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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.

October 2017 Archives

Question: I am covered under COBRA from my former employer, but I pay the full premium. It’s more expensive than Covered California. Can I cancel my COBRA before it expires and buy Covered California instead?

Answer: Yes. You can cancel your COBRA coverage effective December 31, 2017 and enroll in a Covered California plan to be effective January 1, 2018. If you wait until Open Enrollment ends (January 31,2018), and drop your COBRA coverage or stop paying premiums before the COBRA coverage expires, you will not be eligible for a special enrollment and will have to wait until the next Open Enrollment period. Only expiration of your COBRA coverage triggers a special enrollment opportunity.

Question: I’m confused about how to renew coverage through Covered California. The renewal notice I got seemed to say that I don’t have to do anything and I will be renewed. Is that correct? What if I want to change plans?

Answer: Yes. If you take no action, you will automatically be renewed in the same plan you had this year. During open enrollment, November 1st through January 31st, you have two options to renew your health plan through Covered California: (1) If you want to keep your same health plan and coverage, Covered California will automatically check your information with federal government data sources and renew your coverage with the same health plan. You will be automatically renewed in the same health plan, if it is still available, with the appropriate tax credits, as long as you have filed your taxes the previous year. (2) To make changes to your coverage or switch health plans, either log on to your Covered California online account or contact your Certified Insurance Agent or call Covered California at (800) 300-1506 to make the change.

Does HRA Nix Subsidies?

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Question: I receive an HRA monthly payment from my last employer (now retired) of around $270 per month. In 2017 I used Covered California to select a plan. At that time I did not apply for any Tax credits against my plan. For 2018, based on my income, I would qualify for about $550 tax credit. Can I apply for Tax Credits when I receive the HRA payments?

Answer: Your HRA benefit does not affect your eligibility for Advance Premium Tax Credits through the Affordable Care Act. You must update your 2018 income estimate in your Covered California account either online or at the call center 800-300-1506. Make sure that your profile indicates that you want help with your premium payments. No need to cancel your HRA benefits as long as your former employer chooses to keep paying. You can use it for out-of pocket medical expenses other than the monthly premium - things like dental care, chiropractic care, and acupuncture that are not covered well on your health plan.

Question: If our income drops mid-year to become Medi-Cal eligible, does Covered Ca give us the option to pay the full premium or will they automatically send our info to Medi-Cal? Will that be considered a qualifying event to enroll in other private health plans during the year?

Answer: If you lower your annual income on your Covered California account into Medi-Cal eligibility, Covered California will automatically enroll you in Medi-Cal. If that change takes place outside of the Open Enrollment Period, it is not considered a qualifying event that would allow the purchase of unsubsidized health insurance coverage either through Covered California or direct from an insurance carrier.

What is My Family Premium?

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Question: I’m 57, my spouse is 55, and our kids are 23, 17, 15, and 13. What age premium will we be charged for health insurance in the Marketplace?

Answer: Family premiums reflect the composition of family members and their ages. To compute a “family premium,” insurers will add together a separate premium for each adult age 21 and older. In addition, insurers can charge a separate premium for up to three children under age 21. In your example, your family premium will reflect three adult premiums and three child premiums.

Question: What income is counted in determining my eligibility for premium tax credits?

Answer: Eligibility for premium tax credits is based on your Modified Adjusted Gross Income, or MAGI. When you file a federal income tax return, you must report your adjusted gross income (which includes wages and salaries, interest and dividends, unemployment benefits, and several other sources of income.) MAGI modifies your adjusted gross income by adding to it any non-taxable Social Security benefits you receive, any tax-exempt interest you earn, and any foreign income you earned that was excluded from your income for tax purposes. Note that eligibility for Medi-Cal is also based on MAGI, although some additional modifications may be made in determining eligibility for these programs.

Subsidies Cancelled, WTF?

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Question: I just read that Trump has cancelled Obamacare subsidies. WTF? Does that affect Covered California too?

