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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.

Is Covered CA No Longer Necessary to Get a Subsidy?

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Question: Phil please comment on the new CMS guidance on this subject. Here are the main points from the CMS bulletin:

  1. The health insurance exchange still is responsible for determining eligibility to obtain a marketplace plan and for financial assistance, and individuals must submit an application to begin the process.
  2. If an individual was unable to purchase a marketplace plan in time for the coverage to begin Jan. 1, the marketplace can set a date for retroactive coverage based on when the application was submitted.
  3. If an individual diverted the exchange and enrolled in a health plan directly through a carrier, and the health plan also is offered on the marketplace, the marketplace can treat the enrollees as if they made their arrangements through the exchange.
  4. In both of the above circumstances, if the enrollee also is determined to be eligible for premium subsidies by the marketplace, CMS will provide the tax credits retroactive to the policy start date directly to the insurance carrier. The insurance carrier would either credit or refund to the enrollee any claims or excess payments retroactive to the policy start date.

Answer: The CMS Guidelines are just that - guidelines. The devil is in the details and once the i’s are dotted t’s are crossed, I think you’ll see these guidelines are a nonstarter in California. But some state exchanges are really in deep doodoo. The “Cover Oregon” exchange still (March 1) does not have a working online application. Paper applications are reviewed manually by state workers wearing green eyeshades. So Oregon Governor John Kitzhaber worked with the feds to figure out a solution for Oregonians screwed over by his state’s disastrous Obamacare rollout. Realizing the need, the Obama administration opened up alternative avenues for states like Oregon (the CMS Bulletin to which your refer above) to make up for lost coverage time and federal tax credits caused by the technical problems at their state health insurance exchanges.

However, to answer your question directly: yes, applying through Covered California is still the only way to get a subsidy in California. To quote item 1 in the CMS Bulletin, “the health insurance exchange still is responsible for determining eligibility to obtain a marketplace plan and for financial assistance, and individuals must submit an application to begin the process.”

While the California exchange rollout was anything but smooth, the technology was adequate to get most of those who met the December 23rd application deadline covered on January 1. So item 2, does not apply in CA and it follows that item 3 does not apply here either. For item 4 to work, items 2 and 3 would have to be met, so that doesn’t apply either.

Admittedly, most of those January 1 enrollees were not able to actually use their health care coverage for most of the month of January for lack of insurance cards, but that was due to (a) extending the application deadline twice, (b) delays in handing off application data from the exchange to the carriers and (c) the carriers’ inability to get invoices out in a reasonable amount of time. Worst case, some people will have to go through the hassle of submitting claims to recover out-of-pocket costs after their effective dates of coverage. I guess we can be thankful, once more, that we don’t live in Oregon.


Hi Michael F.

According with Covered brochure posted by Steve Shorr if you do not want subsidy in advance the only condition is to buy through www.coveredca.com it does not say about checking “yes”. (see Page 5.) You can do a search with “tax-credit-booklet-covered-california-may-2013.pdf” You may be right, this was Covered first intention but it will not stay in a court of law if I show the brochure page 5. I can not guess the intentions, I can only relay on Covered materials.

Thanks, very interesting.

No health insurance tax credit subsidy can be claimed on one’s tax return if one applies for health coverage through Covered California without saying “yes” they want assistance, or if one applies for health insurance coverage directly through a health insurance carrier.

According to my math, $12,000 divided by $80,000 equals 15%. making your employer-based coverage “unaffordable”.

Question: If someone applies through Covered CA but select from the beginning the option without subsidy is he able to claim the subsidy at the end of the year ? By the end of the year I mean to get a refund from IRS after filling the taxes?

Here’s the URL of the actual 2.27.2014 guidance http://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/retroactive-advance-payments-ptc-csrs-02-27-14.pdf

Do you have the url to view the actual guidance?

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