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Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.


Should I Go Through Covered California?

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Question: Our medical insurance has been through my husband's work, and he is retiring April 1 (with no retirement benefits). He is over 65, but I am 59, giving me 6 years before Medicare. I've run the numbers, and we won't be eligible for subsidies. It seems I should purchase insurance on the open market through an insurance company's individual plan. Am I missing something; should I consider going through Covered California? I thought the only reason was to get financial help with the monthly premiums, and can't see a reason otherwise. If I should go through Covered California anyway, please explain why.

Question: If you are not within the income range for a subsidy, there is no compelling reason to apply for coverage through Covered California. Some might argue that you may as well apply through CC now just in case you are eligible for a subsidy later. That way you could simply adjust your income in your online CC account and become eligible for subsidies immediately. However you could complete your CC application at that point where you income drops. It would take just a few more minutes to do it then. Purchasing an off-exchange plan directly from the insurer also offers some plan designs not available on Covered California. Finally, you don't have to disclose your personal IRS history to the insurer in a direct purchase as you would with Covered California.

4 Comments

Agent Blue …

Perhaps your motivations for being a licensed agent need to be reexamined. If your overriding concern is for your compensation, then you are really in the wrong business. As professional insurance producers, most of us are not focused on our commissions, we are focused on helping people get what they need. I know this: if I submit an application for insurance, and the policy is issued, I get paid.

If I’m supposed to get a check and it doesn’t arrive, of course I follow up on it, but I don’t even stop to compute my commissions on any type of policy I transact. I trust the insurance company to compensate me according to my contract. And, none of my health insurance contracts are for only 3%, so I don’t know where you’re getting that number from.

And, yes, I have spent countless hours on hold with Covered Californa customer service (mostly in 2013 and early 2014 — in the second half of 2014 and throughout 2015, there were almost no such incidents), as well as untold hours defending several of my clients against their unlawful terminations from their health plans and forced enrollments into Medi-Cal, including handling their appeals with the state Dept of Social Services. As much as they have wanted to pay me to do that, I have not accepted a single penny for doing so, because I perceive it as part of my public responsibility as their agent. It is an obligation as a licensee of the State of California.

Do my commissions compensate me for that? Of course not, But when I promise my client that I will get their health insurance restored and go on to do that, the payback is in the referrals I get from them — and not just for health insurance, but for life insurance, auto, homeowners, and even an annuity or two.

Agent Blue …

California Insurance Code Section 33 makes it CRYSTAL CLEAR that there are no “Brokers” transacting Life, Disability, or Health insurance anywhere in the State of California:

  1. “Insurance broker” means a person who, for compensation and on behalf of another person, transacts insurance other than life, disability, or health with, but not on behalf of, an insurer.

In other words, the title “Broker” is reserved for persons who hold a Property and/or Casualty Broker-Agent license, and requires those persons who want to act as a Broker to first file a $10,000 surety bond with the Department of Insurance. I am also P&C licensed, but I am not a Broker, I am an agent when I transact auto, homeowners or commercial insurance..

Now, I realize that every health insurance company I am appointed with refers to me as a “Broker” but that’s their problem, not mine. No agent transacting life, disability, or health insurance is permitted to charge any person a fee for the services we render. I also hold the Life & Disability Insurance Analyst licence (there are only about 30 of us in the entire state of California), and we are the only ones who can lawfully charge fees for services related to Life, Disability, or Health insurance, but NOT if we are going to receive a commission for the transaction of any of those forms of insurance.

A person who charges any consumer a fee of any amount for transacting Life, Disability, or Health insurance commits a crime in this state, and I would strongly caution you both to read up on this in the Insurance Code, where it is also discussed in Sections 1621, 1622, and 1623.

I am a Covered California Agent subsisting on 3% commission while spending hours on service with customers who get canceled out of the blue because they do not understand the 90 day grace period, which carries have figured out how to wittle down to 45 days, or because Medi Cal has been in the clients account changing things and causing their insurance to cancel. These problems take hours and hours to unravel. Are brokers allowed to charge a broker fee for these services? Are other brokers experiencing this, or are you telling customers you are only enrolling them and they are on their own for service? I would welcome other perspectives. Thank you.

In the described circumstance, there is no essential need to apply through CoveredCA. “Mirror Plans” with the same premiums must be offered off-exchange. Those premiums could be higher or lower than premiums for other plans from the same insurer which are not offered on the exchange.

All plans should be evaluated carefully, taking into consideration not only the monthly premium, but the trade off in benefits at different levels of coverage. For example, a Silver plan may offer a monthly premium of $550 for a person age 59, and a Gold plan’s premium might be less than $100 more per month. But the Gold plan offers significantly lower out-of-pocket expenses for doctor visit copays ($30 vs $45) and copays/coinsurance for other medical needs or hospitalization — especially no medical deductible, which, in a Silver plan would be $2000 per year. Prescription drug copays are also lower. The $1200 additional annual premium would easily be surpassed by the $2000 deductible in the event of a one or two day hospital stay, not to mention the lower cost of the stay under the Gold plan.

All too often, consumers fail to do the math and choose their coverage on the basis of premium alone, and expose themselves to higher out-of-pocket costs that eventually outrun the higher premium cost of a plan better suited to their needs.

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