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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.

July 2016 Archives

Medicare Mandatory at 65?

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Question: I am currently insured with Blue Shield thru Covered California. I will be 65 in December. Must I choose Medicare and give up my current plan? I am retired and receiving social security benefits.

Answer: If you do not sign up for Medicare when it is offered (age 65 birthday month), you will no longer be eligible for a subsidy through Covered California. Unless you have money to burn, sign up for Medicare.

Question: I recently quit my job. I enrolled in a Covered California plan with premium assistance. My old company offered me COBRA coverage but it’s much more expensive. Does an offer of COBRA coverage someone from receiving a premium tax credit?

Answer: An offer of COBRA coverage does not prevent you from being eligible for premium tax credits. You could not receive premium tax credits if the you had actually enrolled in COBRA, then dropped it in favor of Covered California coverage. If a former employee actually enrolls in the COBRA plan, it is considered minimum essential coverage and becomes a barrier to receiving premium tax credits. People who are enrolled in COBRA coverage generally must wait until the marketplace open enrollment period to drop that coverage and enroll in a Covered California health plan with premium tax credits.

Question: I was offered health insurance by my employer, but missed the open enrollment period. Can I still keep my Covered California coverage with a subsidy?

Answer: Probably not. If the coverage offered by the employer was “affordable” and met minimum value, that employer offer still counts as an offer of minimum essential coverage that prevents a person from being eligible for premium tax credits. A person in this position may enroll in marketplace coverage, but will be ineligible for financial help.

Self-Employed Subsidy?

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Question: Can someone who is self-employed qualify for subsidized coverage?

Answer: Yes. A person who is self-employed can enroll in coverage through Covered California and potentially qualify for premium tax credits.

Question: My company gives employees a certain amount each month for coverage instead of providing health insurance. Ami I still eligible for a subsidy?

Answer: Yes. Some employers offer a cash “stipend” instead of offering health insurance. This cash stipend is taxable income, similar to a bonus or a pay raise, and cannot be conditioned on the purchase of health insurance. If the employee uses the stipend to purchase a marketplace plan, the payments will be made on an after-tax basis and will not be made through payroll deductions. This type of employer assistance does not disqualify a person from receiving premium tax credits. Employers cannot reimburse employees for the cost of their marketplace premiums using pre-tax dollars.

Question: I have just started a new job and was looking forward to having a company health plan, but what they are offering me is not a good deal. I can’t afford it. Can I stay with my Covered California plan?

Answer: Employee-only coverage is considered to be affordable if it costs less than 9.66 percent of household income in 2016. If employee-only coverage is affordable, then any offer of coverage for dependents is automatically considered affordable as well. This means that coverage offered by an employer to dependents may cost more than 9.66 percent of income and still be deemed affordable as long as the employee-only coverage costs less than 9.66 percent of income. In such cases, the dependents are not eligible for a premium tax credit because they are considered to have affordable employer-sponsored coverage.

Question: My wife and I currently both have the Blue Cross Enhanced Silver 87 plan that we pay $129 a month for based on 2016 projected earnings of $30,130. What is the penalty for us if our earnings would be say $33,000 for 2016? If we exceed by $100 is the penalty the same as if we exceed by $1000?

Answer: First of all, there is no "penalty" for unexpected fluctuations in annual income. If you received more premium assistance than you were entitled to based on your income, the IRS will make the adjustment retroactively on your tax return for that year. The premium assistance due for an income of $33,000 versus $30,130 would be about $400 less for the year. You would pay that back through an additional $400 in federal income tax.

Question: I am eligible for a subsidy but would rather not take it. The amount would be small and not worth the time, trouble and stress getting paperwork together. Can I choose not to take it, and, if so, how do I do that?

Answer: To avoid receiving premium assistance on a monthly basis ask Covered California to change your payment type to a "lump sum" at the end of the year. That way, you'll get any subsidy you may be due when you file your tax return and if you are not due any subsidy, you will not have to pay anything back.

How to Cancel COBRA?

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Question: I want to cancel my COBRA and enroll in a Covered California plan. How much lag time should I expect from time of application to activation of the new coverage?

Answer: Applicants who are eligible for a Special Enrollment Period (SEP) due to loss of coverage can apply right down to the last day within a 60 day window of loss of coverage and the new Covered California coverage is effective the first of the following month. However, in your case you do not qualify for a SEP until the expiration of your COBRA coverage. You can voluntarily cancel your COBRA during the annual Open Enrollment Period (Nov-Dec). During open enrollment, applications received on or before 12/15/2016 will be effective 1/1/2017.

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