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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.

June 2013 Archives

Question: How does the Supreme Court ruling on DOMA affect gay and lesbian couples, married or not, in eligibility for Covered California coverage in 2014?

Answer: The U.S. Supreme Court on Wednesday struck down the Defense of Marriage Act, or DOMA, ruling that legally married same-sex couples are now entitled to the same federal benefits as married opposite-sex couples.

This has implications for Covered California premium assistance. For example, same-sex partners who each have an income of $35,000 may be eligible for the premium assistance tax credits under the ACA - but only if they remain single. If they marry, then they would lose eligibility because their income would be over the threshold 400% FPL for a household of two.

But marriage would be a benefit for couples who have significantly different salaries. For example, say one spouse is unemployed and one earns $50,000. Separate, the unemployed person would qualify for Medi-Cal, but the $50,000 earner would be ineligible for premium assistance. Together, their combined earnings are now low enough to qualify both of them for a Covered California tax credit.

Question: I am self employed and qualified for low income insurance through my state. My girlfriend/soon to be wife’s company does not offer same sex marriage health insurance. if I get married I will lose my insurance through my state because they use her income as part of the application process. If I apply for the insurance in January under the Obama care will it be just my income or will it be our income combined? She does not need coverage it would be just myself.

Answer: After the DOMA ruling yesterday, your partner’s employer must offer coverage for married same-sex couples at some point (assuming your state allows same-sex marriage), probably not until the group’s next open enrollment. Obamacare will treat you as a couple only if you file income taxes jointly. Being treated individually will be better for you if you have a lower income than your partner, you may qualify for premium assistance in the exchange. She will not because she has access to affordable group coverage.

What is a Private Exchange?

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Question: What are Private Exchanges?

Answer: In the most general sense, a private exchange is any website that offers comparative quotes.The term is most often used by various marketers offering agent websites with online interactive quoting. In my opinion, the most legitimate use of the term are those private exchanges set up by very large employers for their employees to dealt with enrollment and claims over multiple carriers offering many plans. California Choice is also an example of a actual private exchange as it offers a choice of carriers and plans but also provides aggregate billing and other administrative services.

Question: When will certification training will be available for Agents?

Answer: I get this question almost every day and we finally got some clarification. Last Friday, Michael Lujan, Director of Sales and Marketing for SHOP announced that registration for Covered California Certification will open August 19 with actual in-person training to take place the first week of September (dates and locations to be announced). Online Certification will follow, but no specific date was offered. Lujan also made it clear these timelines may change.

Exchange Coverage for Spouse?

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Question: If I am currently on my spouse’s insurance can I deny insurance coverage from my current employer under new Obama health care plan? My employer is saying no that I cannot deny and would have to go t part time to avoid that.

Answer: Yes. You can drop off your spouse’s employer-based coverage and enroll in the Exchange, but you will not be eligible for premium assistance because you have access to employer-based coverage. The employer would have to exclude all spouses and children from coverage in its group plan for the dependents to be eligible for subsidized coverage in the Exchange. It is only when the insured’s employee-only cost exceeds 9.5% of income that the coverage is deemed not “affordable”, making the entire family, including the employee, eligible for premium assistance in the Exchange.

Question: You have a person who’s on the Exchange with family coverage gets a job with affordable ee not affordable for family coverage “what happens to spouse/children” can they stay on the Exchange?

Answer: In this scenario, the spouse and/or children could continue in the Exchange, but they will no longer be eligible for premium assistance once they have access to employer-based coverage. It does not matter that the family coverage is “not affordable for you. The employer would have to exclude all spouses and children from coverage in its group plan for the dependents to be eligible for subsidized coverage in the Exchange. It is only when the insured’s employee-only cost exceeds 9.5% of income that the coverage is deemed not affordable, making the entire family, including the employee, eligible for premium assistance in Covered California.

Why No Family Rates?

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Question: Does everyone come to the Exchange as an individual? Or, does family pricing exist to offer more advantageous pricing for households?

Answer: Not sure if family rates will be available. They have not been released yet. The sample rates that have been released so far are for individuals only. That was done in the interests of simplicity.

