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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.


May 2013 Archives


Question: My husband recently changed jobs, and his new employer states that if my employer offers a group plan and I am eligible than I can not be on his plan, because of a “life change” I can enroll in my company’s plan but he and the kids can be on his plan….is this actually legal?

Answer: Yes.


Question: Would Medi-Cal or continued enrollment through a parent’s employee plan be better for a 21 year-old college student? I work part-time and attend school. My father does not claim me as dependent on his federal tax returns.

Answer: You are eligible for Medi-cal. That means your out-of-pocket costs for medical expenses would be next to $0 and your parent’s costs would be reduced to $0. So unless money means nothing in your family, I’d have to say Medi-Cal is the better deal.


Stay on Cobra in 2014?

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Question: I am currently on cobra which will last till i go on medicare. will i be forced to get ins. from an exchange in 2014 or can i stay on cobra, if i so desire? thank you

Answer: You can stay on COBRA if you wish, but I suggest you take a look at coverage offered in your state exchange. You might get better coverage for less money especially if you qualify for a premium subsidy.


Question: I am currently on COBRA benefits paying over $900/month. How do I find an exchange to enroll in under the ACA and when can I enroll? Thank you.

Answer: The California exchange is called Covered California and you can enroll beginning October 1, 2013 for coverage effective January 1, 2014.


HSA Funds

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Question: Since HSA may not exit or may be less attractive than subsidized plans, What should I do with the funds in my HSA? Can I use the funds for medical expenses in a non HSA plan?

Answer: The funds that you have saved in a HSA account can be used for medical expenses at any time, even if you no longer have HSA qualified health insurance.


No Dependent Coverage Offered

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Question: I work for a small company that offers affordable health insurance for me, but does not offer any dependent coverage at all. My spouse is unemployed. Can my kids/wife qualify for a subsidy on the exchange?

Answer: To my knowledge, Covered California has not addressed this issue directly. But according to a recent IRS ruling, your dependents will not be eligible for subsidies in the exchange if they have “access” to employer-sponsored coverage. If your employer excludes spouse and dependent coverage then your spouse and dependents can be eligible for subsidized Covered California Coverage. But if spouse and dependent coverage is available even though the employer makes no contribution they will not be eligible for subsidized coverage. In that case, you would better off if your employer dropped the group plan. If I were you, I would talk to your employer about poling the other employees to see how many would similarly benefit.


Question: The Silver HSA plan was expressly eliminated at Covered California’s May 8, 2013 meeting “because this will interfere with the calculation of subsidies”, and the same logic would apply to Bronze plans. Since “the board was disinclined to allow alternate plan designs in the individual market” we see in the “Final” CC Health Plans Booklet only a non-HSA Bronze plan. So aren’t HSA plans officially dead now, and if not, why didn’t Covered California mention them in any of their late May press releases? (Quotes from Health Access Blog)

Answer: I’m not entirely sure what the Exchange Board might eventually do about the HSA plan, but I sense some wish-fulfillment in your question. Consumer advocates say that HSA plans are unsuitable for low-income consumers. I agree. Being underinsured is a chief cause of financial disaster for families without the financial resources to deal with large out-of-pocket expenses. The IRS sets minimum deductible levels for HSA-compatible health plans to give users of the HSA tax break “skin in the game”. On the other side of the coin, ACA cost-sharing reductions help low-income people (less than 250% FPL) cover the cost of health insurance deductibles, co-payment and coinsurance bills. This same demographic may be attracted to HSAs because they are relatively cheap, but the problem is that the plan variation caused by reduced cost-sharing is no longer HSA-qualified. The bottom line is that HSA plans cannot be purchased by those with incomes below 250% FPL. - those most vulnerable to catastrophic financial loss. There is still a place for the HSA plan - a financially sound method of funding healthcare for many Californians. Covered California will pass up on a substantial portion of the non-subsidized individual health insurance market if they do not offer an HSA plan.


