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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.

February 2013 Archives

Exchange Premium Rates

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Question: Will prices in the exchange be the same as outside the exchange?

Answer: Yes.

Question: Most of the resources and write-ups regarding the workings of the exchanges and subsidies seem to indicate that the premium subsidies will be based on the “silver” level plan. More specifically, if someone chooses the silver level plan, and if the income is below the 400% FPL cut off, they are eligible for a subsidy which is based on a fixed percentage of income outlay towards premiums and also some cost sharing. What happens if the same person chooses a HSA eligible HDHP plan instead, which is (presumably) less expensive than the silver level plan. Would this just cause the subsidy to be correspondingly reduced resulting in no additional net savings to the consumer? How do the silver level plans relate to the HSA eligible HDHP plans.

Answer: Yes. The subsidy amount is based on the premium for a Silver level plan, but the consumer may use their subsidy to select a plan from any other level. For example, the let’s say the consumer cost is $200 and the federal subsidy is $400 for a Silver plan. An individual or family who wants a more expensive or higher tier plan, gold or platinum, must pay the difference above the $400 subsidy for the plan they choose. Likewise, an individual of family that wants to save money can use their $400 subsidy to purchase a Bronze level plan and cut their cost. HSA plans will be available at both the silver and Bronze level.

Grandfathered Coverage and Rates

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Question: It is my understanding that individual health plans that were originated prior to 3/23/2010 will have grandfathered status and insureds will be able to keep these plans when the CA exchange kicks in 1/2014. My question, what about individual plans originated after 3/23/10 to 12/2013, can insureds keep these plans (even if they don’t meet essential coverage requirements), or are they going to be required to select a metal plan in 1/2014? If so, this could potentially result in a higher premium if insured is not eligible for subsidy.

Answer: The “grandfather” option is available for all plans in existence on March 23, 2010, that have continuously covered someone since that date, and have not taken any restricted actions under the regulations. The major benefit to grandfathering a health plan is that grandfathered plans have the ability to avoid several mandates and thus avoid the increases in healthcare costs associated with those mandates. Non-grandfathered plans will cease to exist, so yes you will have to select a conforming qualified health plan in 2014 if you are not covered by a grandfathered plan. The rates for the conforming QHPs will be higher than current rates, but grandfathered plans will face increases as well, so what the difference may be is anybody’s guess at this point. We can expect the see the rates for QHPs in late May or June 2013.

Question: I currently have an individual insurance policy. I would like to shop the exchange for something I like better plus be able to take advantage of the subsidies. Can I apply for a plan under Covered California while my other policy is still in effect? I do not want to have a lapse in coverage.

Answer: Yes. You can apply for Covered Californian coverage as early as October 1, 2013 and keep your present coverage until January 1, 2014 when your new coverage goes into effect.

Using Tax Credits

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Question: When I file my tax return, I usually get refunded the entire amount I paid in for the year or pretty close to it. How is the low-income tax credit going to help me?

Answer: Tax credits (aka premium subsidies) are only available through Covered California. These premium tax credits are immediately applied at the time you are purchasing insurance. You do not have to wait until you have filed your tax return to be reimbursed. When you buy health insurance in the Exchange, your tax credit will be sent directly to the insurance company from which you are purchasing your insurance. You will be responsible for the remaining balance after the subsidy is credited. Tax credits are available even if you have no tax liability.

Question: My insurance company is terminating my coverage as of 12/31/2013. This means that my family will now have to seek coverage through the Exchange. How will I find non HMO/capitation insurance? I do not want to forced into non-private insurance. How will I find an insurance company I can afford without being forced into a welfare clinic type service plan.

Answer: If you earn less than $31,810 for a family of four, you will be eligible for free public insurance coverage under Medi-Cal. Otherwise, you will be able to buy the same high- quality health insurance from Covered California that is available on the private market today. You will not be forced to choose an HMO type plan (Covered California Copay Plan) if you prefer a Coinsurance Plan. Covered California is the only place where you can use tax credits or cost-sharing subsidies from government assistance programs to lower your health care costs. If you are not eligible for free public insurance or federally subsidized health insurance in Covered California, you can purchase the health insurance of your choice in the non-exchange marketplace.

Calendar Year or Plan Year?

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Question: I have a high deductible PPO plan with Blue Shield. My coverage renews in June every year. Will I have to change to a Covered California plan in the middle of the plan year?