Over 65 - No Medicare

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Question: I’m a US citizen and just brought my foreign citizen mother to the US to live with me (by sponsoring her to become a permanent resident) after my father passed away. She is well over 65 and I’m paying $1600 per month for her health insurance alone with a one year waiting period for many treatments. Can she qualify for the exchange plans if she is well over 65? She does not qualify for Medicare.

Answer: Your mother will be eligible for Covered California coverage once she is a permanent resident. Though she is over 65, she will be eligible because she does not have access to any public coverage - Medicare or Medi-Cal.

Split Subsidy with Employees?

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Question: I employ three people at my small company making what I believe is between 200-300% FPL based on what I know about their family situation. I offer them health insurance as part of their compensation (so that the premiums are paid pre-tax) but have decreased their salaries accordingly. Can I just cut-off their health coverage and send them to the exchange subsidies ? (I would propose them a salary increase equal to half the subsidy they’d get from the state, in essence drawing a new subsidy and splitting the benefit between them and myself? Seems almost certain that we would both benefit and thus find the arrangement attractive).

Answer: A few points you should consider; (1) You can stop providing group health insurance. There is no requirement for groups with less than 50 full-time employees to provide health insurance benefits, (2) The employee’s premium assistance (subsidy) is their private concern. If you base their salary increase on their premium assistance you will be infringing on their privacy in requiring them to disclose it to you, (3) Splitting their subsidies with you is a bad idea and may even be illegal.

Let’s be candid. You are not providing any employee benefit now because you have decreased their salaries equal to the cost of the benefits they are receiving . As a result, they do get a a portion of their incomes pre-tax, but we taxpayers are providing that benefit not you. You would be doing them a great favor by dropping your current health plan at the end of the year and replacing the wages you are withholding.

Question: I recently attended a webinar on Covered California eligibility and they used an example where the mother was eligible for Covered California and the child was eligible for Medi-Cal. How is that even possible?

Answer: The eligibility upper limits for Medi-Cal are different for adults and children - for adults it’s 138% of Federal Poverty Level (FPL), for children it’s 250% FPL. So if the parents’ income is between 138% and 250% FPL, then you’ll get s split public / private eligibility as you described.

Is Obamacare the End of COBRA?

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Question: As I understand it, when the ACA goes into effect, that is effectively the end of COBRA. If you lose, or resign from, a job mid-year (not during the yearly enrollment period), are you allowed to purchase insurance through the exchange at that time?

Answer: If you loose access to affordable employer-sponsored group coverage outside of the annual open enrollment period you will be eligible for a special enrollment period during which you can purchase coverage in the individual exchange. While this eliminates the need for COBRA, the Department of Labor has ruled that COBRA will continue to be available in 2014. One scenario where a person could benefit by staying on COBRA is that it is cheaper than Covered California individual coverage would be.

Acupuncture Covered?

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Question: Will Obamacare cover acupuncture?

Answer: Yes. Covered California has listed acupuncture as an essential health benefit so all individual and small group health plans will include acupuncture coverage in 2014 and beyond. This is great news for acupuncture patients. It’s a mixed blessing for acupuncture providers. They can expect to see more patients, however they will earn less per patient.

Authorized Representative

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Question: Can third party complete an application for Covered California on behalf of the applicant, like a family member or friend? What about an agent?

Answer: Yes. Federal regulations indicate that consumers may designate an Authorized Representative to act on their behalf by signing an application on the individual’s behalf, submit an update or respond to a redetermination, receive copies of the individual’s notices and other communications from Covered California, and act on behalf of the individual in all other matters with Covered California. (1) Authorized Representative is valid until the consumer modifies the authorization; (2) Consumer must notify the Authorized Representative and Covered California that the representative in no longer authorized to act on the consumer’s behalf; or (3) Authorized Representative notifies the consumer and Covered California that they no longer are acting in such capacity.

Question: If someone sold a income property net $100,000 in 2012 to make ends meet which is the retirement monies. Would they be able to get help if normal income is $25,000 per year and single?

