Exchange lays out implementation strategy for ACA credits . . .

CoveredCA Plans Will Help Off-Exchange Consumers Switch, Won’t Reset Deductibles

March 18, 2021

Insurers participating in Covered California have agreed to help move their off-exchange individual plan enrollees into the marketplace so they can benefit from the new Affordable Care Act subsidies available under the American Rescue Plan (ARP) and will not reset the deductibles, Covered California Executive Director Peter Lee said Thursday (March 18) in a webinar with reporters and key stakeholders.

Lee laid out an implementation roadmap, which includes opening a new special enrollment period (SEP) April 12 that will last through the end of the year, automatically adjusting subsidies for existing enrollees, moving people from the off-exchange to exchange coverage, and investing millions more into marketing, particularly over the next few months.

The American Rescue Plan provision granting maximum subsidies to people who received unemployment insurance is more difficult to implement and will not be available until later this summer, Lee says. But he notes that people unable to get the additional help in advance to pay premiums will still get the larger subsides when they reconcile their subsidies and income on their 2021 tax forms.

Lee praises Congress and the Biden administration for moving quickly to get the new subsidies and notes California has already been helping people earning more than the 400% threshold for ACA subsidies. Since last year, the state has subsidized people up to 600% of poverty.

The relief plan provisions completely remove that subsidy cliff. Under the new provisions, people earning less than 400% of the federal poverty level (FPL) must contribute less of their income to their premiums and those earning more than 400% FPL can now get subsidies, since the policy limits their premium contribution to 8.5% of income. The policy is effective Jan. 1, 2020 through the end of 2022.

Lee points out that the Congressional Budget Office predicted just 10% of the eligible uninsured population are likely to use the new tax credits, largely because people will still think they cannot afford coverage. People might also be deterred because the policy is being implemented mid-year and the help is temporary.

This is why the exchange will be investing so much into marketing -- to make sure people understand the potential savings, he says.

For example, the 1.4 million consumers already enrolled in subsidized coverage can expect an average premium decrease of $119 a month, Covered California estimates.

The exchange will automatically recalculate and adjust subsidies for current enrollees who will see their lower premiums starting May 1, Lee says.

Another 1.2 million Californians, and about 13 million people nationwide, are uninsured and now eligible for lower premiums. Lee says about two-thirds of the uninsured Californians could get a silver plan for less than $60 a month or a bronze plan for just $1 a month.

Off-exchange enrollees could get an average $500 premium drop, which means they could save as much as $12,000 under the two-year provision, Lee says. About 430,000 Californians and 1.5 million people nationally who are enrolled off-exchange plans are newly eligible for help, the exchange estimates.

Covered California plans a massive marketing blitz that will highlight the potential savings. The campaign will last throughout the SEP, but Lee plans to spend between $20 million to $30 million from April to June 30. Highlighting the potential savings should motivate people back to the exchanges to shop and compare prices, he says.

Lorretta Chan, who owns APAC Service Center and Insurance Services, says she will be sorting through her list of clients and contacting people who could benefit from the new subsidies. Many people were forced to cancel their coverage over the past year, she says, and she will reach out to those consumers as well.

Lee expects the 10,000 or so brokers and agents working with Covered California to do the same. Brokers nationwide should be helping clients access the maximum credits, he says.

He notes that Covered California has also seen an increase in the number of people who drop their coverage and enter the ranks of the uninsured, and the exchange will reach out to those consumers.

The exchange also plans to provide more resources to the 112 navigator entities working to provide unbiased, in-person enrollment assistance throughout the state. Anthony Wright, executive director of Health Access California, also says the coalition of advocates will be mobilizing to spread the word, help people sign up and ultimately ensure the increased credits are made permanent.

Health insurers also must play a role in getting the additional assistance to consumers, Lee says. He applauds Covered California’s 11 insurers for committing to help with marketing, outreach and transitioning off-exchange clients to the exchange.

The insurers have agreed to honor any spending toward the deductible, so it will not reset to zero.

This is critical, Lee explains, since the main reason someone might opt to stay in their off-exchange, unsubsidized plan is because they have already made payments toward the deductible.

GetInsured, which helps power Covered California’s enrollment technology, recently told Inside Health Policy that that it has been working on a tool for all their exchange clients that can facilitate the transfer from an off-exchange plan into the marketplace in a way that allows consumers to easily keep the same or a similar plan with the same insurer.

Exchange officials were slated to discuss the idea at Thursday's board meeting. -- Amy Lotven (