Tom Schrette and Alan Cash

Tom Schrette and Alan Cash

Dear Tom and Alan:

Hope you both survived the fire. You must be really busy with all the insurance claims coming in.

However, I still have to ask my question: what is the deal with the subsidy being removed by President Trump?

I’m not on Covered California, but I know people who are (my daughter, for example). She doesn’t make much money at her job so she’s concerned about having to pay more.


Tom: Thank you for your letter and for your concern. We’re both OK.

We don’t do insurance for houses, cars, etc., so we’re now busy during the Annual Enrollment Period (AEP) for prescription drug plans and for Medicare Advantage plans, but we don’t have any insurance work for fire damage.

Al: The whole system around subsidies is pretty complicated, so let me go through the basics for your daughter’s question.

First, anyone can apply for health insurance through Covered California. It is simply an “exchange” or “marketplace” where individuals, families, and/or groups can shop for plans offered by different companies.

Second, depending on income, individuals and families can get subsidies to help them pay their monthly premium (it’s not the same for groups).

Third, the subsidies apply whether they apply for a bronze, silver, gold, or platinum plan.

Tom: Here’s the complicated part: In addition to the subsidy available on all the “metal” tiers, there is a “cost-sharing reduction” that can accompany the silver, and only the silver, that reduces what the subscriber has to pay for doctor visits, deductibles, and other patient costs.

This benefit, but not the original subsidy, is the target of President Trump’s plan. According to the Los Angeles Times, the Trump administration argued that “…paying for the subsidies was illegal because Congress had not appropriated the money for them.”

Al: Here’s another complicated part: health insurance companies in California are adding a surcharge to the rates for silver tier plans because the federal government is no longer funding this particular subsidy.

However, Covered California, anticipating this move by the administration, states in their agent briefing email: “…in most cases consumers will not see a significant change in the net price of their monthly premium since the premium tax credit would also increase.”

Tom: Since Anthem Blue Cross and Health Net are leaving some parts of California, Covered California says they will assign subscribers to a new and similar plan for 2018 if they don’t choose a plan during the open enrollment period this year.

It definitely caught my attention that HealthCare.gov lists open enrollment as Nov. 1 to Dec. 15, while Covered California says open enrollment is Nov. 1 to Jan. 31, 2018.

Al: Our apologies to those who are now confused about the difference between Open Enrollment and the Annual Enrollment Period. Hint: the AEP is for those on Medicare.

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Submit questions at schrette@gmail.com or alancash@gmail.com.