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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.

November 2013 Archives

Question: My estimated AGI (2 person household) for 2014 is $20,000. In 2012 I cashed out of an annuity and had an AGI of $70,000. I was considering cashing out of another annuity in 2013 which would lead to a similar AGI. Can I obtain the reduced rates (AGI $20,000) for my 2014 premiums? What's the best way to proceed?

Answer: Since your estimated 2014 income is way less than the 10% allowed without verification, your best option is to submit an affidavit explaining that you will not be cashing out another annuity in 2014. You should also submit documentation showing the annuity income. Feel free to cash another one for the 2013 tax year. It will not affect anything at this point. If you do so, you will probably have to do this again when you renew for 2015 to explain why your income in 2013 if higher than your 2015 estimate.

Question: I read an article in USA today advising that people who do not qualify for subsidies were finding it easier to shop on authorized web-based agent sites. I took a look at www.cahba.com and found 11 CIGNA plans which are bronze/silver/gold compatible, but are not on CoveredCA. They are more expensive than Blue Shield's 2014 plans, but they appear to have the broadest choice of providers I have seen offered. Why are these CIGNA plans not on CoveredCA and is there any danger of being deemed not to have MEC if I buy one?

Answer: Health insurance carriers had to apply and compete to be accepted as qualified health plans offered by Covered California. CIGNA chose not apply, so their plans cannot only be offered off-exchange. However, CIGNA plans offered after January 1, 2014 must be ACA-complaiant. So there is no danger of them not having minimum essential coverage. You are right on about there being no advantage to consumers who are not subsidy eligible to buy through Covered California. In fact, there are more advantages to shopping off-exchange and dealing directly with the insurers. For example, there are more choices off-exchange, like CIGNA plans, and the application process takes only a fraction of the time it takes to enroll through Covered California.

Question: The Covered Calif. application says “Person 1: Has this person been offered affordable full-coverage health insurance for January 2014?” What is the definition of affordable? Will people who answer yes be denied a subsidy?

Answer: People who answer that question “yes” will generally not be eligible for a subsidy in Covered California. To be deemed “unaffordable”, the coverage offered costs an employee more than 9.5% of the annual household income.

Question: In order to prove that I qualify for premium assistance, I had to upload evidence of my income. I uploaded the required documents a couple weeks ago. How long does the verification process usually take? Should I go ahead and “check out” with a health plan even though I don’t know how much premium assistance I will be getting?

Answer: You can safely assume that you will be getting the subsidy for which you were conditionally approved. Go ahead and select your health plan. Covered California could take up to 90 days to “verify” your income estimate for 2014.

Conditionally Eligible for 90 Days?

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Question: My wife & I are retired; most of our income is from investments. We received notification today from CoveredCA that we were approved for only 90 days of coverage until we show proof of income. But we don’t know how to show proof of income, since our 2014 income will be considerably lower than our 2012 or 2013 income. (This is because we had been converting portions of our traditional IRAs to Roth IRAs, artificially raising our income each year.) What are we supposed to do to “prove” our 2014 income? Thank you!

Answer: There’s no app for that :-) I suggest you write an explanation in a bit more detail than you have above and include any documents that back it up - e.g. IRA withdrawals and Roth deposits . If they are not satisfied with that, let them request something specific.

Question: Can I apply for a Children’s Dental plan on the Covered CA site or do I have to call the dental plan company directly? I do not see where to do it on the CoverCA site.

Answer: Covered California just added pediatric dental plan selections to the online and paper applications. You’ll find the “Choose Pediatric Dental Plan” and “Choose Health Insurance Plan” on Attachment D. page 25 of the Single Streamlined Application and in in the enrollment section of the online application.

How to Buy Dental Plan for My Child?

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Question: I would like to sign up for the Delta Dental PPO plan listed in the CovererdCa Dental Plans for Children document. I called Delta, they said they don’t sell it. How do I apply for this dental policy?

