Tag Archives: Covered California

Ending Health Subsidies: ‘People Will Die’

Six Embarrassing Headlines on Subsidies from October

By Marc Derendinger, Sr.

  • President Trump Ends Healthcare Insurance Subsidy Program – Fortune [October 12, 2017]
  • Ending Health Subsidies: ‘People Will Die’ New York Times-Oct 13, 2017
  • Trump to halt subsidies to health insurers – ABC News [October 13, 2017]
  • Trump’s strike on health insurance subsidies jolts markets, Washington [October 14, 2017] 
  • Trump will end ObamaCare subsidy payments | New York Post [October 12, 2017] 
  • White House to halt health insurance subsidies The Boston Globe-Oct 12, 2017 

This small sample of headlines from October 12th to 14th emblematize a disappointing age in the history of American Journalism, where indifferent editors compete for reader “clicks,” for the purpose of increasing advertising revenue.

“Yellow Journalism” is based upon sensationalism and crude exaggeration (dictionary.com).

After answering several individual inquiries to explain Trump’s decision on subsidies, I feel compelled to put this explanation in public view (if for no other reason, than to catch my breath). The following paragraphs attempt to more accurately explain what Trump did to Subsidies, as it concerns Californians.

Background: The California individual health insurance market is segmented into two halves:

  1. Covered California plans e.g. Kaiser, Blue Shield, HealthNet, Anthem etc., which are potentially eligible for Subsidies
  2. Off-exchange (same plans as above, but purchased directly from the insurers)- Not Eligible for Subsidies

Further, there are two types of subsidies addressed in this article:

  1. The APTC (advance premium tax credit)- Most Covered CA policies enjoy this subsidy (about 5 billion dollars worth*), whether Minimum Coverage, Bronze, Silver, Gold or Platinum (*Source: Covered California Active Member Profile of March 2017, reported June 1, 2017:  estimated using 828,973 policies, $499 average APTC)
  2. Cost-sharing Reductions (CSR)- only Silver Plan policies receive this subsidy

In contrast to recent headlines, Trump’s orders do not impact the APTC subsidy, which are funded specifically from a California health and dental insurance premium tax (of approx. 3.8%) on California insurance companies. (Truly, one could argue greater damage to the market place was done by Anthem, with its plans to pull out of all California counties except three).

“Trump’s recent order does not impact the APTC subsidy”

The APTC funding mechanism was enabled by the original PPACA legislation. However, Congress blew it when they neglected to include funding for the second subsidy, “CSRs,” leading to the current situation.

What are the CSRs? This misnomer is a buzzword for “coverage enhancements” made to a Silver Plan for applicants with household income from 133% to 250% of the Federal Poverty Level. It lowers copayments and deductibles (essentially making a Silver Plan into a Gold or Platinum+ Plan, at no additional premium). The cost for the coverage upgrade has been coming from the feds (until Trump’s orders).

“Enhanced Silver plans include more robust coverage for the price of the same Silver premium. These plans include lower copays, coinsurance and deductibles compared to normal Silver plans.” [Covered California, July 21, 2017]

Of the Silver plan policies issued in Covered California, about three-quarters qualify for CSRs.  It is noteworthy that whether your Silver plan enjoys CSR status or not, the monthly insurance


premium and the APTC subsidy remain the same.

Interestingly, Trump’s order only impacts adults, because children of these households are taken out of Covered California automatically, and sent to a Medi-Cal case worker for possible coverage (all children in households with less than 250% FPL). So what happens to the remaining adults? Assuming Congress does not provide funding, they would likely receive a supplemental premium notice for the extra coverage, with the option to downgrade to the regular Silver 70 plan for no difference in premium. Yet this may be a worst-case scenario, and here the story gets interesting.

A Small Subsidies Surprise

The deeper we dig, the greater the surprise.  The grand surprise follows this paragraph, but first, in a paper commissioned by the public healthcare exchange, Covered California** and published January 26, 2017, researchers estimated if CSR funding were cut-off (presumably by President Trump), overall Silver policy premiums would increase 16.6% for 2018, AND, rather than causing a multitude to lose insurance coverage, this Covered California-sponsored paper estimates Covered California would actually gain a net 20,000 new members!  (**source:  Evaluating the Potential Consequences of Terminating Direct Federal Cost-Sharing Reduction (CSR) Funding, By Wesley Yin, Ph.D., and Richard Domurat, Ph.D. candidate).

A Big Subsidies Surprise

Closer inspection of a Covered California report issued July 21, 2017 suggests a contingency plan was conceived last June, in the event CSR funding was ceased.  Taken verbatim from this report:

What happens if the cost-sharing reduction payments are stopped?

