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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.

January 2012 Archives

Double Coverage Quandry

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Question: My employer offers health insurance to me at no cost to me. My husband also has me covered through his insurance at his place of employment. I have been told that my insurance through my employer has to be my primary. I want to opt out of my insurance through my employer and only have my husband insurance, but my employer is telling me that I can not opt out and that I have to take the insurance. Is this right? The board pays our insurance, but I would rather them put my board paid money into and annuity.

Answer: The responsible thing to do would be to take the coverage your employer is offering and cancel the coverage being offered through your husband’s employer. Your sense of entitlement is especially astonishing at a time when many people lack good health care and some can’t get it at all.

Question: My employer has just sent me an email stating he will no longer cover the insurance premium for my spouse and my cost for myself will increase. He states this is effective in March. Is this legal? This is a small Colorado employer.

Answer: Yes. Your employer was never required to cover your spouse and did so voluntarily. If an employer offers a group health plan, he or she is required to be fair. For example, it the employer offers coverage for spouse or other dependents, he or she must offer like coverage to all employees of that class, e.g. hourly, salaried, management, etc..

From what you say, your employer is making a choice to no longer contribute to dependent coverage for all enrolled employees effective on the March 1 plan renewal date. That is his right and probably a necessity for the health of the business. Employer sponsored health insurance costs have increased by 50% over the last 5 or 6 years.

Question: I moved my family from Virginia to Alaska last week. We have an individual family policy (not group) from Anthem BCBS Virginia. My intention was to keep the Virginia policy and apply for a new policy when we got here. Since arriving I have not been feeling well. It may be nothing but my concern is that if I visit a doctor and there is something wrong I may not be able to get a new policy. Is this a ligitimate concern and what if any recommendations do you have? Thank you!!

Answer: Your Anthem Blue Cross Blue Shield of Virginia policy covers you in Alaska. As long as you get medical services from a provider who is in the Premera Blue Cross of Alaska network, your coverage in Alaska will be the same as they would have been in Virginia. If you have something wrong, get treatment. It could be something that would become serious if not treated now. Go see a doctor!

Normally, your current policy will cover you in Alaska for months (six months is probably the limit). You should apply for coverage with Premera Blue Cross in Alaska if you live there on a more permanent basis. If you have developed a serious medical condition in the meantime and do not qualify for individual health insurance with a new carrier, there are other options like HIPAA and PCIP.

Question: Why can’t employer reimburse individual insurance premiums?

Answer: Employers can reimburse individual health insurance premiums, but the reimbursement is not tax deductible for the employer and is taxable as income for the employee. The employer would have to establish a Health Reimbursement Arrangement (HRA) in order to enjoy the same tax advantages of group health insurance - deductible premiums and pre-tax income for the employee.

Maternity Coverage Required in CA

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Question: Can you opt out of mandatory maternity coverage in California if dont want it?

Answer: Not if you are covered by a group health insurance plan. California law requires all employer sponsored group health plans to include maternity coverage. While it seems illogical for a single male or an older female to be required to pay the extra costs associated with insuring for maternity coverage when they will never use the benefit, it is one of the basics that makes insurance work, that is: those with no claims finance those with claims. It makes the maternity benefit affordable for all those who need it.

In the individual health insurance market, many plans are available without the maternity benefit. This makes those non-maternity plans more affordable, but also makes those plans with a maternity benefit very expensive for the few who require it.

Exchange Eligibility 2014

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Question: Who will be able to buy health insurance in the Exchange?

Answer: Exchange eligibility will be quite simple. Starting in 2014, lawful California residents (undocumented aliens are prohibited) may enroll in a qualified health plan through the Exchange. Also in 2014, small employers (50 or less full time employees) can offer coverage to their employees through the Shop Exchange. California may allow access to the Exchange for large employers in 2017.

Question: How many people are expected to obtain coverage in the California Health Benefit Exchange?

Answer: Approximately, 6.5 million Californians will be eligible for coverage in the individual Exchange. It breaks down this way: 2 mil Medi-Cal eligible, 2.4 mil eligible for cost-sharing subsidies, and 2 mil eligible without subsidies. In addition, about 3.8 mil workers will be eligible for coverage in the SHOP Exchange. That rounds out to 8.3 million Californians eligible for coverage in the California Health Benefit Exchange.

The number of eligible who actually enroll will of course be something less than 8.3 mil. How much less remains a guessing game at this point, but 5 million enrolled members by 2016 would not be unreasonable. The Exchange is likely to start with the subsidized population and grow over time depending on their ability to keep administrative costs low and provide a first-class user experience.

Maternity Care for Dependents

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Question: Does Obamacare provide maternity for married dependents?

