If anyone should know about buying individual health plans through the state-run marketplace, it’s Steve Heyman.
The West Hollywood resident is a veteran health insurance broker of 28 years. He’s enrolled more than a hundred clients into subsidized policies sold through Covered California, himself included. And initially, he says, all was good.
"I was very excited about it and the premiums were wonderful," he says of his Blue Shield plan. But then he discovered in November that he was no longer enrolled in the plan.
Heyman is among up to 95,000 Californians who've been notified they’re no longer eligible for subsidized health insurance through Covered California. Instead, they've been informed their income qualifies them for Medi-Cal coverage.
Medi-Cal is California’s Medicaid program for low-income residents. And many, like Heyman, are not happy to find they’ve been moved onto it.
"I was very upset about it," he says. "Medi-Cal is not somewhere I want to be."
The Affordable Care Act provides subsidies to offset private insurance costs for those who make a certain amount above the federal poverty level: From about $16,000 to about $46,000 for an individual. Those who earn less qualify for low- or no-cost Medi-Cal insurance; they are ineligible for subsidized private insurance.
A person who begins with a subsidized private plan loses his eligibility for that subsidy if his income falls to a level that qualifies him for Medi-Cal.
"If someone is redetermined to be eligible for Medi-Cal, they are given a notice about it and their coverage is taking effect immediately," says Dana Howard, a spokesman for Covered California.
In Heyman’s case, he says hours of phone calls and letter writing uncovered a clerical error that improperly reclassified him as Medi-Cal eligible.
But Dylan Roby, a health policy professor at UCLA, says others may have been misclassified for a different reason: "If you look at income that people enter into their Covered California applications, they’re using estimated income for 2015."
Roby says a disconnect can easily arise when Covered California tries to confirm that information. In the absence of any other verifying documents from the enrollee, the state exchange relies on information provided by the federal government – specifically tax returns – to confirm a person’s income.
"They’re looking at modified adjusted gross income from the last available tax year, and right now the last available tax year was back in 2013, it’s not even updated for 2014 because the filing deadline hasn’t occurred yet," says Roby.
And because mistakes happen – be it due to outdated government information or human error – critics such as California Insurance Commissioner Dave Jones want Covered California to change its procedures.
Jones calls on the agency to let consumers keep their subsidized plans until any income mismatches are resolved, rather than automatically switching them onto Medi-Cal.
"In every other state we’re advised that people are being allowed to stay on their private health insurance through their exchange until such time as they’re actually electing to move to the Medicaid (Medi-Cal in California) program," he says. "Or they’re electing to pay the higher price associated with the exchange insurance without the subsidy."
Dylan Roby of UCLA agrees that alerting consumers that they have that choice of forgoing their subsidy and sticking with their private plan - rather than sending them a notice that they’ve been switched onto Medi-Cal - is a better way to go.
"In addition to following up and making sure the income information is correct...they also need to figure out what the actual person wants to do," he says. "That’s another thing that’s falling through the cracks."
Covered California defends the process and says its biggest priority is making sure people don’t experience a gap in coverage when they’re being switched into Medi-Cal.
Just how many Californians have been transferred from private, subsidized plan onto Medi-Cal, won’t be known until open enrollment ends next month.
In the meantime, Covered California spokesman Howard advises those who believe they’ve been erroneously moved out of their subsidized plan to appeal the decision with the exchange.