Covered California is going through an adjusting – eliminating or jerking – the subsidy from some of their members. The consumer did nothing wrong. Covered California made the error and started awarding too much subsidy to some consumers. Apparently, the extra-subsidy occurred when the consumer or Medi-Cal made a change to the consumer’s income.
The first indication that something was amiss for one of my client’s was receiving one of those alarming and awkwardly worded letters from Blue Shield announcing a rate change to the consumer. These letters are awkward because Blue Shield lists the full premium rate while mentioning that a subsidy may apply. At first glance, it sounds as if the family had lost all the subsidy, but that is not the case.
Blue Shield Alerts Consumer That Their Subsidy Has Been Jerked
This particular Blue Shield letter was triggered because Covered California had audited the consumer’s account, found they were receiving too much California Premium Tax Credit subsidy, and eliminated it. Blue Shield had to re-adjust the billing and sent the poorly written letter.
The failure on the part of Covered California is that they waited two weeks before generating a letter to the consumer explaining the situation. While the letter apologizes for the error, they never really spell out how or why it happened. It is sad the family had to learn from their health plan that their monthly bill was being adjusted.
Covered California System Error
I can tell you this family was originally receiving a California Premium Tax Credit subsidy of $13.62 in January 2020. Medi-Cal got involved, based on erroneous information, and put the whole family in Medi-Cal, when only their daughter should have been Medi-Cal. After that was resolved, the parents back in Covered California, the California Premium Tax Credit Subsidy jumped to $102.08 per month.
There was another adjustment to the income and that dropped the California Premium Subsidy down to $88.69. But apparently, even with the lower income, that amount was too high. The family received the $88.69 subsidy through June. Then Covered California recalculated how much they were eligible for, determined they had already received too much California Premium Subsidy, and eliminated altogether.
For July, the family’s premium will jump $88.69. They are still receiving the federal Premium Tax Credit subsidy. Hopefully, Covered California caught the error in time to spare the family having to repay over $500 back to the California Franchise Tax Board when they file their 2020 State income tax return.
Covered California’s Belated Letter To the Consumer
We regret to inform you that while your premium subsidy was correctly calculated when you originally enrolled, there was an error that incorrectly adjusted your premium subsidy when a change was reported to your account. This error caused your net premium (the amount you pay after financial help is applied) to be incorrect for your plan (Silver 73 PPO) with Blue Shield. We fixed the error effective the month of July and sincerely apologize for any inconvenience this may cause you.
You will get an eligibility notice with details about your premium subsidy.
Old monthly premium: $395.27
New monthly premium starting July 1: $483.96
This family can absorb the increase to the health insurance premium. Other family’s may not be so fortunate. The other sad part of this failure is the time wasted on the part of the family, agent, and Covered California trying to figure out why the subsidy was jerked in the first place. A simple solution would have been to send out the letter of the subsidy elimination before it took place so people were properly notified and prepared.