Answer: What counts is your current income. If it is significantly different from last year that will be taken into account in the enrollment process. While, last year’s AGI is an important reference point, it’s you current income or your estimate of your income for the current that counts.

"Obamacare" Maternity

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Question: I have insurance under my mother’s policy, with no maternity. My due date is in mid January, 2014. Does this mean that I can get insurance right before my birth to cover my hospital expenses?

Answer: Yes. Your new coverage can be effective January 1, 2014. Coverage includes maternity and there are no waiting periods.

Question: My husband has coverage thru the union and is retired. The current individual cost for his plan is under 9.5% of his pension but I am unable to enroll on his plan. Can he drop his current plan so we BOTH can get subsidized on the Covered California plan?

Answer: You may be eligible for an advance premium tax credit in Covered California because you do not have access to an employer (or union) sponsored group health insurance plan. However, even if your husband were to drop his union health plan, he would not be eligible for a subsidy because he has access to group health plan.

SHOP Health Plan Announcement

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Question: Last month, Covered California said they would announce the health plans selected to compete in the small-employer program in early June, but that has not happened. What’s the story?

Answer: The SHOP health plan announcement of participating carriers has been delayed until late July or early August. A Covered California spokesperson cited “concern about rates” as the main issue. They don’t want rates out too soon, “because of competitive reasons”. Not exactly sure what that means, but that’s the official story.

Question: I have 4 separate businesses with 4 payrolls, 4 de-6, 4 tax returns. Each have 20 ft ee’s. Am I considered over 50 or under 50 for penalty sake?

Answer: Yes. Long-standing ERISA rules require that all employees of commonly controlled businesses be treated as employees of a single business. View IRS Publication for further definition of controlled businesses.

Thanks to CAHBA agents David Brabender (Sacramento) and Ted Ruiz (San Dimas) for providing the correct answer.

Question: How does coverage work for dependent children (e.g., college students) or other family members who live out of state? Won’t all their providers/hospitals etc including PCP be out of network?

Answer: That really depends on the plans itself, the ACA nor Covered California have done nothing to change this issue. HMO and EPO plans do not offer coverage out of network, however PPO plans with national or multi-state agreements offer in-network coverage outside of California.

Pre-Tax Premium Reimbursement?

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Question: In a recent post you said, “pre-tax premium reimbursement for employees is debatable”. What is the debate? I thought the IRS had ruled against it.

Answer: Here’s a link to the the question and answer you referenced. Currently, the pre-tax reimbursement for individual health insurance premiums can be accomplished by enacting a stand-alone Health Reimbursement Arrangement (HRA). However, as you pointed out, the Department of Labor ruled that under the ACA, employer-sponsored HRAs may not be integrated with individual market coverage or with an employer plan that provides coverage through individual policies. Why? Because “Section 2711 of the Public Health Service Act (PHS) as added by the ACA, generally prohibits plans and issuers from imposing lifetime or annual limits on the dollar value of essential health benefits”. The debatable part comes from some HRA administrators who believe that if an HRA is structured properly - no lifetime limits and no annual limits - they can still be used to provide tax advantages.

Question: Based on your answer to a recent question, an EPO sounds a lot like an HMO. What’s the difference?

Answer; Yes, but it’s also like a PPO in some ways. An EPO is like an HMO in that their networks are exclusive and do not provide out of network coverage except for emergencies. EPO’s are like PPOs in that they are regulated by the Dept. of Insurance (DOI) while HMO are regulated by Dept. of Managed Health Care (DMHC). EPOs are like PPOs in that they traditionally offer coinsurance plans while HMO’s usually offer copay plans. This later distinction is becoming less defined in the Exchange.

Question: I thought I had heard previously that all QHPs on the Exchange had to offer a plan in every tier, in each geographic region they contract in. However, the ratebook released by Covered CA includes blanks for some tiers. Is that allowed?

Answer: Insurers who are participating in Covered California DO offer a plan at every tier. Where you see blanks, as in the North Los Angeles Rating Region, the carrier may not offer an HMO plan but do offer at PPO plan etc.