Answer: Delta Dental is one six selected companies including Anthem, Blue Shield, Health Net, LIBERTY Dental, and Premier Access Dental - offering dental plans in covered California. You can select Dental Dental’s plan on your Covered California health insurance application either online or by paper application. The dental plan selection was added to the applicaqtion very recently.

Can I Stay on COBRA?

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Question: I enrolled in COBRA when I was laid off from my previous employer in September, 2013. I have received a letter from the insurer stating that my policy will not be available after December 31 as it does not meet new federal requirements for 2014. Employees will be offered a choice of new plans to chose from for 2014. Will I be able to chose from one of these plans as a prior employee with COBRA coverage until my 18 months of COBRA coverage expires? The current premium with COBRA coverage is less than any of the quotes I have received from the current market exchange offerings.

Answer: Yes you can stay on COBRA if you prefer, but you will have to reevaluate your decision once you see the premium for the new ACA compliant group plan you are offered. The rate will probably be higher than the non-compliant plan.

Question: I have been told by Blue Shield that I will be able to stay in it until March 31 2014. The new Bronze HSA plan is 50% more expensive for almost identical coverage to me, so I plan to want to stay in the existing plan. However, as I read the IRS website, that means I could be liable to paying the “individual shared responsibility” penalty for the first three months of 2014, which at my income level would more than offset the premium savings. Can you please clarify whether I would be liable to the penalty or not?

Answer: No penalty. You get transition relief from the shared responsibility payment because your coverage ends in 2014. The transition relief begins in January 2014 and continues through the month in which the 2013-2014 plan year ends, March 31st in your case.

Grandfathered Plan Rate Increase?

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Question: If someone has a grandfathered individual plan, will the rates be locked in till open enrollment next year or can they have increases mid year that may be unfavorable? Which means the client is locked in till open enrollment or does that open a window to make a move to another option?

Answer: Your grandfathered plan rate is only locked in until the policy renewal date, which is the anniversary of the policy”s original effective date of coverage. If that date falls outside off an open-enrollment period, you cannot choose to change plans regardless of the rate increase. That is not a qualifying event. You will not be able to change your plan until the next open enrollment period - Oct 15 to Dec 7 of that year.

Premium Subsidy for Retiree?

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Question: An earlier response here (from Oct.) indicated that retirees under age 65 who are eligible, but not enrolled in employer-sponsored coverage, can obtain premium subsidies in 2014 to purchase coverage through the CA exchange, even though they have access to a employer-sponsored health plan. I would like to take this approach. (I’m 62 and on a retiree plan for 2013 that I can continue next year if I wish. Instead, I’m contemplating a switch in Jan. to a plan on the CA exchange & planning to get a subsidy.) However, in registering, the website asks if I “have or have been offered affordable, minimum standard value health insurance for 2014?” The answer to this is “yes”, but someone at coveredca told me on the phone that if I answer “yes” it will disqualify me from any subsidy. I believe I’m entitled to the subsidy, but it appears the website will not allow it. What can I do?

Answer: If you have access to affordable employer-sponsored coverage, even for retirees, you are not eligible for as subsidy. Look at it this way: since your former employer offers you a group health insurance plan to which they contribute at lease 50% of the cost of coverage, you already have “subsidized” health insurance. Federal subsidies are for people who do not have that option.

Household Size with College Student?

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Question: My son is away at college in New York. I claim him as a dependent on my taxes. He also earns enough to file his own tax return. I would like to purchase a policy for the two of us with subsidies through CoveredCA. Can I do that? Do we report our incomes separately?

Answer: Think of your household as everyone in your tax family. Your son at college in New York, whom you do claim on your taxes, is considered part of your household. And if that son happens to hold down a part-time job while attending school and earns enough money to file a tax return, you’ll need to include his earnings as part of your total household income. So you can purchase a policy for the two of you through Covered California. Your eligibility for premium assistance and cost savings reductions will depend on your aggregate income for a household of two.

