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Covered California Q&A

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.


Married Filing Separately?

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Question: I'm recently married and will be filing married/separate tax returns for 2019 tax year as he owes the IRS. However when applying to renew my covered cal insurance it states I must file married jointly. I've had covered cal insurance since it was offered and received the tax credit towards my premium and filed and paid taxes every year.

Answer: You will be ineligible for premium assistance if you're married and file separately, no exceptions.


Question: I am a small employer (two employees) who earn less than 50,000 per year. I am looking into covered ca small business plans. My quotes are coming in at 2500-3500 per mo. I can't afford to pay that amount. They mention possible tax credits to help offset costs. Would the credits reduce my monthly premium, or be assessed at the end of the year?

Answer: You would have to pay the entire monthly premium before earning the credit of up to 50% for two years. You claim the credit on the employer's annual income tax return, with a Form 8941, "Credit for Small Employer Health Insurance Premiums", showing the calculation of the credit.


Question: How much can you have in IRA's or savings accounts to be eligible for Covered CA tax credit?

Answer: Your assets, whether savings, retirement accounts, or real estate do not affect your eligibility for premium assistance. Covered California considers only your adjusted gross income (AGI).


Question: I sponsored my 84 years old mother when she got her green card a year ago. She is getting health coverage through Covered California, with a subsidy (as her annual income is around 35k). Can the government or state at some point ask me to repay that money? Is this a "means-tested public benefit"? Thanks

Answer: You will not be asked to repay your mother's benefits because you sponsored her green card application. Covered California (Affordable Care Act) premium assistance benefits are not considered means tested benefits.


Question: My 38 year old son lives with us and has zero income. We cover him 100%. He has medical insurance through Covered California (Medi-Cal) and he pays no premium and almost never any fees. Should I claim him as a dependent or will my liability for his medical cost me more than I save.

​Answer: Covered California requires him to file a tax return even if his income is $0. He needs to claim zero dependents on his return. If so, you can claim him as a dependent on your return without affecting his ​health insurance eligibility through Covered California.


Question: My dependent daughter goes to college out of state. How would coverage for her work?

Answer: If she's covered under your family health insurance policy, he will have out-of-network coverage while out of state. That means a lot more out-of-pocket costs for her routine medical expenses compared to in-network coverage at home. Ideally, she would enroll in the student health insurance coverage offered by her school. That way she get's routine care at school for low or no out-of-pocket expense and major medical coverage under your plan.


Question: I have a very small business (s-corp): 2 employees (myself + full-time employee). The employee currently has a subsidized plan under covered california. I would like to help pay for the employee's health care, but it seems like the employee would lose their subsidy if I did so. When getting quotes I saw that even if I paid 65% of the premium (of the employees current plan), the employees would still be losing over $100/month. Is there any way I can contribute via a cafeteria plan (IRS 125) or similar and they can keep their individual plan? Basically, some way I can contribute that will maintain their subsidy eligibility but not increase their taxable income. Note: my employee is full time and earns > $18/hour. I am covered by my spouse.

Answer: A Health Reimbursement Arrangement (HRA) would allow the employer to reimburse premium and/or out-of-pocket medical, dental, and/or vision expenses up to $4,950 for employee-only coverage and $10,000 for family coverage. Employer contributions under an HRA are pre-tax to the employee so wouldn't increase their reportable income. Employees participating in a small business HRA can access the ACA premium tax credit, but the amount of the credit will be reduced dollar for dollar by the HRA amount, so the employee can't double dip.


Does Rental Income Count?

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Question: We didn't make any money besides on our rental properties. And I'm not sure if that would apply towards our income. Would there be a penalty if we were supposed to be in Medi-cal instead of Covered Ca plan?

Answer: Your net rental income after expenses is taxable and counts toward your adjusted gross income (Line 37 of Form 1040) which is what you report to Covered California. If your adjusted gross income makes you eligible for Medi-Cal, your Covered California coverage will be terminated, but there is no penalty.


Domestic Partnership Eligibility?

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Question: I now quality for health insurance assistance. If I enter into a domestic partnership with someone who is over 62 (opposite sex) who does not qualify for assistance, would I have to include his income to determine if I still quality for assistance?

Answer: In general, California now affords the same rights and responsibilities to registered domestic partnerships (RDP) as married individuals. However, because the IRS does not recognize RDPs as married individuals for federal tax purposes, domestic partners will continue to been seen as unmarried individuals by Covered California. Your eligibility for premium assistance is based on your income alone.


Question: My child is a full time dependant that lives at home and works part-time. This year she earned over the limit of nonreportable income and had to file taxes. My question is this, do I report the income earned through the part- time job that is over the threshold or the entire 9k? Secondly, is it okay to include under entire household income (my income, self employed) estimate, or should I list the income for my dependant alongside the dependant name?

Answer: This is the easy part of your question: all of your adult child's $9,000 income must be reported, not just the amount over the threshold. Part two: If you wish to continue claiming her as a dependent, you must add the $9,000 to your household income. In that case, your dependent must opt out of her personal deduction when filing her income tax return. Otherwise, she can apply for coverage as a one-person household. The income of $9,000 makes her eligible for Medi-Cal, no cost insurance, but you would give up the dependent deduction on your taxes.

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