Answer: The Affordable Care Act (ACA) includes several categories of essential benefits to set a benefits floor for all health insurance plans from 2014 going forward and maternity and newborn care is one of those categories.

But I think you may be asking another question. It sounds like your married son or daughter is covered under your health insurance policy and you have a grandchild on the way. We don’t know yet how that situation will be covered in 2014, but today, the maternity and delivery costs will not be covered by your health insurance.

Deductible Roll-Over at Year End

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Question: If you are treated for an illness in the last few days of December and have to have additional treatment in January of the following year for the same illness do you still have to meet your deductible again.

Answer: Generally, the annual deductible resets on January 1st. But you may want to contact your health insurance company to ask about “fourth-quarter roll over.” Some health insurers will allow dollars paid toward your deductible in the final months of 2011 to “roll over” or count toward your 2012 annual deductible. This can give you a head start toward meeting your deductible in the new year.

Question: We purchased a private plan through Golden Rule / United Health Care in 2009. They excluded coverage for my 7 year old son’s ears for life. Anything at all to do with his ears. Is this considered a grandfathered plan and can they still deny coverage for his ears?

Answer: The Affordable Care Act (ACA), or Obamacare depending on your politics, legislated that no exclusions of coverage would be allowed for children’s (through age 18) health insurance. Most sane individuals would see the intent of the law was to make health insurance for children guaranteed-issue - meaning they can’t be turned down because of pre-existing conditions. The insurance industry chose to interpret the law differently with the result that in most states child-only health insurance is no longer available (California being one of the exceptions) because the insurers refuse to comply with the law’s intent. I guess your son’s health insurance carrier will keep doing what they want until forced not to.

Question: I am turning 65 and work half-time. I am not eligible for health benefits, so I am on my wife’s policy. It is at a state university and it is through Anthem. Will I be able to continue on her policy, or will Anthem kick me out?

Answer: When you turn 65 you have health insurance available. It’s called Medicare. Your wife’s employer is no longer obliged to offer you coverage as a dependent on her employer-sponsored policy. Medicare is excellent coverage and it’s available to you for less than $100 per month. Anthem will not “kick you out” because they collect a nice piece of change from your wife’s employer as long as you remain on the group plan. Do the right thing and opt for Medicare.

Pre-Tax Health Insurance Premiums

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Question: Do you have to have a cafeteria plan for health premiums to be pre-tax?

Answer: Yes. A version of the Section 125 “cafeteria plan” can be designed for premiums only. This single purpose plan is referred to as a Premium Only Plan or POP plan. With a POP plan in place employers may deduct the employee’s portion of the company-sponsored group health insurance premium directly from said employee’s paycheck before taxes are deducted. POP plans cannot be used to pay individual health insurance premiums.

Reimbursing Employee Deductibles

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Question: I own a small business and have a health insurance plan for myself and 6 employees. Most of us have elected high deductible insurance coverage - over $1000 deductible. If I choose to reimburse the employees for their health insurance deductible, what would be the best way to do it?

Answer:To do it right you will want to create a Health Reimbursement Arrangement or HRA. If you reimburse employee out-of-pocket medical expenses without a proper HRA in place, you’ll be reimbursing with after tax-dollars. The HRA makes the reimbursements tax deductible to the business and pre-tax for the employee.

Question: Will the essential benefits package apply to plans outside the Exchange as well as inside?

Answer: The essential health benefits package is aimed at ensuring that health plans in individual and small group markets offer a minimum of coverage, both inside and outside of health benefit exchanges, scheduled to take effect in 2014. Care must be taken to ensure that identical rules apply to health insurance benefits regardless of where they are sold to avoid adverse selection. Comparable benefit packages must be offered both in or out of the Exchange, otherwise, sicker patients will gravitate toward the market where more comprehensive coverage is sold. To the extent the rules are different outside the Exchange versus inside, there is room for market manipulation. California will need to consider how strongly to link rating rules inside and outside.

Question: My husbands insurance was cancelled for the year because he did not have enough hours due to unemployment. What can we do for insurance. His union is offering us coverage for $7000. we can’t afford that! We are hoping to stay healthy and get through the year. Any advice?

Answer: Staying healthy will definitely make thing easier, but if you need medical care, here are some other ideas:

  1. Check out your local free clinic (if you are lucky enough to have one in your area). Generally, there is little paperwork and good doctors, dentists, and nurses who volunteer their time.
  2. Read my article, 7 Ways to Pay Less for Hospital Care
  3. Read Maggie’s article, 7 Ways to Get Cheaper Prescription Drugs

Good luck.

Question: I recently heard mention of a California "bridge the gap" insurance plan on the radio. It was part of a discussion about health care reform. What does that mean exactly? Is it available now?