Question: I have signed up some clients with incomes that qualify them for Medi-Cal. Since we will receive a $58 commission, I have continued the application process. When I look on my individual listing for these clients they show as “ineligible”. Does this mean they are ineligible for a subsidy? Also, will the application be forwarded to Medi-Cal?

Answer: Yes. If the applicant’s income makes them Medi-Cal eligible the application will be handed-off to the county for further processing. The “ineligible” tag you see in your CC agent account means the applicant is ineligible for Covered California coverage. If your client designated you as agent of record you “should” eventually get your one-time $58 sign-up fee.

Why Are Rates Higher in Northern CA?

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Cost Comparison by Regions.jpg click_image.png

Question: Rates are considerably higher in the northern part of the state than in SoCal. What’s up with that? I understand San Francisco being higher because everything is costlier there, but even the rural areas of the north counties are pricier than LA and Orange County. Can you make sense of it?

Answer: In a nutshell, it’s about population and competition. More population means more hospitals, large medical groups and other providers. That means more competition with more providers willing to contract at lower rates to get a leg up. That translates to a 48% difference in premium rates between San Francisco and Los Angeles for a 40 year old buying the 2nd lowest priced Silver Plan - $373 vs $252.

Why are Networks Restricted?

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Question: There has been much talk about restricted provider networks in the Covered California plans. If the plans have to be the same as those offered outside the marketplace, how are they restricted? Or all all individual plans restricted in comparison to group plans? Can you shed some light on this subject?

Answer: Individual plan provider networks have been "narrowed" for 2014 as a way of controlling costs. That's because a smaller number of medical providers are willing to agree to lower contract rates. Carriers who offer qualified health plans in the exchange must "mirror" those plans (including networks) outside of the exchange, so the individual plan networks are identical in the exchange and off the exchange. Group plans will generally have broader networks than individual plans, if not the same as pre-2014.

Who Sets Prices?

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Question: Does the ACA set prices for procedures etc or are insurance companies allowed to charge anything? Also, which insurance company has the best record for not overcharging for procedures?

Answer: The ACA does not set prices for medical services, nor for that matter does the law set health insurance rates. Insurance companies negotiate with health care providers - doctors, hospitals, etc.- to set a contract rate for each medical procedure or service. There is considerable variance in medical costs between insurance companies for the same service or procedure and also between providers within the same insurance company network, because negotiated contract rates are lower with some providers than others. There is no transparency for the consumer in this system so there is no way to compare the contract rates among carriers.

Continuation of Non-ACA Policies

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Question: I got a letter from Blue Shield that my existing policy would be terminated Dec 31st 2013, and I would be switched over to some new bronze ACA plan for the next year. A few weeks ago I received another letter and that states my current policy can continue until March 31, 2014. What is the significance of March 31st deadline? Has this something to do with the administrative directive Obama administration issued regarding individual mandate? The above letter was before the more recent development of the administration allowing non-ACA policies to continue till the end of the year. In light of that, should I expect yet another letter from BlueShield extending the current policy until Dec 31, 2014?

Answer: It is possible that Blue Shield will extend current non-grandfathered plans for another year. If so that would be a result of the recent mea culpa announcement by President Obama. The initial Blue Shield extension was ordered by the Department of Insurance because Blue Shield allegedly did not give policyholders sufficient notice of cancellation.

Covered Care & AGI

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Question: I’m having a hard time understanding how to enter my income on the Covered Care application. I’m self-employed, so my monthly salary does not include withheld taxes (I pay those quarterly). On the Covered Care application, if I enter the amount of the monthly check I receive, it looks like my salary is greater than it really is. There is no place on the application to enter a yearly AGI. Should I divide my AGI (line 37 of my income tax) by twelve, to show the monthly salary I actually end up keeping? And also, because I have a home office deduction, and there is a place on the Covered California application to list self-employment deductions, am I supposed to enter that amount on the application? Thank you. I’ve tried e-mailing Covered Care, but they still haven’t answered my questions. (You can click the chart to enlarge it.)