“In June, Covered California’s board took steps to protect most consumers from any rate increases caused by the uncertainty surrounding cost-sharing reduction payments. The board acted to place any rate increases caused by the uncertainty only into Silver plans. If the federal government does not act to provide certainty that CSRs will be funded, Silver-level consumers would see an increase in the gross cost of their premiums, they will also see an increase in the amount of  financial assistance they receive, leaving their net payment virtually the same.” [Source: “How Cost Sharing Reductions Work:” Covered California, July 21, 2017]

Recent Headlines

Reflecting on recent headlines, readers beware:  Yellow Journalism is prejudiced, jaundiced, and lurks everywhere…even from the world’s most respected news organizations:

Ending Health Subsidies: ‘People Will Die’  New York Times-Oct 13, 2017


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Stanford Children’s Health Drops Individual Health Plans

Stanford Children’s Health (SCH) has stopped accepting most individual health plans, according to letters shipped to patients in early December.

Stanford Children's Health Drops Individual Health Plans

Stanford Children’s Health Ships Patient Letters

“If you are receiving this letter we have identified that…you or your child have an upcoming appointment and SCH is NOT an in-network provider with your insurance.” (view entire letter)

What health plans will take SCH?  Unless you are covered on a group plan, individuals and families should consider HealthNet plans [Quote and Apply Here].




HealthNet PPO  may be purchased via Health Net or through a licensed insurance agent [Read more from the Stanford Medicine FAQ here]

Stanford Medicine has published an FAQ on the Stanford Children’s Health news story, which can be found at the link below:


Updates will be posted to  http://www.healthinsurance.stanfordchildrens.org as they occur


As you will read from the resources listed above, HealthNet is one of the few insurance options for individuals and families.




[Quote and Apply Here].

Breaking News: COBRA Coverage California Open Enrollment May 15 – July 15

Beginning Thursday, May 15, Covered California will launch a limited-time special-enrollment period for people who have COBRA health insurance, either Federal COBRA or Cal-COBRA (COBRA Coverage California), and would like to switch to an exchange plan.

People who have health coverage through COBRA (the Consolidated Omnibus Budget Reconciliation Act) will be eligible to shop for and buy coverage through Covered California from May 15 through July 15, including local assistance from Certified Insurance Agents, at no additional charge.  The two-month window mirrors a U.S. Department of Health and Human Services (HHS) ruling announced May 2 that allows COBRA enrollees to buy plans through the federal exchange up to July 1.

Read the full press release here or jump ahead for a Rate Quote, right now!

Website Problems Challenge December Deadline For California Individual Family Enrollment

For January 1st coverage, the December deadline for California Individual Family enrollment is just days away, yet the Covered California website is down for repairs.  Fortunately, you can download an application today, and even request free assistance from a local Certified Insurance Agent.


Already started an online application, but frustrated with results?  Get free help from a San Francisco bay area Certified Insurance Agent.  How?  Beginning November 26, 2013, simply login to coveredca.com and follow the instructions below:


  1. CLICK “Find Help Near You” in the upper right corner
  2. CLICK “Find An Agent”
  3. CLICK the name search box and type in “DEREN”
  4. CLICK on the search results for “Marc Derendinger”
  5. CLICK the “Continue” button
  6. CHECK the 3 agreement boxes and Accept this person as your designated agent.

Don’t worry, you can change or revoke this designation at any time, but the benefit to you is getting access to a personal advocate with 30 years industry experience…free of charge!

Now that you have completed the designation, call us and we start helping you right away!


California Marketplace

2014 Health Plan Options For Californians

For rate comparisons of new group health plans, click here.  For non-group e.g. individual family plans click this link.  Have an individual Kaiser plan?  Read this article.

Got questions? Frustrated with the Affordable Care Act?  Life’s too short to waste time with all this:  Request free consumer assistance from Certified Insurance Agents, below:

Request Free Pricing Information


Coverage California ACA Buyer Guide: Covered California

The Regular Open Enrollment (2015) is Complete, but the 2016 Open Enrollment begins November 1st

By Marc Derendinger  

The purpose of this Coverage California Buyer Guide is to help individuals, families, and early retirees take full advantage of the Affordable Care Act (ACA) Open Enrollment and Special Enrollment seasons, and avoid mistakes that could cost you money and opportunity under Covered California (Obamacare) and the private market.  This is a good reference article, so retain it until you need it.

Remember, Open Enrollment begins November 1st, but you may qualify to enroll sooner under a Qualifying Event Special Enrollment provision of the Affordable Care Act (ACA).  We published an introductory article about Special Enrollments here.

Buyer beware, because changes are coming to certain PPO networks.  If you did not use a Certified Agent last year, now is a good time to find one…they are a free service of Covered California and the good ones can help guide you through the network provider “game of hide & seek” that is being played by California health insurance companies, at the expense of California residents.

Health plans take on a new design structure, with new metallic” plans. (If you already know about metal plans and want to skip ahead to more advanced topics in this series, click here)

Unless you are insulated from all these changes through your participation in a Grandfathered plan, by 2014-2016 you will start to see insurance talk about “metals,” including Kaiser members (for more information on Obamacare vs. Kaiser, Click Here.)   For example, Bronze plans cover an average of 60% of costs, meaning that, on average, you will be responsible for paying 40% of your health care costs.  Also, most services covered by the Bronze plan are subject to a deductible or amount you must pay out-of-pocket before the plan will cover costs.