Question: I have been paying the Blue Shield premium for my 52 year old son who lives in my home. He is unemployed and because he has a pre existing condition I didn’t want him to loose coverage. The current rate is $435 a month for basic plan ($5500 deductible.) While he filed a tax return last year with AGI of under $2,000 I declared him a dependent on my return. Can he qualify for the exchange and if so must he use household income (my income)? Because I can’t afford the premium I have been considering cancelling the policy but continue to borrow from credit cards to keep the policy in place. How can I get my son switched over to the exchange with applicable subsidies?

Answer: Your son will be eligible for Medi-Cal based on his income. In this case, the fact that you claim him as a dependent will not be an obstacle to his eligibility. Your son can be enrolled in Medi-cal anytime after October 1, but his coverage will not be effective until January 1, 2014.


How Are Premiums Paid?

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Question: What will be the mechanism for the payment of monthly premiums in the Exchange?

Answer: The premiums are collected by the health plan issuer (insurance company) not Covered California. So you would get a bill from Blue Shield or Kaiser just as you do now. If you are eligible for a subsidy, the subsidy money goes from the federal government directly to the carrier and the carrier bills you for the remainder - the net premium amount.


Question: If the subsidy is really an “advanced tax credit” how does a low income person (no income tax paid) pay the premiums? From your site: Estimated monthly silver plan premium (without subsidy) $1,369. Estimated tax credit from the government $1,280 Your estimated monthly silver plan premium $89. I cannot pay $1,369 and I am on early Social Security so I do not pay income taxes. Please help! Several of my friends are in the same situation and we all think we have to pay a penalty for no insurance and wait until we turn 65 for Medicare.

Answer: You will only pay the net premium after the “tax credit” which is $89 per month. Furthermore, the IRS only recovers tax credits that have been overpaid. In your case there would not have been an overpayment (that is, a person received more tax credit than their income justified) so in your case no tax would be due, Hope this helps you to sleep better.


Question: I would like to keep my current individual health plan if possible, because it has a broader provider network than the Covered California plans. Does my plan have to be grandfathered or does the plan simply have to have benefits which constitute minimum essential coverage for me to be able to stay in it?

Answer: Your plan would have to be grandfathered. If you have been continuously covered on the same plan since March 23, 2010 or earlier your plan is grandfathered. It does not have to provide minimum essential benefits.


Question: For Covered CA plans, are deductibles included in the out-of-pocket limit. When I was shopping for individual plans earlier this year for 2013, I believe Kaiser included the deductible in the OOP limit so the max of my cost-sharing is the OOP limit, but for Anthem deductibles weren’t part of the OOP limit so the max of my cost sharing is the deductible plus the OOP limit. Will it continue to differ by company in the 2014 Covered CA plans or is this standardized?

Answer: Yes. Deductibles are included in the out-of-pocket maximum for all plans both in Covered California and off-exchange. Standard plans is one of the primary consumer benefits afforded by the ACA. The current situation you described above made it impossible to compare plans across all carriers on an apples-to-apples basis.


Calculator is Way Off

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Question: My 2012 1040 had an adjusted gross of $57,000. I have just started getting social security at 62. I did the calculator on the covered California site and it seems to indicate that at $57,000 I would pay $458/month for myself and my wife (age 60) With my added social security bringing my income to $70K my payment would jump almost 400% to $1600/month. I hope I am making some fundamental error here.

Answer: No you did not make a fundamental error, but the difference between subsidized and non-subsidized premiums will not be nearly as high as the calculator indicated. The calculators used projected rates which turned out to be much higher than the rates just announced. The new rates need be loaded into the calculator.


Question: My company (as of June 1, 2013) will no longer offer any non-Kaiser health insurance plans. We prefer to use the doctors we have established relationships with. If we want insurance, we will have to take a Kaiser plan for the next 6 months - but then can we drop this insurance mid way through the year in favor of another plan from Covered California? If you calculate the “affordability” per your earlier answers, my employer’s plan costs (for employee only) are less than 9.5% of my AGI. Thanks.

Question: You can opt out of your group plan at open enrollment only. I wouldn’t advise that you do that June 2013 because there will be no guaranteed-issue coverage available at that time. If you opt out of your employer-sponsored coverage in June 2014, you will then be able to enroll with the carrier of your choice, in exchange or off exchange. You will not be eligible for subsidized coverage however.