Answer: Yes. I think your idea of estimating your AGI for 2014 then dividing by 12 is a good way to report your income on a monthly basis. Perhaps this chart will help to deterring what part of your income counts toward AGI. (You can click the chart to enlarge it.) MAGI Chart.jpg

Get Subsidy From My Carrier?

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Question: In case a participating carrier cancels an existing plan as it does not comply with ACA and offers different plans that comply with ACA to insured, are those offered plans same or different from the plan offered under Covered California. Is the insured entitled to premium assistance and cost sharing help If the insured buys directly from the carrier?

Answer: Insurance companies who participate in Covered California (Anthem, Blue Shield, Health Net, Kaiser), must offer the identical plans off-exchange though you’ll find they use different plan names off-exchange (just to add a bit more confusion). You can select an on-exchange, Covered California, plan from one of these participating carriers after you have enrolled through Covered California and are eligible of a subsidy and / or cost sharing help.

How Do I Submit Proof?

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Question: After 45 days of working my way through a minefield, I was finally able to choose a health plan today and get a confirmation printed out. However, the way I understand it, I will have to submit proof of US citizenship for myself and my wife, either by uploading the documents or by mailing them in. I can’t find the online link anymore, so what would you suggest me to do?

Answer: Try logging in to your Covered CA account and check your “Secure Mailbox”. CC will send a formal request for proof of citizenship, including the reason for the request, examples of the types of acceptable proof and instructions on how to submit it, and your appeal rights. CC does not correspond by regular email for privacy reasons. Unfortunately, they don’t explain this sufficiently and secure mailbox messages go unnoticed.

Question: I just kind of wonder whether I will be able to keep my current non-ACA Anthem Blue Cross insurance plan until the end of 2014 after Obama's announcement today.

Answer: President Obama announced today that he (the federal government) will not require insurance companies to cancel ACA non-conforming individual plans on Jan 1, 2014, but would allow them to continue through 2014. Effectively, this presidential gesture passes the decision to cancel or not on to the insurance companies participating in the federally facilitated exchange. Here in California, where more than 900,000 cancellations have been sent out, Insurance Commissioner Dave Jones called on insurers to extend the policies being scrapped. Neither Obama nor Jones will have the final say, because Covered California requires insurance companies to cancel non-grandfathered health plans on 1/1/2014. The next CC board meeting is scheduled for November 21st and they will probably discuss the option to reverse the cancellation mandate for 2014. It seems unlikely, in my opinion, that they will overturn their mandate. It would cause chaos in the marketplace and they believe that the roll-out is going OK here.

Over 65 No Medicare or Medi-Cal?

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Question: I understand that seniors (new immigrant) over 65 without medicare or medicaid can purchase insurance through exchanges. I assume they won’t be able to get any federal subsidies, right? So should they actually purchase through off exchanges?

Answer: The immigrant you describe would be eligible for a subsidy in Covered California if income is under 400% FPL if “legally present”.

Question: I applied to Covered Cal and am eligible for Medi-Cal in 2014 (just under the income limit). I received nothing for a month until the county uDPS office sent me a note wanting income and residency proof. Is CC forwarding all Medi-Cal apps over to counties and are the county agencies not able to access the Federal Data Hub for verification info?

Answer: Correct. Medi-Cal eligible applications pass through Covered California to the County Office of CA Dept of Health Care Services. Access to the Federal Data Hub may or may not be working right now, but it would be typical to approve an applicant conditionally until proof of income and residency is received.

Anthem BlueCard Access Out-of State?

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Question: In your answer to a question about getting coverage in FL or CA, there was mention that Anthem Blue Cross would not be honoring Blue Card for ACA-compliant plans. However I looked in the brochure for both the on exchange and off exchange Anthem Blue Cross plans and they both mention Blue Card access (Page 4 of PDF mentions accesss to Emergency and UrgentCare coast to coast using BlueCard. Could you clear up the discrepancy?