Question: A group over 50 with a September renewal but currently only has 30 on the plan. Are they subject to the penalty on Jan 1 or can they wait to Sept to cover the rest? (carrier wont allow additional ee’s until Sept).

Answer: Tough question - I had to get help on this one. Here’s what I found out: “The answer hinges on the ERISA plan year for the group. They must be in compliance on their ERISA plan year and if that too is September then they have until September. If their ERISA plan year was January (even though their insurance renewal was Sept) they would need to comply in January.”

Question: Let’s say a group currently offers coverage and the renewal date is September 1. Let’s also say that the coverage they offer does not currently meet the affordability test but that they plan to make changes so that it will meet the affordability test come 9/1/14. Are the employees of that group eligible to receive a subsidy on the exchange from 1/1/14 through 8/31/14?

Answer: Yes. The employees of your hypothetical group can be eligible for advance premium tax credits in the individual exchange as long as they do not have access to affordable coverage,

Small Business Tax Credit

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Question: It is my understanding that small employers with under 25 employees who are low wage, may qualify for a 50% subsidy in 2014 in Covered CA. If this is correct, will the 50% subsidy continue in 2015 and out, or be phased out?

Answer: Yes. There is a tax credit of up to 50% percent of the employer’s eligible premium expenses for tax years 2014 and 2015. Beginning in 2014 coverage must be purchased from Covered California to qualify for a tax credit. The Small Business Tax Credit has been available since 2010, with a sliding-scale tax credit of up to 35 percent of the employer’s eligible premium expenses for tax years 2010-2013.

Employers that provide health care coverage to their employees are eligible for the Small Business Health Care Tax Credit if:

  • They employ fewer than 25 full-time employees.
  • Annual average earnings wage per employee is less than $50,000 per year.
  • They pay at least 50 percent of employees’ premium cost for health insurance coverage.

Question: My employer (we have way less than 50 full time workers) plans on dropping our group plan and instead offering $200 (apparently pre-tax) to each employee who provides evidence of purchasing a health insurance policy at the exchange. We all have modest incomes and fall within the household income ranges to qualify for a subsidy. Is this a positive step for all of us? Will we be allowed to have a tax favored reimbursement of $200 and a subsidy from the Exchange?

Answer: Yes. This is a good deal for you. You get subsidized coverage in the exchange plus a contribution from your employer. Whether or not the $200 can be pre-tax to the employees is debatable at this point, but even if it gets taxed as income, it’s still a good deal for you and your employer as well - a win-win.

Question: I know that children under 26 don’t have to be dependent on their parents to be covered on a parent’s plan due to Obamacare. But what about children that are independent from their parents? Can they get subsidized exchange coverage even if their parent can cover them through their work?

Answer: Yes you may be eligible for subsidized coverage in Covered California if your parents do not claim you as a dependent on their federal tax return. That’s how the exchange guidelines define “independent”.

Waiting Period?

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Question: As an individual enrolling for health insurance through Covered California (I will also be subsidy eligible) will there be a waiting period before benefits are payable?

*Answer*: No. There is no waiting period for coverage of any specific benefits at all. You will have to wait until January 1, 2014 for coverage to begin. If you enroll after that date but within the open enrollment period, you may have to wait until the first of the month for coverage to begin. If you do not enroll during the open enrollment period, you will have to wait for the next open enrollment period beginning October 15, 2014 unless you qualify for a special enrollment due to a qualifying event.

Question: If my Employer contributes towards my coverage, not my dependents, and is affordable to me, can my family qualify for Medi-cal assuming family will qualify? I understand my dependents will not qualify for a subsidy.

Answer: Yes. There is no obstacle to Medi-Cal coverage for your family based on the availability of affordable employee-only group coverage for you.

Question: My wife is a small business owner, and is covered under my policy. However, the cost of covering her is exorbitant. Can she opt out of my coverage and buy her own policy on the new exchanges?