Answer: A recent ruling on the Essential Health Benefit (EHB) says that the EHB requirements will apply to individual plans on a plan year basis, not on January 1, 2014. So if you feel there is a disadvantage to making benefit and policy changes mid plan-year, you can wait until June 2014 to change.

Does Medi-Cal Consider Assets?

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Question: We are a family of 3 and AGI $20,000.We work part time and purchase our health insurance directly from Anthem. Can we get health insurance through the exchange if we do not qualify for medicaid due to assets?

Answer: In 2014, Medi-Cal will no longer consider your assets, only your income. Your AGI of $20,000 for a family of 3 makes you eligible for Medi-Cal.

Eligible for Medicaid in 2014?

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Question: I am a single mom with 2 children. I make about $20,000. We don’t have insurance now. We don’t qualify for Medicaid because I have some savings. Can we get health insurance through the exchange if we do not qualify for medicaid due to assets?

Answer: Starting in 2014, Medicaid will no longer consider assets, only income. So based on your income you will be eligible for free public health insurance from Medicaid. If you choose to opt out of Medicaid in favor of Exchange coverage, you cannot also be eligible for subsidized coverage. You would have to pay the full premium and I don’t think that will be practical for you.

Question: We currently have Anthem PPO(POS) through my workplace. My spouse is 50 and has a chronic illness. So far she is doing okay, but our fear is that when I retire next year, and we shop from the exchange, the potential treatment she may need won’t match up with what I currently have with Anthem. That it won’t be as covered and our options limited for treatment. Are these fears unfounded? Will health insurance via the exchange be as inclusive and extensive as Anthem PPO? Will the latest treatments be available?

Answer: Yes. I would say your fears are unfounded. The quality of health care coverage in 2014 and beyond will actually be better - more comprehensive and fewer restrictions - than it is now as a result of health insurance reforms imposed by the Affordable Care Act.. You can still purchase an Anthem PPO (coinsurance) plan if you so choose, either in the Covered California marketplace or outside of it.

Question: I’ve been on a sabbatical for a couple of years so my income has been close to 0 this past two years. I’m assuming that this could make me eligible for Medicaid, although I doubt it because my net worth is significant. Will I still be able to buy insurance from the exchanges if I qualify for Medicaid but I prefer one of the plans offered there?

Answer: Only your current modified adjusted gross income (MAGI) and not your assets will be taken into account in determining your eligibility for coverage in Covered California. If you are eligible for Medi-Cal you cannot also be eligible for a premium subsidy in the Marketplace. However, you may opt out of Medi-Cal and purchase unsubsidized coverage either in Covered California or in the market outside the exchange.

Dependant Coverage to Age 26

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Question: What happens with the 26 year old age limit for including dependants on the primary’s insurance policy?

Answer: The ability for a parent to include a dependent son or daughter on their family health insurance coverage to age 26 was one of the first implemented benefits of the ACA and it will continue to be offered indefinitely.

Better Coverage in 2014?

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Question: We currently have an Aetna PPO through my employer. My spouse is 53 and has a chronic illness. So far she is doing okay, but our fear is that when I retire next year, and we shop from the exchange, the potential treatment she may need won’t be as good as what I currently have with Aetna. That our options for treatment will be limited. Are these fears unfounded? Will the latest treatments be available?

Answer: The quality of health insurance coverage in 2014 will actually be better - more comprehensive and with fewer restrictions - than it is now as a result of health insurance reforms imposed by the Affordable Care Act.. You can still purchase an Aetna PPO plan if you so choose, either in the state exchange or the outside marketplace.

Question: My son and I buy health insurance through my husbands work. My husband is covered 90% and we are covered 0%. Our annual income is $55,000 and we pay $7,000/ year in health insurance w/ a $1,500 deductible per person. Can my son and I apply for Cover California in October or are we screwed because my husbands part of insurance doesn’t exceed 9.5% of his income. Is my best hope his company decides to not have health insurance to their employees so we can apply for Cover California?

Answer: You and your son will be able to purchase health insurance in the Covered California insurance marketplace, but you will not be eligible for a premium subsidy if your husband is offered “affordable” group health insurance by his employer. As you say, it would be better for your family if your husband’s employer did not offer group coverage.