Answer: Here is the quote from the brochure to which you referred: “When you’re traveling for work or on vacation, going to the ER or urgent care is probably the last thing you want to happen. However, our plans cover emergency and urgent care in every state through the Blue Cross and Blue Shield Association’s BlueCard® Program. This means you and your family have emergency and urgent care coverage from coast to coast.” The fact is that the Anthem Blue Card formerly covered non-emergency care from any BCBS network provider in another state for the same benefit coverage as if the cardholder were in-network in their home state. I would say that Anthem is a bit disingenuous in stating this as an extraordinary benefit since out-of-network emergency care is covered by all plans.

Question: I got notified by Anthem that my plan is canceling on Des 31. I’ve been trying to apply for a new plan at Covered California. So far I have been able to find out that I am not eligible for tax credits and that’s about all. I created an account, but I don’t see why I have to give them my financial information if I know I won’t get a subsidy. Is there another way?

Answer: Without a subsidy, there’s no compelling reason to enroll on the exchange. You should shop for off-exchange plans where you’ll have more plan options and the process is 3 times faster and you won’t be required to disclose your financial information. You can shop and compare off-exchange plans in seconds o this website. Your licensed insurance professional can also provide you with an off-exchange quote, advise you on plan selection, and make your enrollment easy. See Covered California is Not for Everyone

Question I have not been able to find out how the Medi-Cal eligible kids are being handled. An organization that I am working with was instructed by Kaiser to include a denial letter wit the application, if the kids qualify for Medi-Cal. I have not been able to get any information on the plans, who qualifies or what to do with all these kids.

Answer: In California, the income limit for adult eligibility for Medi-Cal is 138% of Federal Poverty Level (FPL) and for children it’s 266% FPL. That’s why you can have parents eligible for a CC subsidy while the kids are eligible for Medi-Cal. If the kids are eligible for Medi-Cal a “denial letter” won’t work. If they pass on Medi-Cal when eligible, they cannot be eligible for a CC subsidy. As for how to handle it? Complete a Single Simplified Application for the family and let CC sort it out. Medi-Cal Expansion Chart.jpg

1099 for Subsidy Income?

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Question: I heard that individuals will receive a 1099 from the Federal govt for any tax credits and/or subsidies they receive and will have to report it as income for state and federal tax purposes. Can you confirm?

Answer: No. The advanced premium tax credits (“APTC”) and cost sharing reductions (“CSR”) are not types of income and therefore are not likely to be reported on a form 1099. However, it is likely that qualifying individuals will receive a statement at tax time reporting any subsidy received. This statement will be used to help reconcile the APTC received (based on estimated income) with the APTC that should be received (based on actual income) at tax filing time. The APTC/CSR are not considered income and are not taxable regardless of how they get reported.

Thank you Steven C Stasoiski, Health Insurance and Tax Professional from Seal Beach, CA for this answer.

Risk Adjustment and MLR?

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Question: The insurance companies do not have any history with the exchange and are probably guessing the risk-profile of the customers. I understand that there is some mechanism built-in to make them whole if they guess wrong and lose a lot of money. (please correct me if I am wrong). My question is, if they find that they were too conservative and make too much profit — i.e. spend less than the stipulated percentage in patient care — are they still forced to give it back. Will it be refunded to the individuals, or to the government, or split equitably based on the subsidy amount.

Answer: The ACA law includes a “risk adjustment” provision that provides a behind-the-scenes mechanism to correct for market imbalances that occur if some insurers attract pools of subscribers whose expected medical costs are substantially greater or less than market-wide averages. It helps to accomplish this by subsidizing insurers that end up with a disproportionate share of high-cost patients and assessing competing insurers that — either through strategy or happenstance — end up with a better selection of health risks. Conversely, there is no mechanism to recover revenue from an insurer who does a better than average job of risk assessment. There is however and Medical Loss Ratio (MLR) regulation in the ACA that requires health insurance issuers to submit data on the proportion of premium revenues spent on clinical services and quality improvement. It also requires them to issue rebates to enrollees if this percentage does not meet minimum standards - at least 80% or 85% of premium dollars on medical care. If they fail to meet these standards, the insurance companies are required to provide a rebate to their customers.

