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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.

March 2013 Archives

Question: I thought premium levels are locked in for individuals based on their income between that sliding scale of 2%-9.5%. But i just read article stating subsidys wont be enough to overcome huge increases on rates. Won’t rates be moot if the premium levels are locked in?

Answer: For anybody eligible for subsidies, their contribution to the total premium is fixed on a range between 2% and 9.5% of income. So, for the subsidized, it doesn’t make any difference what the final rates are. Their costs are fixed. While there have been many scary stories lately about rate shock, 2014 rates in California are estimated (Milliman) to increase 30% over 2013 on average. On an individual basis, age and income will determine how much of an increase. The subsidized group are likely to pay about 47% to 84% less in monthly premiums compared to 2013. The young (below 40) and un-subsidized will see the highest premium increases. Some of older un-subsidized group will have lower premiums than today for better coverage. On a positive note for the un-subsidized, coverage will be more comprehensive for all, meaning less out-of-pocket costs thus reducing the impact of higher rates.

Subsidy for Spouse

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Question: I’ve opted to have an individual health plan because, being in good health, it’s less expensive than buying into my spouses employer plan. As an independant contractor, will I be eligible for a health insurance tax subsidy if our family income is low enough?

Answer: The ACA says that someone with access to “affordable” employer-sponsored coverage cannot get a premium subsidy from state exchanges in 2014, unless the cost of the employer-based health care coverage for that employee exceeds 9.5 percent of the worker’s household income. The IRS ruled recently that the calculation of affordability will be based on the cost of employee-only coverage, not family coverage. For example, if your spouse contributes $300 each month or $3600 for the year for his or her portion of the premium for the employee only, Your family income would have to be less than $37,895 per year no family member would qualify for a subsidy even though they are not covered by the spouse’s group plan.

Question: If I am subsidized for healthcare through the exchange and then discover at the end of the year I qualified for Medicaid, what happens? My income varies year to year because I have 2 jobs. One pays monthy and the other is off and on throughout the year causing my income to vary between $15000 to $16000 a year. I can’t afford to pay at the end of the year so I’s rather over estimate. How is it handeled if they found out I should have went with Medicaid that year instead of subsidies?

Answer: Covered California is working on a “Bridge Plan” as a solution for situations like yours. The problem for people whose incomes place them on the line between Medi-Cal and Covered California subsidized coverage is continuity of care. If you and your family members are accustomed to medical care from a certain group of providers, a change from Medi-Cal to private coverage and back again will be disruptive at the very least, The proposed Bridge Plan will promote continuity of care and affordability by altering contracts with Medi-Cal Managed Care Plans to extend to families whose income is between 138% and 200% of FPL.

Age 26 and ACA

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Question: My child is younger than 26 and i want to remove him from my health insurance. Can i do that under the affordable health care act?

Answer: Yes. Covering your child to age 26 is an option provided by the ACA. It is not a requirement. In 2014, everyone will be required to have health insurance. If your child does not have coverage, they may have to pay a penalty.

Obamacare or Employer Plan

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Question: If i lose my health insurance thru my husband’s employer do i have to take one offered thru my employer or can i take one thru the health care exchange?

Answer: If your employer offers group health insurance coverage that is “affordable” you should take it, because you will not be eligible for a premium subsidy in the state Health Insurance Exchange.

What Happens to COBRA?

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Question: What is the status of Cal-COBRA going forward? If my employer ends group coverage, will my COBRA abruptly end and would that be considered a qualifying event? Is the natural expiration of a COBRA (18 months) considered a qualifying event to purchase from the exchange outside of the enrollment dates?

Answer: The ACA did not eliminate COBRA or Cal-COBRA or change the existing rules. If you stay on COBRA until your coverage expires you will qualify for special enrollment outside of the open enrollment period. Likewise if your COBRA coverage ends for any other reason it will be considered a qualifying event.

Medical Costs Out of Control

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Question: We appreciate our future ability to purchase insurance via Covered California however, is there anything being considered about the out-or-control pricing generated by the pharmaceutical industry, the hospitals, and the providers?”

