For Covered California members who have received unemployment benefits in 2021 the subsidy to reduce health insurance premiums can increase dramatically. The catch is that you have to have reported you received unemployment insurance benefits on the income section of your Covered California account.
The enhanced unemployment subsidy benefit is only for 2021 and is part of the American Rescue plan that bumped up the subsidies earlier in the year. Covered California now has the application software updated to further increase the subsidies for households who received unemployment benefits for as little as one week in 2021. The subsidy increase can be very large and makes the household members eligible for an Enhanced Silver 94 plan.
2021 Unemployment Insurance Benefit Boosts Subsidy
I recently updated a client’s Covered California account to reflect the unemployment insurance benefits one of the household members received in 2021. This household has three members, all in different plans and the household income is approximately $75,000. One of the family members was enrolled in a Kaiser Gold plan at the beginning of January.
This person was receiving $677.19 in a federal subsidy and an additional $29.66 in California Premium Assistance Subsidy. The total subsidies of $706.85 reduced the Gold plan down to $374.23 per month. In April, the American Rescue Plan subsidy was implemented and the federal subsidy increased to $895.57. The California Premium Assistance Subsidy went away.
The member’s health insurance rate dropped to $185.51 with the subsidy boost. The member called me about a billing problem and I learned that a household member had received unemployment benefits during the past several months. We immediately went and updated the income section of the Covered California application with the unemployment income.
The unemployment subsidy benefit further increased the subsidy. Because everyone was now eligible for the Enhanced Silver 94 plan, we switched this member from the Gold to the Silver plan. The new subsidy of $1,016.53 dropped the health plan rate to $1 per month. The better member cost-sharing for copayments and coinsurance will save the family even more money.
Unemployment Income Update To Covered California
In order to receive the unemployment benefit increase subsidy, the unemployment insurance benefit income must be listed in the Covered California application. You must use a specific category of income for the system to recognize it and apply the larger subsidies.
Enhanced Silver 94 Plan Eligibility
For some households the subsidy increase will be very little to nothing if they already have a low income to begin with. The other big benefit is the eligibility for the Enhanced Silver 94 plan, which are better than a Gold or Platinum plan. Covered California does this by applying an artificial income amount to the household of just above Medi-Cal levels. This level is in the range for the Silver 94 plan and applies to all household members.
If a person is already in a Silver plan, after the unemployment update, they will have their plan increased to the Silver 94. If a household member is in a Bronze, Gold, or Platinum plan, they can switch to the better Silver 94.
An increase of income has no effect on the new unemployment subsidy, I know because I have done it. One client who was receiving the unemployment subsidy benefit wanted to increase their income to reflect a new income stream. We increased the household income by $15,000 and the subsidies stayed the same.
We don’t know how the IRS will deal with this unemployment benefit subsidy increase. We are not sure if you can take the larger subsidy when you file your federal income tax return for 2021. My suggestion is if you have received unemployment insurance benefits in 2021, update your Covered California application to reflect it, and receive the extra subsidy and Enhanced Silver 94 plan. This is only good through 2021.