Question: Not knowing what my income is from year to year, I could estimate my income to be lower than the actual amount. If it turns out the IRS says I owe them money because they paid me too much subsidy, will I also be charged interest, penalty, or fine?

Answer: No. There is no penalty or interest, because the IRS will recover the subsidy overpayment as part of your federal tax payment for that tax year. it would not be overdue.

Question: If someone has a giant loss carry forward, like 500K, it’s going to take a while for that to no longer show on line 37. So would that person virtually be on Medi-Cal forever, or for subsidy eligibility, do loss carry forwards only count in the year in which the loss occurred?

Answer: Loss carry forwards do not only count in the year in which the loss occurred. There are two types of loss carry forwards and I am not sure which one you are referring to. A net operating loss (“NOL”) can be carried forward to offset future operating income for up to 20 years following the NOL year. A capital loss can be carried forward to offset capital gains or reduce ordinary income by a maximum of $3,000 per year indefinitely. As such, a NOL carry forward like $500,000 could count for 1 or 20 years whereas a capital loss like $500,000 could count for 1 to 167 years. Both types of loss carry forwards reduce a household’s modified adjusted gross income which is used to determine subsidy eligibility.

Thank you Steven C Stasoiski, Health Insurance and Tax Professional from Seal Beach, CA for this answer.

Enrollment period

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Question: Obamacare tutorial says,”If you don’t sign up for the subsidized plan during the initial open enrollment period—-October 1, 2013 to March 31, 2014—-you will have to wait three years before you can enroll into a subsidized plan unless you have a qualifying event. Since the law will require you to have coverage, you will need to shop on the open market or at a private exchange.” Does it mean that you shall have to wait for three years if you miss the current enrollment period of March 31,2014?

Answer: You’ve got a very misleading tutorial. If you miss the initial open enrollment period ending March 31, 2014. You will have to wait until the next open enrollment period starting October 15, 2014 for coverage effective Jan 1 2015.

Separate Returns = No Subsidy?

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Question: What if a married couple is filing separately? Based on our individual incomes, my husband would qualify for Medi-Cal and I should be eligible for a subsidy. But the exchange told me that in order to receive premium assistance spouses are required to file a joint income tax return. Is that true?

Answer: Yes. The law says if you file as married filing separately, you will not be eligible for any premium subsidy at all, regardless of income. Only domestic abuse, abandonment, or other special circumstances (pending divorce?) may be exempted from the requirement to file a joint return in order to qualify for the premium subsidy. Reference TD 9590, IRS

What is MAGI? Revisited

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Question: What’s added back into my AGI at the end of the year? For example is my rental income, retirement account withdrawals, etc. included in MAGI.

Answer: I have received many questions like this and have answered few, mostly because I wasn’t sure of the answer myself. The problem is official web sites such as the Healthcare.gov site or IRS.gov tend to focus only on earned income and do not provide much guidance as to how to handle other forms of income or various tax deductions when it comes to calculating MAGI (modified adjusted gross income) for purposes of determining subsidy eligibility under the ACA. I can now refer you to an authoritative source. We just published an article by guest author, A. Marshall, in our News and Commentary section, titled MAGI - What It Is and What It Isn’t. Check it out and bookmark it.

I Applied. What Now?

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Question: I submitted an application 3 weeks ago to Covered California for a Blue Shield plan. I have heard nothing from either CC od Blue Shield. Should I apply again?

Answer: No. Do not enroll again. If you completed and submitted an application to Covered CA. They will need to verify eligibility for premium assistance and that will take awhile. I would suggest a follow up with CCA later in the month when they can verify eligibility. If you made a binder payment with your application, their coverage will be pending until the binder payment is processed.

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