Insure Kids Only?

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Question: Can I purchase insurance to cover only my teenagers? My employer’s insurance is very expensive for dependents. I do not need insurance as their parent. I do not want it, just for my kids.

Answer: You can purchase Covered California coverage for your children, but if your employer-based coverage is deemed “affordable” for you, your kids will not be eligible for a subsidy. 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 recently ruled that the calculation of affordability will be based on the cost of employee-only coverage, not family coverage.


Question: I currently have an HSA plan which I enjoy having. I particularly like that I can pay cash and get stuff taken care of without a lot of fuss (dental coverage tends to be weak, and I use a doctor that does weekends for a price). What’s the status of HSA plans in the exchange?

Answer: Update 7-24-13: According to Covered California’s Michael Lujan in an e-mail message to agents today, “Covered California will offer HSA-compliant high-deductible plans in both individual and SHOP product portfolios”.


Question: I read on another site that there are several exceptions (Native American, financial hardship, etc.) in which case they would trust someone over 30 to buy a catastrophic policy. Is is true that if the cheapest Bronze plan is over 8% of my 2013 income that I would be eligible?

Answer: Yes. If one has received a certification from the Exchange that they are exempt from the individual mandate because they do not have an affordable coverage option or because they qualify for a hardship exemption they will be eligible for enrollment in the catastrophic plan even if over 30 years of age.


What is an EPO?

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Question: Looking over the providers that will be available in my area (San Diego), I note that the Anthem Plan is an “EPO”. I know what a “PPO” is, that is what I have had for years, but I am wondering what an “EPO” is, other than a drug that will get you kicked out of the Tour de France. What are the similarities/differences between a PPO and an EPO ?

Answer: EPO stands for “Exclusive Provider Organization” plan. As a member of an EPO, you can use the doctors and hospitals within the EPO network, but cannot go outside the network for care. There are no out-of-network benefits.


Question: It appears from the rates out today that the subsidy level is fixed not the premium as an earlier question indicated. I thought the premium was a % of income, can you clarify?

Answer: The net premium for those eligible for a premium subsidy is a percentage of income. You may have been confused by a table such as the one below, that was released with the announcement of the new rates. This is an example of the rates a 40 year old single individual might pay (net after subsidy) in Region 16 (Los Angeles - South) for a Silver Plan.

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That amount shown in each box at the top and in black is the net premium due after subsidy. The premium subsidies are shown in green. While this is a fixed number, it is derived as a percentage of the total premium and that percentage varies with income.

The net cost of a silver level plan after subsidies can be computed using a percentage of income on a sliding scale as follows:

  • Up to 133% FPL - 2% of income
  • 133 - 150% FPL - 3% - 4% of income
  • 150 - 200% FPL - 4% - 6.3% of income
  • 200 - 250% FPL - 6.3% - 8.05% of income
  • 250 - 300% FPL - 8.05% - 9.5% of income
  • 350 - 400% FPL - 9.5% of income

Large Group Rates Higher?

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Question: I appreciate the Covered California choices for those in the “individual market” but I have concerns about the effect of the ACA on “large group” employer-based insurance premium rates. At work we have two choices, Kaiser or Anthem. We are hearing that premiums for next November could go up as high as 25%. Is this true and if so why? Wouldn’t more people in the insurance pools drive costs down? This rate increase rumor sounds counter-intuitive to me.

Answer: The rumors of huge rate increases in the individual market proved to be wrong. Perhaps your group rates won’t go up at all. Fewer uninsured will have a downward pressure in rates but it will take some time. The upward pressure on rates from the ACA in the large group market comes from requirements for more comprehensive coverage.


Question: I understand that under the new 2014 Covered California health plans pre-existing conditions are covered. However, will there be a waiting period before any benefits covered are payable? In particular if I currently have coverage under one insurer and in January 2014 change over to a different insurer on the exchange?

