On July 9th, 2019, Covered CA released its preliminary rates for the individual and family market with a weighted average premium increase of 0.8%, a major relief from the 8.4% weighted average premium increases Californians saw from 2015-2019. Furthermore, Covered CA will begin offering subsidies for individual and families up to 600% of the Federal Poverty Level vs the current cutoff of 400% of the FPL.
Not only are we seeing health insurance premium increases begin to flatten, it is estimated that 235,000 people who previously were not eligible for subsidies will be able to qualify for premium tax credits beginning in 2020 due to the passing of SB-78. SB-78 increases the eligibility for subsidies from 400% of the Federal Poverty Level up to 600% in 2020 as well as establishes a new health insurance mandate tax penalty for those that do not have health insurance. A new tax penalty of up to 2.5% of Californians’ income would be used to enforce the Affordable Care Act’s mandate after President Trump’s latest tax law effectively set the federal tax penalty to 0%. The state tax penalty is estimated to bring in $317 million in 2020 which will go towards funding the individuals and families newly eligible for premium tax credits that earn between 400-600% of the FPL who will save an estimated $172 per family or 23% off their current premiums.
On another major note, Anthem Blue Cross is expanding its insurance offerings to Los Angeles, the Central Coast, the Inland Empire and parts of the Central Valley in 2020, offering coverage for up to 59% of the California population. This is very exciting news to have a major national insurance company like Anthem Blue Cross expanding throughout California after leaving most of California in 2018. It will be refreshing to see increased competition between the insurance companies, especially as Blue Shield of California has continued to dominate the PPO area in Los Angeles for the individual market.
Overall, 2020 looks like it will be a great year for Californians in regards to their health insurance options. Rates are staying flat at a 0.8% increase (Silver plans are actually dropping by 4.3% on average), subsidies will provide relief to much of the middle class while the carrier and provider choices will increase with the expansion of Anthem Blue Cross to reach more than half of all Californians.
At Solid Health Insurance Services, we are very happy to see relief for our clients who have voiced their concerns for the last 5 years of rate hikes. As independent insurance agents, we are happy to assist our clients with the changes to the 2020 insurance marketplace and we strive to find you the best plans for both your budget and medical needs. Please do not hesitate to contact us at 310-909-6135 or at info@solidhealthinsurance.com to go over your health, dental, vision, life and long-term care needs.