How the COVID stimulus bill will lower health care costs for more than 1 million Californians
More than 1 million Californians will start saving hundreds — possibly thousands — of dollars per year on health care costs after President Joe Biden signs the COVID-19 stimulus plan going through Congress.
The changes aim to make coverage more accessible for people who buy health insurance through the Affordable Care Act, the health care law former President Donald Trump repeatedly tried to overturn before losing his reelection bid.
One change in the stimulus bill would cap premiums for people who earn 400% of the federal poverty line — just over $50,000 per year for an individual — at 8.5% of income for a mid-coverage plan under the Affordable Care Act. Currently, there is no federal cap on premiums for those households.
Another provision says people earning less than 150% of the poverty line will not have to pay premiums. That applies to a single person earning about $18,000 or a family of four earning about $40,000. Currently, people earning between the poverty line and 150% of the line have to pay up to 4% of their income in premiums.
The changes aim to address a problem health care advocates referred to as the “affordability cliff,” meaning the changes will save money working-class Californians.
“The affordability cliff means that if you’re over 400% poverty level you could be charged whatever,” said Anthony Wright, executive director of Health Access California, an advocate organization for increasing health care access. “That was a huge problem, and (this fix is) a fairly big help up and down the income scale.”.
Under the changes, no one will pay more than 8.5% of their income for health care premiums, regardless of income level. And those making below 400% of the poverty line have an even lower cap on their premiums.
California has already taken some steps to ease the affordability cliff problem, instituting some subsidies in 2020 that helped people with incomes between 400% and 600% of the poverty level.
But the new federal cap would still be a huge help to those people, Wright said, even if it’s not as drastic as it will be in other states.
“California made it so no one had to pay a third, and almost no one had to pay a quarter of their income,” Wright said. “But this gets virtually everybody under 8.5 percent.”
For example, a single individual making $50,000 per year, which is just over 400% of the federal poverty line, would have had to pay about $5,000 per year in premium under current California law.
With stimulus bill, they’ll pay about $4,250 per year.
A couple making about $82,000 a year, which is about 500% of the federal poverty line, currently has to pay $13,100 under California law, but would pay just under $7,000 a year in premiums under the bill Biden is expected to sign.
The bill also wipes out premiums for lower-income households earning 150% of the poverty level. For example, a family of three living on $31,000 a year would save $1,300 per year.
About 1.5 million Californians are enrolled in Affordable Care Act plans, Wright said. Almost all of those people will see additional savings.
“For many people it will be hundreds or even thousands of dollars in new help,” Wright said. “So this is a big deal.”
This will also help people who are considering whether or not they can afford to sign up for health care under the Affordable Care Act, according to Wright. A special open enrollment period is ongoing, so people reacting to the change can sign up for health coverage immediately.
But there’s a catch — these new federal caps aren’t permanent. The caps included in the COVID-19 stimulus only last until the end of 2022. Wright said he’s hopeful lawmakers will extend the breaks on premiums or or even make them permanent.
No House nor Senate Republicans have voted for the COVID-19 stimulus bill, which is wide ranging and nearly $2 trillion in total. House Democrats are still expected to pass the final version Wednesday, and Biden is expected to sign it later this week.
This story was originally published March 10, 2021 at 5:00 AM.
.jpg)