Why Covered California May Not Be For You

Kelley Weiss, CHCF Center for Health Reporting

The health exchange – Covered California – is open for business and all over the news. But many Californians won’t land there if they need health insurance for themselves or their families.

Instead they’ll turn to private health insurance marketplaces or buy coverage directly from insurance companies or brokers.

For the roughly two million Californians who currently buy health insurance on their own, only about a third will qualify for government tax subsidies -- and to get the subsidy, people must buy through Covered California.

But without that subsidy to offset prices, there’s little incentive for people to buy on the state exchange, says insurance broker Carrie McLean. She’s the customer care director for the largest online health insurance broker in the country, eHealthInsurance. It operates like an Orbitz for health insurance and there are other similar online businesses.

She says many people who earn too much to expect government help will be shopping for off-exchange plans, where they’ll have more options.

What are off-exchange plans? As you might guess, they will not be sold on Covered California.

But off-exchange plans will still be required to meet 10 benefits standards outlined in the health care law.

On Tuesday, during the first day of Obamacare open enrollment, McLean cautioned that people shouldn’t make any rushed decisions.

She says many of the off-exchange plans are not yet available because government regulators still need to approve them.

“It may not be a good time today to actually buy a plan,” McLean says. “You may not be seeing all the options that are going to be available to you.”

The California Department of Insurance is tasked with approving most of those off-exchange plans. And to date the Insurance Commissioner’s office reports that many are still under review. Some of these plans are expected to be approved this week while others will be available later in the month.

McLean says that’s why it’s important for people to wait until you can compare all of your choices.

“There’s time, you know, take a breath and know that you have time to get these new ACA plans,” she says.

The Affordable Care Act plans will go live on Jan. 1. McLean says people have until Dec. 15 to enroll in a plan that will start on the first of the year. And they can enroll as late as Mar 31, 2014 for coverage.

Here’s another thing to keep in mind: most people with existing individual policies in California will get new plans by the end of the year. That’s because those individual plans don’t meet the standards outlined in Obamacare and must be upgraded to comply with the law.

So when that letter from your insurance carrier shows up in the mail, McLean says to pay attention.

“If you’re set up on an electronic withdrawal from your bank account and that premium just got increased, you may be hit with that in December or January and not realize that your plan got moved and it may be costing you more,” she says.

That’s the other thing. All plans will have to cover a certain percentage of medical costs and include standardized benefits. McLean says that means that the more than one million California residents who now have individual plans, and no subsidies, will very likely be paying a higher monthly premium.