How the Advanced Tax Credit Works

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Question: My gross income for myself and my daughter falls in the range of 200-250% of the FPL. AFter exemptions and deductions I pay no Federal Income Tax. Therefore, a tax credit will not help me. Can I get another type of subsidy?

Answer: While the premium subsidy is called an “advanced tax credit”, it works differently than you are assuming. For example, if your family’s insurance premium before the subsidy is $1000 and you qualify for a subsidy or “advanced tax credit” of $700. The federal government sends that tax credit directly to your insurance company and you pay only the balance of $300 each month. It’s called an “advance” because if the government overpays for some reason, for example your income goes up during the year, you will pay back some of that advanced tax credit when you file your taxes for that year.

Question: If the small (group) employer elects to make a defined benefit contribution for each employee could this not cause an older and lower compensated employee to have to contribute more than 9.5% of his income to cover his family? Would the employer have to make different contributions based on each employee age and income?

Answer: Yes, an employer can make different contribution amounts for different ages of employees. You can also make different contributions for different classes of employees, for example: hourly and salaried, management and non-management, and length of service.

Drop COBRA Coverage?

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Question: If you are on cobra insurance(in calif.) and want to stop cobra ins. and change to obama health care through the exchange in jan.2014, can you?

Answer: Yes indeed.

Question: How much will premiums increase in 2014?

Answer: We’ll know by May of this year, when health plan issuers must have their final premiums ready. In the meantime, we can only guess. A 2009 Congressional Budget Office (CBO) report suggested an increase of between 10% and 30% beyond what they would have been without the ACA. But higher premiums for people who purchase coverage in the individual market will be offset by federal subsidies for low and middle-income families. The increases on the individual market are because of ACA provisions that: (1) Require plans to cover a broader scope of items — including maternity care and mental health treatment; (2) Mandate that premiums for older beneficiaries be no more than three times higher than what younger people pay; (3) Bar insurers from rejecting people with pre-existing conditions; and (4) Limit deductibles.

Is an Urgent Care visit Covered?

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Question: Are Urgent Care Visits covered by insurers if I get a plan using Cov.CA? Can you mandate all insurers to cover Urgent care visits ? Can I see Doctor if I travel across the CA?

Answer: Yes. the Urgent Care benefit is covered by all insurers in Covered California. You can see any doctor in California but will pay more if not in-network.

Question: I was told in a Covered California webinar this past thursdays that agents would NOT be compensated in the individual exchange. Is this incorrect?

Answer: You misunderstood. Agents will not be compensated by Covered California for writing individual business in the Exchange. Instead they will be paid by issuing carrier for enrollments in the exchange as well as businesses placed outside the exchange.

Question: On the new coveredCA under the (SHOP FAQ) question…What if my employees want families covered too? They indicate that when buying group through the exchange that the dependants can apply separtely as individuals if the boss is not including them in the group plan. I thought that if the business offered group the dependants would have to say yes to the question..Does your employer offer group coverage?? I am confused.

Answer: Thanks for bringing this to my attention. Here’s the quote on coveredca.com, “Under the new insurance rules that take effect in 2014, your employees and their family members who do not have coverage through your business will be able to buy insurance through Covered California or in the individual market.” This statement is accurate as far as it goes. The spouse and dependents can buy individual insurance in the Exchange, however they would NOT qualify for a subsidy, even if otherwise eligible, unless the employer-sponsored coverage was deemed unaffordable for the family. See also: Bad News for Families with Modest Incomes

Question: Will the SHOP exchange will offer the same qualified health plans as the individual exchange?

Answer: The ACA leaves this up to the states. In some states, like California, there will be two separate exchanges one for individuals and one for small-businesses and both exchanges must offer the same standardized plans. In some states the two exchanges may be combined.

What is MAGI?

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Question: Why is my eligibility for a subsidy for Obamacare based on 2012 income instead of 2013 and what if my income is lower in 2014? Also does an early IRA distribution count as income affecting my 2014 health care subsidy?

Answer: I’ve had many questions having to do with just how Covered California will use the adjusted gross income (AGI) from an applicant’s tax return. I think that, primarily, people want to know how much flexibility will be shown beyond the AGI number. Actually, the exchange has always referred to eligibility based on MAGI for Modified Adjusted Gross Income, but we didn’t know how the AGI would be modified.