Answer: In the short-term, neither the ACA or the Exchange does much to affect the underlying medical costs of drugs, hospitals, and doctors. The most immediate reduction in medical costs will be due to the expansion of Medi-Cal, by adding more than 1 million newly insured patients with medical reimbursements below Medicare rates. Covered California will contribute to lower healthcare costs over time by providing more transparency and competition on the health insurance side. On the provider side, the ACA supports Affordable Care Organizations (ACOs) - new models that integrate hospital and physician services to achieve greater accountability and coordination of health care. California’s health care policy wonks are working to track the development of integrated approaches to the delivery of care and financing, to determine how ACOs would work in the public sector as well as the private health care marketplace.

For more on this topic read our commentary, Why Medical Costs are Killing Us

Standardization vs Innovation

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Question: Covered California standard plans do make it easier to compare benefits, but what about innovation? Health plans have shown they can develop innovative plan designs that appeal to consumers. Won’t they be stifled by ACA rules?

Answer: Consumers trying to buy health coverage today face a complex and confusing experience, not to mention the lack of transparency (read “fine print”). The standardization of benefit designs will force insurers to compete on cost and quality and customer service rather than consumer confusion. Much of what passed for health plan innovation in the past was designed to hit a price point while making it impossible to predict out-of-pocket costs.

Service Center Locations

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Question: Where will the Covered California service center be located?

Answer: There will actually be three Covered California service center locations. The main center will be in Rancho Cordova (Sacramento), the other 2 will be in Contra Costa (East Bay), and Fresno.

Wellness to Lower Piremiums?

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Question: Will people that follow a wellness program successfully qualify for lower premiums?

Answer: Employers may offer incentives such as lower premium contributions for employees who meet wellness targets like weight loss or smoking cessation, but health insurance companies do not offer lower premiums. However, insurers may offer enhanced benefits such as lower deductibles of out-of-pocket maximums to employees who meet wellness targets.

Question: My son turns 26 next year and is disabled with lyme disease and cannot work (no financial income). Currently, he is covered under my work insurance plan. What options does he have when he can no longer be on my plan.

Answer: Your son will be eligible for coverage in your state health insurance exchange on January 1, 2014, as would any legal resident of your state regardless of medical conditions. You don’t have to wait until he is 26. His income will determine whether he is eligible for Medicaid or subsidized private coverage.

Question: I am a small business owner and employed part time mainly to have access to group insurance. My spouse is disabled and currently enrolled in part A of Medicare. In, 2014 will I be able to purchase a family plan individually through Covered California or buy coverage as an employer and cover our family including my spouse? or will he be forced to use Medicare only?

Answer: Yes. Your husband will be eligible for coverage in Covered California, as would any legal resident of California regardless of medical conditions. Your income will determine whether your family is eligible for Medi-Cal or Covered California subsidized coverage. If you are eligible for either you will pay less for individual health insurance, because a group plan for your business would probably make you ineligible for a premium subsidy.

Question: What do I need to do to become a representative enroller and do community outreach in hispanic areas?

Answer: Your assistance will be very much appreciated and needed. Please contact the Covered California Assister Help Desk at 888-402-0737 or e-mail assisterinfo@ccgrantsandassisters.org.

New Permanent Residents Qualify?

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Question: My parents currently live in the United Kingdom, but at some stage I may petition them to move to the states when I become a US citizen. If they become legal permanent residents, will they be eligible to purchase insurance through the exchange - or is there a set time period before they could do so?

Answer: Yes. You parents will qualify for coverage in the exchange when they have permanent residence status. I don’t know of a waiting period, but then the law is over 2000 pages so I could be wrong.

Question: I am a 63 year old, long time Kaiser individual-pay member, and wish to stay on Kaiser, but I will be classified as Medi-Cal eligible due to not working for 2 years. Since I won’t be eligible for a premium subsidy in the Marketplace, will Kaiser offer a similar plan for Medi-Cal individuals? If so, will it have comparable coverage and co-pays? I did read your posts at Feb. 20th, 2013 9:54 AM and also Feb. 4th, 2013 2:46 PM, but they seem to contradict each other suggesting that if I was Medi-Cal eligible I’d have to pay full fare if I wanted to be covered in the Marketplace. Yet on Feb 4 you seem to indicate I could stick with Kaiser in some plan. Lots of us low income Kaiser members who will want to know the precise answer to this. Other wise, not wanting to leave Kaiser, we’ll be paying full fare without even getting a subsidy that moderate income people get. BTW, You have a great site with wonderful questions and answers to so many of the questions that affect us. If I call Kaiser, they seem to know nothing.

