Health Care In The States

California Sets Standard Deductibles, Copays For Insurance Plans

By Julie Appleby

February 13th, 2013, 4:09 PM

California on Wednesday became the first state to standardize health insurance plans under the federal health law, which regulators say will make shopping for health insurance easier  when new online marketplaces begin enrolling customers in the fall.

The state has set specific rules governing how much insurers can charge consumers for such things as office visits, drugs or emergency room care.

California builds on the federal law’s requirement that insurance plans be classified as bronze, silver, gold and platinum, based on the scope of their coverage.  In addition to meeting those federal rules, California is requiring insurers to set standardized deductibles and co-payments. That will allow consumers “to make apples to apples comparisons in ways they have not had in the past,” said Peter Lee, executive director of Covered California, the state’s new marketplace.

Under the rules, the most comprehensive policies classified as gold and platinum level coverage  will have no annual deductibles and offer office visits as low as $25.  All silver plans, the moderate-price option, will have $2,000 annual deductibles for individuals, charge $45 for primary care office visits and $250 for using emergency rooms.  Bronze plans, expected to have the lowest premiums, will have $5,000 deductibles for individuals and $70 office visits. Annual family deductibles are double those of individuals.  Consumer cost sharing amounts will be lower for people whose income qualifies them for subsidies.

In announcing the rules, the state also launched its Covered California website,  part of what is expected to be an all-out effort to reach millions of state residents who will be directly affected by the law because they are uninsured, buy their own coverage, or work for a small employer.

The state does not yet have premium information from insurance carriers, but expects to announce those rates in June, Lee said.

But it does have estimates on how much low-and-moderate income Californians will pay if they qualify for a federal subsidy.  Federal law sets that amount based on household income. For a family of four earning $23,550, for example, the monthly payments could be as little as $39 with the federal government picking up the rest of the premium. That same family might see an office visit copayment of as little as $4 because the federal law also includes cost-sharing subsidies for some lower-income Americans, Lee said. California’s rules on plan benefit design ensure that consumers will know “what that is going to buy them,” Lee said.

State lawmakers authorized such standardization in a law creating the state’s new online marketplace, where individuals and small businesses will shop for coverage that goes into effect Jan. 1, 2014.

Other states may go in other directions. Some are likely to allow insurers to develop a wide range of coverage options, so long as they stay within the federal law’s requirements for bronze, silver, gold and platinum plans.  For example, one insurer might have a $30 office visit copayment, while a second may require a $50 co-pay, even though both are silver or bronze-tiered plans.

Lee said he expects residents of every California county will have at least two insurers to choose from.

Updated on Nov. 15 to include pricing for family policies.

13 Responses to “California Sets Standard Deductibles, Copays For Insurance Plans”

  1. Alison Knopf says:

    KHN: Are those deductibles per person or per family? Eg if you have two parents and two kids you have a $20,000 deductible?

  2. Char says:

    Does this mean that a company, for example WalMart, who’s insurance is through another state, but is located in CA, must follow those same rules?

  3. Julie Appleby says:

    Hi Alison,
    Thanks for your question.
    Covered California released some charts showing standarized benefits for families that qualify for federal subsidies. In those plans, the deductible ranges from $1,500 to $2,000 for the entire family. I have requested more information about deductibles in the unsubsidized family plans and will update when I get it.

  4. Alison Knopf says:

    Thanks KHN. But what if you do not qualify for a subsidy? You are middle class, self-employed, have two kids, both adults earn $50,000 each, income $100,000, what is your deductible, $5,000 or $20,000? Not even knowing what the premium is….your reporting is much appreciated and very valuable.

  5. Stephen says:

    Why is the generics co-pay for some of the plans so high ($25)? Is this a max ? Are there other offsets to lower this to comparable with most commercial plans that have $10 copays?
    Thanks!

  6. Craig says:

    Alison-

    If you don’t qualify for a subsidy you will be able to purchase group or non-group coverage outside of the Public Exchange for market rates. You will want to compare the ” net cost” of participating in an Employer (group) plan or purchasing coverage yourself.

  7. Daniel says:

    Is California really the first state? Didn’t Vermont select standardized plans last year?

  8. I’m an independent benefits broker so I’ve been following the ACA developments with a fair degree of interest. The questions that I never seem to see answers to are:
    1) What happens to the Exchange Rates with ZERO cost controls on actual health CARE charges?
    2) Just where does the Federal government expect to find the funds to pay all these subsidies? From its huge budget surplus?
    3) Can we say ‘taxes’, people?

  9. John Spek says:

    KHN
    I notice not many discussions address the “sunset clause” of the subsidy.
    Why is that being left out?

    After all -
    if there is a mandate to purchase,
    and the plan cost increases in ALL plans due to the law,
    and then the purchase help goes away -

    this creates a financial crisis in a household.

  10. Julie Appleby says:

    Hi Alison,
    Covered California just responded to my query about the size of the family deductibles in the unsubsidized Silver and Bronze plans. They will be double the amount of the individual deductibles, which are what are shown on the chart included with this story.
    So, Silver plan deductibles for a family would be $4,000 a year and for a Bronze they would be $10,000.

  11. The Premium for a family making $100,000 per year for a Bronze Plan will be $14,245.00 per year. $1187.00 PER MONTH! Use the Kaiser premium calculator by follwing this link.

    http://healthreform.kff.org/SubsidyCalculator.aspx

  12. Ozzie says:

    Any reasonable insurance executive will tell you that the more policy holders you have paying premiums, the lower the premiums. Lower premiums attract more customers. The more paying policyholders you have, the larger the risk pool. The larger the risk pool, the lower the risk. The Heritage Foundation (HF) had the right idea when they proposed the individual mandate back in the 1990′s. Former Massachusetts Governor Mitt Romney liked the HF idea so much, he invented Romneycare and got it enacted. Romneycare has an individual mandate. Ask anyone in Massachusetts and they will tell you, Romneycare is working very well. I recently visited family there and they really like Romneycare! In fact, Romneycare works so well, President Obama adopted the Romneycare idea, the individual mandate idea, and he proposed Obamacare. Republicans simply don’t want to admit the the original HF idea of having the individual mandate, is really their idea!

  13. Frank says:

    @ OZZIE: Yes, premiums would go down if more young health individuals were insured. Now, back to reality, why would someone pay $5000 a year in premiums if they can get by with paying a $695 per year fine and having guaranteed coverage after getting sick? Where do you think the money is going to come from for those that are being subsidized, Obama’s magic wand?

    Central planning has a huge tendency to provide perverse incentives: Not getting a job (someone else will pay for my healthcare), having kids out of wedlock (someone else will pay for their healthcare), hiding income (the less I make, the more the government will pay for my healthcare). If Romneycare is so great, then citizens in other states can vote to have something similar in their states. Then the rest of us have an option of moving to a state where they get it right.

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