Download a PDF of the Metallic plans here:  CoveredCA Health Plan Benefits Summary

While the Bronze plan has the cheapest monthly premium, Silver Plans provide a lower risk of out-of-pocket costs, making it a better value for most people. Silver 70 plans cover an average of 70% of costs, meaning that, on average, you will be responsible for 30% of your healthcare costs.  Most common covered services under the Enhanced Silver Plan do not have a deductible.

The higher the metal value, the higher the value of benefits covered under the plan.  Hence, Gold plans expect to cover an average of 80% of the cost of medical services and Platinum, an average of 90%.  Higher benefits also lead to higher premiums, so talk to a certified professional to analyze all your options.  Under California law, only Certified Insurance Agents can compare your options under Medi-Cal vs. Covered California public exchanges vs. private market plans.  There is no added cost when you use these experts.

Insurers Will Battle Within Metal Tiers

If you are looking to benefit from lower prices in a new competitive market, I suggest starting with the Silver Tier, where five insurance companies (in Santa Clara County) compete for your business (see our Obamacare Rate Guide for examples).  Since they offer similar plans within the metal tier, companies are forced to compete on price and provider network.

For additional employer requirements under the Affordable Care Act legislation click here.  For rate comparisons of new group health plans, click here.  For non-group e.g. individual family plans click this link.

Got questions? Frustrated with the Affordable Care Act?  Life’s too short to waste time with all this:  Request free consumer assistance from Certified Insurance Agents, below:


Editor’s Note:  Marc Derendinger has 30-years experience in the California health insurance marketplace and serves on the agent advisory group for the State of California Department of Healthcare Services California Partnership for Long-term Care.  His insurance brokerage is located in San Jose and advises many well-known organizations e.g. San Jose Police Officers’ Association, City of Campbell, City of Santa Clara, plus individuals and family businesses throughout Northern California.California License No. 0563986






An Early Look At California’s New Health Insurance ObamaCare Marketplace

October 2013 marks a milestone in the implementation of ObamaCare national health care reform, as a new California public healthcare exchange kicks off its first open enrollment season. We have been monitoring preparations for this event, and offer a sneak preview of coverage in California’s new health insurance marketplace.

Reacting quickly to new federal law (ObamaCare) and guidelines, California is the first state to implement its version of the public health benefit exchange system, named “Covered California.”

What is a Health Benefit Exchange?

CoveredCA Health Plan Benefits Summary

“It is a new insurance marketplace in which individuals and small businesses will be able to purchase competitively priced health plans using ObamaCare federal tax subsidies and credits beginning in 2014,” according to Covered California Director Michael Lujan.  Also see www.healthcare.gov.

After attending meetings and listening to new Covered-CA Director Michael Lujan, I have accumulated a personal stack of Post-its, which I find particularly interesting, and I hope you do, too:

Facts & Features of the Covered California Health Benefit Exchange

  • There will be separate exchanges for individuals and small business.
  • Medical questions will not be asked; all will be accepted.
  • Financial questions will be asked only to qualify you for possible subsidies.
  • Applicants must be U.S. citizens or otherwise “legally present.”
  • The private insurance market will continue to exist and compete with public exchanges.
  • Rates & Information can be obtained through certified Assistors and Agents (e.g. Derendinger Insurance).
  • An Assistor is limited to providing information on Covered California quotes, whereas a certified agent may provide Covered California quotes as well as quotes from competing private health benefit exchanges and even individual insurers e.g. Kaiser, Aetna. (See updated story on Aetna) Also, a certified Agent can provide ongoing claims assistance and other service issues.
  • There is no extra cost to consumers for using the services of an Assistor vs. a certified Agent.
  • Open Enrollment is expected to begin in October, with coverage effective January 1st.
  • There are four enrollment methods:  Paper, Phone, Fax, or Web.
  • Public exchanges will limit plans to four categories, Platinum, Gold, Silver, and Bronze, which must line up with a coverage value of 90%, 80%, 70%, and 60%, respectively.
  • Participating insurance companies will develop new plans to fit into these “metallic” categories.
  • Rates will be updated this summer.
  • Rate Bands will vary according to one-year brackets, versus the current 5 or 10 year brackets.
  • There may be no greater than a three to one ratio from the most expensive to least expensive age band.  (This should present some challenges to the status quo, in my opinion.)

Is The Health Benefit Exchange Marketplace Good for California Consumers?

Paraphrasing Alan Katz, a long-time health industry observer:  “The new Covered California Health Benefit Exchange is not going to be as good as some people hope for, yet it is not going to be as bad as others fear.”  In between these lines lies the potential of this reform, which include guaranteed medical plans for early retirees, hope for families burdened with pre-existing medical conditions, and affordable healthcare plans for 7 million* uninsured Californians. *California Healthcare Foundation (December 2012)

For updates on California’s changing healthcare system, follow us on Twitter:

Follow Us: https://twitter.com/DerendingerIns

Editor’s Note:  The Derendinger insurance agency has served the California insurance market for 54 years.  Marc can be reached at (408) 252-7300.  You may find more information at www.derendingerinsurance.com.