Answer: No. There will be no waiting period before any benefits are covered,


Affordable But Skinny

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Question: If I understand the Affordable Care Act correctly, if an employer offers a low-benefit, or “skinny”, healthcare plan, where the employee’s premium would be less than the 9.5% cap of AGI, then if I were to choose to go to the exchange, I would NOT be eligible for subsidies because my employer offered a plan, even though it was very poor. Is this a correct reading of the law? Would this be true even if the plan was better than a “skinny” plan, but worse than what I could get through the exchange — that is, I would not be eligible for premium subsidies? If so, it sounds like it would be better for an employer not to offer any plan, or that getting a new job is an imperative under such circumstances.

Answer: You raise several questions interesting issues. (1) Yes. If you are offered affordable employer-sponsored coverage (employee only premium cost is less that 9.5% of income), you will not be eligible for a subsidy regardless of how poor the coverage. (2) But employer-sponsored health insurance will eventually match the Exchange minimum coverage requirements, and (3) there will be some situations when it will be a win-win for both employees and employers not to have a group health plan, for example a small group (less than 50 employees) with a majority of low-income employees.


Question: If I am over 65 and not yet eligible for Medicare, as a recent immigrant, am I eligible to purchase individual coverage through the exchange? If not, what are my options? Will there be guaranteed issue coverage outside the exchange?

Answer: If you are a legal resident, you will be eligible for Covered California coverage even over age 65.


Medi-Cal or Covered CA?

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Question: Should i get private health insurance for my children or go on ca medi-cal in 2014.

Answer: If your children are eligible for Medi-Cal, you should definitely enroll them. You have the option of not enrolling in Medi-Cal, but if you are eligible and opt out, you will not be eligible for premium subsidies or cost-sharing reductions in Covered California. That would make coverage for your children prohibitively expensive.


Question: Is the federal subsidy based on the total household income of a person/family or just based on those person(s) enrolling in Covered California? For example, could a couple “work” the system by enrolling as 2 separate individual policies and base the subsidy on his/her own earnings instead of a combined earnings total?

Answer: The household income on which the advance tax credit eligibility is based for a married couple would usually be the total income. This would be verified by IRS data showing joint income for federal income tax purposes. So in this scenario it would be very difficult to game the system. The subsidy would be calculated on the joint income even if one of the spouses did not apply for subsidized coverage in Covered California (example: one spouse on Medicare). In this case, the percentage that the couple’s subsidy represents for dual coverage in a Silver Level Plan, could be applied by one eligible spouse for the purchase on any qualified plan in the exchange.


Question: When Obamacare comes along can I drop my insurance through my employer and buy my own policy that meets my needs? Our current coverage is horrible.

Answer: Yes. You can opt out of your employer-based insurance and buy a plan in your state exchange, but you will not be eligible for a premium subsidy if you have access to “affordable” employer-sponsored health insurance. To be considered affordable, your contribution toward the employee-only coverage must be less that 9.5% of your income.


Question: Will a Broker be allowed to have his unlicensed staff be certified to enroll clients in CoveredCa. Other AEE,s employing assisters and navigators are unlicened.

Answer: No. Only, a California licensed agent or Assister can be certified by Covered California. Unlicensed agency staff may assist consumers but may not assist enrollments in Covered California. Furthermore, an agent may not employ employ or otherwise provide financial renumeration to certified assisters for enrollments in Covered California. In-person assisters and and navigators can only assist enrollments in the exchange on behalf of certified assister entities. They are not free to act independently.


Question: I am retiring at 62 and want to use my income from my retirement accounts. if i draw social security will this count as income and will the money i draw out from my ira’s count as income? i plan to sell 66k from my ira’s each year till 65. is this 66k considered income and thus will disallow me from a subsidy? i would augment this 66k from my ira stock sales with 20k from social security. thanks for your help

Answer: This is a correction. I answered this question incorrectly previously. Your IRA withdrawals are taxable and if the amount withdrawn is $66,000, then at least some of your social security income will be taxable as well. All of this income will be considered thus may disallow you from a subsidy depending on the size of your family.


Question: I understand plans on the exchange will be of the ‘guaranteed issue’ kind, meaning people will pre-existing conditions will not be charged more and will always be accepted. Will this also be the case for those plans that don’t make the cut on the exchange or are offered outside of it?

