know that. What average person would? And he’s far from the only one who got a letter like this. Fred Fourby is a Tehama County insurance agent who enrolls clients in Covered California. He said that on Monday alone four people walked into his office with letters just like the one Mills got in the mail.
“People are upset when they’re getting the letters, that there rates are going to go up dramatically,” Fourby said. “What the letter does not tell them is that their premium assistance is also going up.”
A spokesperson for Anthem says that sending out these letters is necessary. They are required to notify people about the increased rates for 2018, but they can’t include the new subsidies in their estimates because that is decided on Covered California’s end and not theirs. It’s also important to note that those enrolled in Covered California who don’t get subsidies could pay significantly more next year. In the Northern California region, that’s less than 3 percent of people enrolled.
Despite the confusion and uncertainty, James Scullary at Covered California says that the state exchange is still going strong.
“One of the key messages is that despite all of the noise and the distant thunder in Washington, the law hasn’t changed,” he said. “The Affordable Care Act is still the law of the land.”
Open enrollment ends Jan. 31. To start coverage by Jan. 1, you must sign up by Dec. 15. You can sign up online on Covered California’s website or through alicensed Covered California agent. If you received a letter like Josh Mills’, visit Covered California online to see if you'll qualify for a subsidy next year, and for how much. If you can’t make heads or tails of it, a licensed agent can also help you navigate the site. Their consultations are free.