Answer: You are correct. If your income makes you eligible for Medi-Cal (less than 138% FPL), you cannot opt for subsidized coverage in Covered California. However you can choose a Kaiser plan inside the Exchange or directly from Kaiser without premium subsidy or cost sharing assistance. Kaiser coverage in 2014 be more comprehensive on the whole than todays plans due to ACA requirements. Unfortunately, the cost of coverage will be higher as well. Hang in there. You’ll be on Medicare soon.

Question:I am 60 and retired. I kept the retiree insurance offered by my previous employer while waiting for a response from an individual insurance application for a plan that was half the cost. I was denied insurance based on pre-existing conditions. It is VERY difficult to continue paying these premiums ($600)and would like to know if I will be able to enroll through an exchange in the fall of 2013 for the 2014 implementation of the health care act, or will I have to be uninsured to do so?

Answer: Yes. You will be able to enroll in a ACA conforming health plan through your state exchange anytime after 10/1/13 and your new coverage will be effective on 1/1/14.

Question: If I buy an individual policy now in 2013 will my policy coverage and/or cost change on 01/01/2014?

Answer: If you purchase a grandfathered plan now, Your coverage or rate will not change on 1/1/14. If you purchase any other plan currently available, you will have to select an ACA compliant plan in January. In the later case your coverage and premium will change.

Question: Someone buying insurance earns $200,000 a year. Will the cost be less to buy coverage outside the exchange rather than inside the exchange? If buying out side the exchange would reduce costs and all else being equal there would no attraction for people with higher incomes to use the exchange.

Answer: The cost for unsubsidized individuals will be the same whether in the exchange or not. There is no financial incentive one way or the other in this scenario.

Whose Age Determines Premium?

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Question: Will Exchange premiums be based on the age of the policyholder, the youngest adult age, or the ages of all family members seeking coverage? The premium estimate calculator on the Covered CA website asks me to enter the youngest adult age in the family to determine the premium, which I think is confusing. Why would my family’s premium be driven by 21 yr old dependent son in college instead of my age or my wife’s?

Answer:Indeed, “Age of youngest adult in family”, can be confusing. Clearly, it is intended that the age of the youngest spouse or parent (if there are married dependents) is used as the primary insured and the family’s premium is based on that age.

Question: How do they (Covered California) keep track of what your subsidy should be if your income changes frequently?

Answer: Subsidy recipients will be required to report any change of income that may result in a change in the amount of their tax credit or cost sharing reduction. This requirement will enable consumers to adjust their advance premium subsidy accordingly based on their needs, which will help minimize repayment of excess advance tax credit taken during the benefit year. It will also help to provide more affordable coverage when income goes down. And just in case a consumer forgets to report income changes, there will be an annual redetermination process during the fourth quarter open enrollment period each year.

Actual Prices on the Exchange?

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Question: After all the talk of plans and levels the big important question of how much will actually all plans cost at all levels remains unanswered. When will we know how much every level premiums cost when buying insurance on the Exchange?

Answer: Sometime between May 15 and July 1, you’ll have the final rates. The deadline for the health insurance companies to have their rates ready for approval is May 15, 2013. Then there is a 45-day public comment period. Finally, on July 1, 2013 the rates are loaded into the Covered California system.

Household Income Subsidy Issue

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Question: I understand IRS data will show up as the individual applies for exchange, but isn’t subsidy based on household income and if so how will that coordinate?

Answer: If more than one tax return is filed within a household, you would probably have some options. Let’s say the household consists of a husband, wife, and 24 year-old daughter. The parents filed jointly. but the daughter filed a separate return. I would think you could either combine both incomes and test the subsidy-eligibility for that household as a family of three. The second option would be to for the parents to qualify separately from the daughter based on their separate incomes. Note that this answer is an educated guess. I have not seen any specific rule treating this situation.

Question: If signing up for Obamacare is going to be so easy, why are assisters and agents needed?