Answer: Yes. All health insurance will be guaranteed issue beginning January 1, 2014.


Question: Are Covered California standard copay plans for hmos and the coinsurance plans for insurance companies?

Answer: The clear distinctions between HMO and PPO plans, will no longer exist. In the new order, copay plans have the same deductibles and out-of-pocket maximums as the coinsurance plans. The coinsurance plans use copays nearly as much as the copay plans do. There are only minor differences. It’s a whole new ball game. Covered California standard plan benefit designs.


Question: I understand that insurance companies can offer off-exchange plans, in addition to the ones on the exchange. Will those be different from the plans offered on the exchange? In what ways are they allowed to differ? Why aren’t they all on the exchange? I will not qualify for a tax credit (subsidy), so I will have the option of looking either on- or off-exchange, when I shop for new individual coverage, is that correct?

Answer: Yes you will have the option of choosing either a Covered California or off-exchange health plan. I don’t really know how different the off-exchange health plans offered in California will be. There are guidelines imposed by the ACA and California state laws that will minimize the difference. Specifically, off-exchange plans will have to conform to 4 metal tiers of benefits with minimum actuarial values. They will also have to meet minimum coverage requirements called essential benefits. For example, the off-exchange plan will have to include maternity coverage just as the exchange plans do. On the other hand, those carriers that are not included in the Covered California exchange either by choice or not making the cut, will offer off-exchange plans. In as much as they are outside the influence of Covered California, they will seek whatever competitive advantage federal and state laws allow. We’ll have to wait to see what they might come up with.


Employer Penalty?

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Question: If employer pays my premiums, but the premiums for my dependent coverage which is too expensive for me so i decline coverage and get subsidized coverage on the exchange, will my employer be fined?

Answer: If you work in a small business with less than 50 full-time your employer is not required to provide health insurance for employees, consequently there is no penalty. If you work for a larger employer, they are required to provide affordable health insurance for the employee only or face a penalty.


Change Carriers?

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Question: Can people in the exchange change carriers at any time?

Answer: No. Once you are enrolled in a qualified health plan, you will only be able to make a carrier or plan change during the open enrollment period at the end of the year. There are exceptions caused by certain qualifying events.


Question: As it stands now, health insurance companies determine approval or denial of procedures and medications patients receive. I have heard that denials can be controversial and not necessarily based in the best care for the patient but rather the insurance company’s bottom-line. Is this a real assessment and does the ACA address this concern in any meaningful way legislatively?

Answer: In my experience, most questions of whether or not a medical treatment or prescription drug is covered arises out of the “small print” portion of the policy that can be unintelligible to humans including the providers and insurers themselves. The ACA law goes a long way towards solving this problem by requiring “clear language” and standard benefit descriptions.


Question: I currently have an employer insurance policy which I pay half of the premium over 500. 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 enroll in a Covered California individual plan as early as October 1, 2013. However, your coverage won’t start until January 1, 2014. You can drop your employer-based coverage at that point if it is considered “unaffordable” - that is more than 9.5% of your income. If you are paying $500 per month for your share of individual coverage. Your annual income would have to be no more that $63,158 for your $500 contribution to be deemed unaffordable.


Question: If the spouse is covered through the group policy and dependent coverage is offered and the spouse and dependents elect not to take coverage under the employer’s policy. Can they go to the Exchange and receive coverage, tax credits & subsidies if eligible?

Answer: The spouse and dependents can certainly shop and enroll at Covered California, but they will not be eligible for tax credits (subsidies) unless the employer-covered spouse pays more than 9.5% of his or her income for their employee contribution. For more detail, read, Bad News …


Question: Does the 9.5% max that the employer can have the employee pay for health coverage apply to employee only or family coverage. I have a wife and one child and am the only employed member of my family group earning 45k a year, how much could I be charged for Family coverage (assuming the employer wants to stay under 9.5%).

Answer: The 9.5% affordability limit applies to employee-only coverage regardless of other family members insurance status. At an income, of $45,000, your contribution to your employee only monthly premium cannot be more than $356 per month to be considered affordable.

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