Who Benefits from the Covered California State Subsidies in 2020?

If I’m in the 400-600% of FPL Range, Why Do I Get $0 Subsidy?

Whether or not you receive a state subsidy depends on what percentage of your income is required to pay your monthly premiums. If your California health insurance premiums are more expensive, you are more likely to get a state subsidy.

Your age and location determine the base premium of your health plan. These two factors will have a significant impact in determining if you receive state assistance.

Those in the 400%-600% range of FPL who are over 50 years of age and those who live in areas where health insurance premiums are more expensive are more likely to receive state subsidies. Premiums tend to be higher in Northern California and in areas like Monterey County.

According to Covered California, getting a state subsidy depends on the difference between two numbers: maximum contribution and benchmark premium. 

Maximum contribution is the amount that the consumer’s household is expected to contribute toward the premium. This is based on percentage of income.

As income rises, the household is expected to contribute a greater share (or contribution) toward the premium. Higher income earners pay a higher percentage of income.

The benchmark premium is the price of the second-lowest cost Silver plan for that consumer; the benchmark premium will vary based on a consumer’s ZIP code and age. If the benchmark premium costs less than the maximum contribution, the household will receive $0 in state premium, despite having a household income between 400%-600% of Federal Poverty Level (FPL).

The $0 result happens more often with the state subsidy program than with APTC/CSR because the maximum contribution is lower for APTC/CSR than it is for the state program. Households in APTC/CSR income ranges are expected to contribute a smaller share of household income toward the premium.

As a result, the benchmark premium often costs more than the APTC/CSR maximum contribution, and the household receives APTC/CSR to pay for the gap between the maximum contribution and the cost of the benchmark premium. In the state subsidy program, there is often no gap, and therefore no state subsidy will be given.

Let’s look at some examples based on households in the 90210 ZIP code:

• A 30-year-old couple with a household income of $100,000: Their maximum contribution would be $1,485, and their benchmark plan would be $644. Because their benchmark plan costs less than their maximum contribution, there is no State credit to make up the difference.
• A 30-year-old couple with a household income of $68,000: Their maximum contribution is $558, and their benchmark plan would be $644. Because their benchmark plan costs more than their maximum contribution, they would be eligible for $86 in State credit.
• A 63-year-old couple with a household income of $100,000: Their maximum contribution is $1,485 and their benchmark plan is $1,675. Because their benchmark plan costs more than their maximum contribution, they would be eligible for $190 in State credit ($1,675-$1,485).

State subsidies are designed largely to assist consumers who see their contribution amount skyrocket when they fall off the “400% cliff”. For many in California, especially people between the ages of 50 and 64 and people who live in high cost areas of the state, once their income goes above 400% of FPL, their federal APTC stops and their monthly contribution increases considerably.

The state subsidy program will assist Californians who fall into these categories. However, to qualify for state or federal subsidies, consumers must enroll through Covered California.