Answer: A lot of hand-holding is essential to signing up for Obamacare. Covered California is creating streamlined web portal, but the process of completing the an application will be difficult for many. Yes the health questions will be gone, but they are replaced by financial questions. It will be more like filling out a tax return. And just as H&R Block has hundreds of offices and thousands of employees who guide clients through the tax preparation process, so too will Covered California need organizations and knowledgeable and trusted assisters and agents who can make the process understandable and reassuring.

Premium Limits for Some

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Qiuestion: My husband and I are 60 and 58 years of age our income is $45,000 a year. When will we know how much will we have to pay for Obamacare per month?

Answer: I can tell you right now that your monthly premium will be no more than $356 for a silver level plan. I can tell you that because individuals and families whose income is less than 400% of the federal poverty level (yours is 300% 0f FPL) are protected by premium limits on the amount they will pay. Regardless of the final rates we’ll see in June, you will pay no more that $356 per month and your premium subsidy will make up the difference.

Question: I noted a section that said something like “you can only be eligible for subsidies if you buy your policy through the exchange”. Does this mean that if I use an independent insurance agent to purchase my policy (through the exchange, presumably), I would not be eligible for subsidies, i.e. that I must personally apply through the web site in order to be eligible ?

Answer: Only the Covered California Exchange can approve your application for an advanced tax credit subsidy. If your agent is certified with the exchange, he or she can help you submit your application to the Exchange either as an online application, a telephone application, or a paper application. Your exchange certified agent will have a unique identification number connected to your application that will allow them to perform some application tasks on your behalf.

Question: The way that I understand it, subsidies will be calculated from your estimate of your AGI. That is, you would seed this value with your AGI from the previous year, and, presumably, adjust it for whatever additional information you have about the current year. What happens then, if your income increases or decreases enough during the year to affect the subsidy amount ? What should you do in this case ?

Answer: Your most recent AGI will be referenced during the application by direct connection to the IRS hub. If your self-reported income makes you eligible for a subsidy but doesn’t match your AGI, it “will result in the consumer being conditionally eligible for Covered California subsidies… Their conditional eligibility will be for the 90-day reasonable opportunity period which provides consumers adequate time to resolve the inconsistency. The consumer will be required to demonstrate their eligibility by resolving the inconsistency in order to maintain coverage beyond the 90-day timeframe.”

During the year, periodic electronic data matching occurs semi- annually. “In the event the periodic data matching indicates that the consumer’s income is different compared to what was originally used to determine their initial eligibility, a notice will be sent to the consumer which identifies the new income that was indicated using electronic data sources. The consumer will have 30 calendar days to respond to the notice. If the consumer does not respond to the notice, the consumer will be able to maintain their Covered California eligibility and tax credit, based on their original eligibility information. However, the consumer will have to confirm their eligibility during the annual eligibility redetermination process and will be required to reconcile the tax credit at the end of the year through their annual tax filing.”

Question: Covered California promises a first class user experience, yet application processing times by Healthy Families and Medi-Cal have been horrendous, sometimes stretching to weeks, even months. How can this state agency be so much better than its predecessors?

Answer: That’s a fair question and only time will tell if they can deliver on their promises. Here’s what they are saying about their goals for application precessing.

  • Complete on-line applications received by in the Covered California System, that do not require the resolution of any inconsistency will occur “real time” and immediately.
  • Complete telephone applications received that do not require the resolution of any inconsistency will occur “real time” and immediately.
  • Complete paper or fax applications that are received and do not require resolution of any inconsistency will be processed within 10 calendar days of receipt. (The goal is actually five (5) business days from the date of receipt of the application.).
  • On-line, telephone, paper or faxed applications that require the resolution of inconsistency will result in the consumer being conditionally eligible for Covered California subsidies, if their self- reported information qualifies them for coverage. Their conditional eligibility will be for the 90-day reasonable opportunity period which provides consumers adequate time to resolve the inconsistency.

Question: If an individual has an existing health plan in the individual market and is eligible for a subsidy in 2014: my question, will his current insurance company proactively assist in transferring insured to one of their compliant plans that includes subsidy? Or will it be necessary for insured to go direct to exchange to obtain a plan with a premium subsidy.

Answer: I’m going to go out on a limb here and say that your current insurance company will make it very easy for you to “roll over” to a subsidy-eligible plan within the Covered California Exchange in 2014. They want to keep your business. If you go the the Exchange on your own, you may select a plan from another insurance company.

