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Covered California: Impact of American Rescue Plan Act

• Under the American Rescue Plan (ARPA), an estimated 3 million Californians will be eligible for new subsidies and almost a million more will become eligible for Medicaid
• Covered California will hold a special enrollment period
• Group plans may also be impacted as more Californians become eligible for subsidized coverage on the exchange

On March 18, 2021, Covered California released new data and announced new partnerships aimed at leveraging the ACA subsidies and other premium assistance passed as part of the recently-enacted federal American Rescue Plan Act (ARPA). Covered California estimates that more than 3 million Californians will be eligible for new subsidies and almost a million more will become eligible for Medicaid under ARPA.

New Covered California Special Enrollment Period

From April 12, 2021 through the end of this year, Covered California will hold a special enrollment period to give uninsured and unsubsidized Californians time to sign up for coverage on the exchange.

ARPA Subsidies

For 2021 and 2022, ARPA has capped the price of coverage on the exchange to 8.5% of household income, and has lowered the cost-sharing percentages at all income levels below 400% of the federal poverty level (FPL).

As an example, below are the premium levels for those who enroll in a marketplace benchmark silver premium plan this year, according to the Kaiser Family Foundation.

Additionally, those already enrolled in covered through Covered California will have their premium payments adjusted in accordance with the lower premium percentages beginning automatically in May. According to Covered California, most of its currently enrolled customers will see an average of $119 per household in premium savings. And many individuals who receive unemployment compensation during 2021 will be entitled free coverage on the exchange.

Impact on Employer-Provided Insurance

While this is important information for consumers on the individual market, it may also impact group health plans as more Californians become eligible for subsidized coverage on the exchange. Under the Affordable Care Act (ACA) employer mandate, an applicable large employer (one with 50 or more full-time equivalent employees) that does not offer minimum essential coverage to substantially all (95%) of its full-time employees and their dependents may be subject to a penalty if any full-time employee obtains coverage on the exchange. Similarly, if an applicable large employer provides coverage that is either not affordable (with the employee’s share of premium at more than 9.83% of their annual household income) or does not provide minimum value (covering at least 60% of the total allowed cost of benefits expected to be incurred under the plan), then the employer will pay a penalty if one or more full-time employees received subsidized coverage on the exchange. Because exchange coverage is about to become much more affordable for many Californians, it is more likely that employees will seek coverage on the exchange, potentially exposing more employers to both of these penalties.

About Amy Donovan
Amy is Keenan's Vice President of Legislative and Regulatory Affairs, authoring the firm's Briefings and position papers on legislation, regulation and litigation that have an impact on the firm and its clients.