We got a good indication of that last week when the feds released a demo version of the marketplace online application. Because the application is connected to a hub including IRS data, the applicant’s AGI from his last federal income tax return in is already displayed in the application, but it only serves as a reference point to help determine his or her estimated income for the year in which he wants insurance coverage. In some cases the MAGI could be very different from the AGI, for example if the applicant became unemployed or underemployed since his or her last tax return.

Grandfathered Plans

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Question: Even though my high deductible plan is grandfathered, can my insurance company decide to stop carring this type plan or are they required to keep these plans in force for their grandfathered clients?

Answer: Yes. The health plan issuer can decide to stop offering any grandfathered plan at any time.

Background: The Affordable Care Act allows healthcare plans that were in existence on or prior to March 23, 2010, to remain generally the same by “grandfathering” the healthcare option. This option is available for all plans in existence on March 23, 2010, that have continuously covered someone since that date, and have not taken any restricted actions under the regulations. The major benefit to grandfathering a health plan is that grandfathered plans have the ability to avoid several mandates and thus avoid the increases in healthcare costs associated with those mandates.

Opt-Out of Small Group?

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Question: If an employer offers qualified group insurance can an empoloy refuse coverage and take his family of four on to the exchange where they can get a lower premium because of a low family income?

Answer: No. Not if the employer-sponsored group coverage is “affordable”. Affordability is defined as an employee-only cost that is less than 9.5% of the family income. See also my article, Bad News for Families with Modest Incomes.

Who Gets Subsidized?

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

Answer: Legal residents, under 65, and not incarcerated will qualify for subsidies called advanced premium tax credits in 2014, if their taxable household income (AGI) is between 133% percent and 400% percent of the federal poverty level. The amount of the subsidy decreases as income increases.

What is Affordable Coverage?

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Question: I read that even if my employer offers health insurance I can buy in the health exchange if it’s not affordable. Is that right?

Answer: Right. If an employer-sponsored plan does not meet the “affordability standard”, an employee and dependents may be eligible for premium subsidies to purchase coverage from Covered California. The affordability standard, according to the ACA, is when the employee’s contribution to coverage cannot exceed 9.5 percent of the household annual income.

But the devil is in the details. Last week the IRS further clarified affordability as being based on what the employee contributes for self-coverage only, not family-coverage. In other words, the affordability of coverage will not take into consideration the portion of the annual premium the employee must pay for family coverage. Also, uninsured children will be ineligible for premium subsidies in the exchange. Bummer!

Question: Which insurance companies will be in california health exchange?

Answer: Covered California recently claimed that 33 insurers expressed interest in participating in the Exchange. Less than dozen insurance companies produce virtually all of the health care coverage sold in California at the present time, so I don’t know where the other 20 or so come from, but obviously there is a lot of interest from insurers in partnering with Covered California. The exchange would like to have at least 5 carriers in every region. You can expect many from which to choose in the populations centers and fewer in the rural areas.

Kaiser Coverage 2014

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Question: What will happen to my Kaiser Permanente coverage in January 2014?

Answer: Your current Kaiser health plan will not meet the requirements of a qualified health plan in 2014, so you will have to make a change. Your local agent, a Kaiser customer service rep, or a Covered California Assister will be there to help you when the time comes to make the change (between 10.1.13 and 12.31.13). The first thing they will check is whether your income makes you eligible for free coverage through Medi-Cal or subsidized coverage through Covered California. Regardless, you will be able to choose a plan from Kaiser if that is your preference.

PCIP Will Phase Out in 2014

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Question: What happens to people who are insured by PCIP in 2014?

Answer: PCIP (Preexisting Conditions Insurance Plan) insureds will be free to select a health plan from Covered California or directly from a health insurance company. Since your preexisting conditions will no longer matter as far as purchasing health insurance is concerned, the need for the PCIP will cease to exist. The PCIP will have served the purpose for which it was created and it will phase out in 2014.

Obamacare Catastrophic Coverage?

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Question: Will there catastrophic coverage under Obamacare?

Answer: Yes. But the catastrophic plan can be offered only only for young adults, those under age 30 before the plan year begins. The catastrophic plan will be the lowest priced health plan available within the guidelines of essential benefits. Catastrophic plans will have an actuarial value of about 60% (bronze level). The deductible and out of pocket maximum will be $6400 per year.

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