Do Assets Count?

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Question: I am a middle-aged engineer who is “asset rich”, but “income poor”. Are the ACA subsidies solely based upon income, or is there a means test which takes ones assets into account (as, for example, the FAFSA federal student aid application)?

Answer: Assets do not count, only income. That would include any income that contributes to your adjusted gross income (AGI), like income from real estate or securities.

For-Profit Assister Entities?

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Question: Can privately held for-profit companies become enrollment agents for ACA?

Answer: The ACA does not rule out the option of for-profit assister entities. Covered California was considering the option of certifying large retail stores like CVS Pharmacy, Costco, Wal-Mart, etc. to be enrollment assister entities They recently decided not to go there. That does not mean that they are not open to the possibility of working with other for-profit businesses to boost enrollment.

Covered California Assisters

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Question: To become as assister, will you have to be licensed?

Answer: Assisters can be licensed agents or unlicensed In-Person Assisters (IPAs). IPAs cannot work independently as agents do. They have to be connected with an assister entity, typically a non-profit community organization.

Question: When will licensed agents become certified for the Covered California exchange?

Answer: Probably not until August. The first step in becoming certified and contracted with Covered California is to successfully complete assister training and the current timeline shows assister training to be ready for delivery in August 2013.

Question: Can high income earner buy california health benefit exchange?

Answer: Yes. You can buy your health insurance plan through Covered California even if you do not qualify for subsidized premiums due to your higher income. (Of those Californians currently insured by individual health insurance plans, almost 50% or about half a million individuals will not qualify for subsidies.) The exchange hopes to sign you up and offers a compelling reason to do so: a marketplace to compare plans from all the participating insurance companies on an apples to apples basis. On the other hand, your current carrier will make it incredibly easy to essentially roll-over your current coverage into an exchange-approved plan. So if you are like many people who don’t particularly want to spend any time at all shopping for health insurance, your current health plan issuer will offer the path of least resistance.

Question: I currently have an HSA plan. If I select a new policy in 2014 that is not an HSA plan, can I still use my the money in my HSA bank account for uncovered medical expenses with no penalty?

Answer: No. There is a tax penalty for using your HSA savings for anything but deductible medical expenses (including health insurance premiums). You are penalized in 2 ways: (1) you will pay income tax on whatever you withdraw and (2) you will pay an additional 15% penalty as well.

Question: How will premium payments be collected for covered ca exchange?

Answer: Covered California will not collect premium payments in the individual exchange. The consumer will pay the health plan issuer. For example, if you select a Kaiser qualified health health plan in the exchange, Kaiser will bill you directly and you will send your payment to them. If you are receiving a premium subsidy, that portion will go directly from the federal government to Kaiser and you will only be billed for the remaining portion of the total premium.

Question: Can I buy insurance on the exchange after the open enrollment period?

Answer: Covered California will have special enrollments throughout the year for individuals and families who become eligible for coverage in the marketplace because of a “qualifying event in their lives. Here are some qualifying events.

  • A change of income.
  • A change in legal marital status, including marriage, death of a spouse, divorce, legal separation and annulment.
  • A change in the number of dependents, including birth, death, adoption, and placement for adoption.
  • A change in employment status of the employee, or the employee’s or retiree’s spouse or dependent, including termination or commencement of employment.
  • A dependent ceasing to satisfy eligibility requirements for coverage due to attainment of age.

Special enrollment periods cover 60 days from the qualifying event to enrollment to allow enough time to make the transition.

Question: The credit moves to 50% in 2014. How long will that last?

Answer: The 50% small business tax credit will be available through the 2015 tax year, but small businesses can claim the credit starting with their 2010 income tax return. So employers can potentially claim the credit for a total of six years The initial credit available from 2010 through 2013 is 35% plus 2014 and 2015 at 50%.

Question: I am concerned that few private doctors will accept the California Exchange insurance and I will have to go to clinics that only the poorer people without insurance use.

Answer: You should not be concerned. Covered California is a marketplace that offers coverage underwritten by private insurance companies. Providers - doctors, hospitals, etc. - will continue to be contracted with the insurance companies, not directly with Covered California. For example, if a doctor is now part of Blue Shield’s network, in all probability they will continue in Shield’s network within the exchange.

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