Answer: They were referring to the Preexisting Conditions Insurance Plan or PCIP. It is one of the first major provisions of national health care reform to take effect and is available now. PCIP was designed to bridge the gap between now and 2014, when insurers will no longer be allowed to decline health coverage or charge higher premiums to individuals with pre-existing conditions. Coverage under the PCIP is available to Californians who have been without health coverage for at least six months and have been declined coverage from a carrier due to their pre-existing condition.

Preganant With 2 Choices

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Question: I am 9 weeks pregnant and recently qualified for PCIP (for people with pre existing conditions without insurance 6 months). It is ONLY maternity coverage. Coming up in February, I am eligible for my work health insurance to kick in. I am confused. Can I keep my maternity with PCIP and enroll in work (anthem blue cross for Dental, vision, and medical come February? I am concerned because before applying for PCIP, I turned to anthem and they denied me because it was a pre-existing condition. Can I have both insurances? Please help. Thank you.

Answer: You are very fortunate to be pregnant and have 2 options for coverage. Let me start by saying that you can’t have both PCIP and employer-sponsored group health insurance. You need not be concerned about selecting the employer-based coverage with Anthem Blue Cross as you cannot be declined due to preexisting conditions with group health insurance as you were when applying for individual health insurance.

Question: I have a pre existing condition and my health insurance has gone up considerably every year. We now pay over $2000 a month and I'm 32 years old. I have 3 questions: (1) I'm thinking of moving from New York to California- can I keep my Aetna plan and stay insured even though I'm moving states or can they drop me? (2) The other question is I'm getting married and would hope that I could join my husbands plan however would they accept me with a pre existing condition? (3) And will Obama's law help me in any way? Thank you.


(1) You must have a group or employer-sponsored health plan as Aetna not sell individual plans in NY. If you remain employed with the same employer and move to another state, you can continue with Aetna group coverage and they cannot drop you.

(2) If you get married, you can be added to your husband's health insurance plan without consideration of your preexisting condition if you remain in NY state as NY has guaranteed issue laws albeit at very high rates as you point out, If you move to California (married or not) and apply for an individual health insurance plan, you will have to qualify through the underwriting process and your preexisting condition may cause you to be declined for coverage.

(3) The main provisions of the Affordable Care Act (what you referred to as Obama's law) are scheduled to go into effect in January 2014. Insurance companies in every state will not be able to use preexisting medical conditions to deny coverage or charge more for coverage. That would pretty much solve both issues you raised above. You will then be able to buy an affordable health insurance plan anywhere in the country. So, yes, I would say it will help you big time.

Question: First, please define the “shop exchange” and what does “employee choice model” mean?

Answer: SHOP stands for Small Group Option Program. It’s an separate exchange for small businesses with fewer than 50 employees. The employee choice model allows each employee of a participating small business employer to select any carrier and any product offered by the SHOP Exchange. This is an essential component that will differentiate the SHOP from the outside market and provide an incentive for businesses to purchase coverage through the SHOP Exchange. Employees will have the freedom to select the carrier and plan that is right for them, a benefit that employees of many large businesses and government agencies are already offered.

CA PCIP Enrollment at 6,000

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Question: What is the enrollment in CA PCIP?

Answer: The California Preexisting Conditions Insurance Plan (PCIP) has enrolled 6,000 members as of the end of 2011. PCIP is a temporary, federally funded insurance plan for US Citizens who have been uninsured for six months or more and have been denied coverage because of a preexisting condition. The program is scheduled to end January 2014 when insurers will be required to accept all applicants without charging higher rates. California has been allotted $347 million in federal funding for PCIP in 2012. The money isn’t going as far planned because the individuals who have enrolled have filed more claims than expected. This pent-up demand for health care among the uninsured is a cautionary tale that the Exchange must heed.

Question: Who will be eligible for health insurance subsidies in the California health benefit exchange in 2014?

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Answer: California residents will qualify for subsidies called premium tax credits in 2014, if their household income for the taxable year is between 100 percent and 400 percent of the federal poverty level (FPL) for the appropriate family size. have a look at the 2000 FPL guidelines they go up a little bit each year. (Click image to enlarge.)

The amount of the subsidy that an eligible taxpayer can receive will depend on their household income, and is based on the total amount of premiums payable by the consumer on the second-lowest-cost silver plan. Generally, the higher the income the lower the subsidy.

Question: If a person is in the process of addressing a health problem at the end of the year and his insurance changes in January which is responsible for the health coverage?

Answer: It sounds like your employer-sponsored health insurance coverage has changed insurance carriers. It you have ongoing treatments that continue from 2011 into 2012, the old insurance is responsible for all medical services received in 2011 even though you may not be billed until 2012. Conversely, the new insurance plan will be responsible for all medical services with dates of service in 2012.

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