Answer: Your wife can purchase individual health insurance on the state exchange, but she will not be eligible for a subsidy because she has access to employer-based health insurance through your employment. The exception to this rule is if your shared contribution to your own coverage (employee-only) exceeds 9.5% of your income. In that case you and your spouse may be eligible for an advance tax credit in the exchange.

Question: My wife will retire in Dec. ‘13 and her employer will pay $100 of a $940 premium for both of us. Would we still qualify for Covered California as an alternative and/or would we qualify for a tax credit? We will both be 62 and our combined income will be $57K.

Answer: It depends. If you will be buying individual coverage and your employer simply give you $100 per month toward the premium, then you would eligible for a tax credit. However, if you still have access to group health insurance after your retirement, you could be ineligible for tax credits, If your contribution to the “employee only” premium is less than $5,415 annually ($57,000 x 9.5%) you will not qualify for a subsidy.

Overpayment of Tax Credit

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Question: My income currently comes from investments. I do not know for sure what my exact income is until the end of a given year. What happens if I estimate that my income will be above the cut-off for Medi-Cal and enroll in a subsidized plan, but at the end of the year find out that my AGI is below the cutoff. You have stated in other answers that if you qualify for Medi-Cal that you cannot get a subsidy through the exchange. Will all of the advanced tax credits have to be paid back due to my income being to low.

Answer: Yes. If advance tax credits are overpaid any tax year, the overpaid amount will be recovered at the next tax filing by essentially returning the overpaid “tax credit” to the “tax due” column.

Question: I have a son with Autism. We’ve had Kaiser for years. First as a fully funded plan so he was protected by CA AB88 in that there were no limits on his therapies. No we have a self funded plan which is regulated by ERISA and we are subject to limits. Being that I assume Kaiser will be a ‘grandfathered’ plan and exempt from ACA mandates, I am concerned that we will have to continue to deal with unfair limitations with my son’s therapies. When shopping for coverage, how can I guarantee that we will not be faced with limits on a 2014 policy? How does the ‘Government Option’ work? What is the best way to compare ALL plans available when dealing with a specific health issue?

Answer: Assuming your employer continues self-funding their employee health coverage, the plan will, as you say, be exempt form the ACA mandates and not cover autism treatments very well. Purchasing an ACA qualified individual plan, either in Covered California or off-exchange, will provide better coverage for autism and you will have to weigh that against the additional cost of purchasing coverage without employer cost sharing. You will be able to compare all plans the the Exchange and off-exchange on the CAHBA.com website, starting in September 2013.

Question: I have a preexisting condition and can’t get health insurance. PCIP has stopped taking applications. Is there any other way I can get covered between now and Jan. 1, 2014?

Answer: Yes. PCIP/MRMIP applications are being screened for eligibility for the Major Risk Medical Insurance Plan. MRMIP, the California state high risk pool is still open for new enrollment and available for individuals with pre‐existing conditions.

Individuals may qualify for MRMIP if:

  • They are a resident of California.
  • They have a pre‐existing condition as shown by:
  • A denial letter from a health insurance company or health plan dated within the last 12 months, or
  • An offer of individual (not group) health coverage with premiums that are higher than the rates of your first MRMIP plan choice. The offer letter must be dated within the last 12 months, or
  • Involuntary termination from a health plan, Health Insurance Company or employer plan for reasons other than fraud or non‐payment of premiums. The involuntary termination letter must be dated within the last 12 months.
  • They are not eligible for Medicare Part A and Part B (except for end‐stage renal disease) or for COBRA or Cal‐COBRA benefits.

For more information about the MRMIP or to request a copy of the PCIP/MRMIP Application and Handbook, please www.mrmib.ca.gov, or call 1‐800‐289‐6574.

Question: I am unemployed but have access (for a while) by belonging to a realtor-associated organization. They offer group coverage - does that disqualify me from signing up for the Cal Exchange and getting a health ins subsidy? If that is the case, can I quit the organization and then be eligible for the subsidy?

Answer: Your eligibility for a subsidy (advance tax credit) in Covered California will depend solely on your income. While you currently have access to health insurance through an association, this is not an employer-sponsored plan because there is no employer cost sharing.

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