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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.

Offered Affordable Health Insurance? Yes or No

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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.


I’m afraid not Leesa. The 9.5% affordability rule is based on the net premium for yourself only.

So, my employer offers benefits. I pay 4.9% of my pay for ONLY my part of coverage. Adding my husband it jumps to 21% of my income. Can my husband apply for himself and add my son who is on Healthy Families/ medical?

I have yet to encounter a request for proof of employment, so I don’t know the real answer. What I have encountered is a request in the Eligibility Determination to submit (1) proof of income” or (2) proof of citizenship or lawful presence, or (3) Social Security Number or (4) proof of minimum essential coverage.

The hard one is the last one in that list — the four acceptable documents to not prove minimum essential coverage, they prove NO coverage at all. Completely backwards if you ask me.

Several of my clients are asked to submit proof of employment, but on the verification page, there is no place to do that. It doesn’t indicate exactly what proof is needed, or where to upload it. I only see the section for verification of residency. How do we do this?

Jane …

The test of your COBRA continuation plan is first one of minimum essential coverage. Then you may apply the 9.5% of MAGI test.

But, if your income is below 400% of the federal poverty level, you will qualify for some amount of premium tax credit if you enroll in a plan through Covered California. You can drop your COBRA continuation plan even if it is “affordable” under the 9.5% test.

In other words, you can comparison shop between your COBRA continuation pan and all of the other plans. If you find a plan with a similar set of benefits and out-of-pocket costs, and you still have access to the physician of your choice, then the test boils down to cost. One of the plans will be lesS costly, and that one might be the best choice.

The only person legally licensed to tell you, “Yes, it looks like this plan will be best for you for the following reasons,” is a CA licensed Accident & Health agent (doesn’t even have to be certified by Covered CA).

The 8% income test is not the same as the 9.5% test. The 9.5% test applies to the “self-only” cost of an employer-sponsored health plan (regardless of the cost of dependent coverage).

The 8% test is based on the cost of minimum essential coverage, and if the lowest cost bronze plan exceeds that percentage of a household’s income, then the household is exempt from the “individual shared responsibility payment” — the $95 per person (up to 3 = $285) “fine” for not having health insurance (which could be even higher because the maximum fine is 1% of MAGI, and $285 = 1% of $28,500 — for example, a family with a $70,000 MAGI would pay almost three times that much = $700).

Affordability is in the eye of the beholder. Far too many people will make a decision based only on the premium and not concern themselves with the internal out-of-pocket costs … deductibles, copays, coinsurance … which can be as much as $12,700 for a family on top of premiums.

Persons who consume a moderate amount of healthcare services in a year need to consider the types of expenses they incur, and whether they would save money in the long run by changing from silver to gold or gold to platinum. In some cases changing from platinum to gold and PPO to HMO can save enough money in total out of pocket expenses due to lower deductibles, and lower out-of-pocket limits as the trade-off for higher premiums.

Please, folks, do not make decisions lightly — you are stuck with your choice for one year.

The “affordability” test, to be more specific, is 9.5% of household modified adjusted gross income (MAGI) and is measured against the “employee self-only cost” not the cost for the entire family.

The “gotcha” in this beyond the 9.5% test, is the word “offered”. “Dependents must be offered coverage” — they do not have to accept it. But a spouse is not a dependent, even if he/she does not work. Go figure. That’s the work of our elected do-nothings in Washington, DC.

Mark the box no and tax credits will be offered to those who are income eligible (400% of FPL or less). Mark the box yes and no tax credits period. Does Congress really want to criminalize Americans in that manner? Or was the goal to make people beholden to the government for their healthcare or assistance paying for it?

Does COBRA count as being offered affordable coverage?

Thank you again for helping all of us wade through this process.

Phil is correct that “affordable” is defined in the law as 9.5% of income.

However, when I completed the online application, I got to this question and was also stumped at the wording. I then moved my mouse pointer over the “?” symbol next to the question and then got a popup box which explained that affordable means less than 8% of your income. I completed the application on October 23 but suspect that the online app is still using the 8% definition.

I understand why the Covered CA app uses a lower percentage than is spelled out in the law. The affordability question depends on an applicant first knowing the definition of income (how many applicants know what “modified AGI” is???) and then doing the math correctly during an online application process. It’s an error-prone question, so if applicants are even close to the borderline (8% instead of 9.5%), Covered CA would rather you answer no (i.e. check off “None of the Above”). Then Covered CA will check on affordability themselves.

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