Answer: Trump recently cancelled the funding for Obamacare subsidies called “Cost Savings Reductions” which lower the out-of-pocket expenses like deductibles and copays for the lowest income portion of the ACA market. The funding for CSRs had been on shaky ground from the beginning. Fortunately, Covered California anticipated the latest political maneuver to sabotage Obamacare. What that means to you is that your Silver Level coverage will continue unchanged for 2018. The rate increased considerably, but so did the subsidy, resulting in a net premium that’s not too much more than you paid this year. The 2018 Covered California rates for Silver Plans, the only plans that include the CSR benefits, include an average 12% increase to cover defunding the CSR. A new bipartisan bill to fund the CSRs has Trump’s support and looks promising, but it’s unlikely that it will become law quickly enough to reduce Silver Plan rates before Open Enrollment for 2018 closes.

Question: I forgot the login for my Covered California account. Help?

Answer: You can recover your username and reset your password at the Covered California Login page by clicking on “Forgot Username” or “Forgot Password”. After you correctly answer your security questions, you will be able to retrieve your username and create a new password. If you do not remember the answers to your security questions, it is best to leave them unanswered and call the Covered California Service Center at (800) 300-1506. A Service Center representative can help reset your password.

Question: My son is covered by Covered California as part of our household. Does his student health coverage count as essential coverage for Obamacare?

Answer: Yes. Student health plans count as “minimum essential coverage” under the Affordable Care Act. If your son chooses to enroll in a student health plan, the rest of the family is still eligible for advance tax credits through Covered California. Update your Covered California account to indicate that your son is a tax dependent and he is not seeking health coverage through Covered California.

Premium Assistance Repayment?

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Question: I am planning to apply for coverage during open enrollment, ending my current COBRA coverage. My question is this- If I am on Covered California or even MediCal for part of the year and then I get hired for a full time position (that exceeds the income threshold for Covered California) with employee benefits 6 months into the year, will I need to pay back the benefits I received during the first part of the year or pay a penalty? Thank you!

Answer: If you receive premium assistance through Covered California in 2018 based on your current income and subsequently earn more, you will repay some or all of the premium assistance you drew when you file your tax return for 2018. If you are covered by Medi-Cal, no repayment will be required.

Question: I was told today by a person from Covered California that if we purchase private insurance for our kids while they are eligible for Medi-Cal, we could lose our premium assistance. Is it true?

Answer: No. You will not lose your premium assistance if you follow these directions. Update your Covered California account to remove your children from coverage by answering "no" when asked if the child wants coverage. This will drop your kids from the Medi-Cal roles. If you don't do this, you could have problems in the future because your children's social security numbers will continue to appear in the Medi-Cal database.

Spouse Medicare Eligible?

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Question: My spouse turned 65 in September, can he stay on our current plan until December without incurring a penalty or losing our current subsidy?

Answer: No. Once he became Medicare eligible, he was no longer eligible for premium assistance under Covered California. He can be covered through Covered California without premium assistance but signing up for Medicare would be a much better deal.

Why a Minimum Income Limit?

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Question: My ex-wife lives with my son and he will claim her on his 2017 taxes. He is a student and works part time with an expected income of 15,500 gross for 2017. His mother does not work and has zero income. He applied under Covered California and was denied assistance or tax credits due to his income being too low. His mother was placed on Medi-Cal. Why would they deny him assistance or credits because his income for a family size of 2 is too low.

Answer: His income would have to be over $22,000 annually in order to qualify for Covered California coverage otherwise he is eligible for Medi-Cal. This rule exists because it is more expensive for the government and ultimately the taxpayers to provide highly-subsidized coverage on Covered California than to provide Medi-Cal coverage.

IRA Income Reporting?

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Question: I have incurred a large state tax in 2017. If I take an IRA distribution (over 59 1/2) equivalent to this. Will I have to include this as income for MAGI assuming that the deduction will offset the income?

Answer: You have to report IRA distributions as income and it will be included in your MAGI calculation. Whether your state tax deduction will offset the IRA income is a question for your accountant.

Question: If I am getting premium assistance and I was told my premium on my plan rises by 25% for 2018. Does that mean I’m going to have to pay 25% bottom line?

Answer: Probably not. Assuming your income and household status remain the same in 2018, as your premiums increases, so do your tax credits, so the premium assistance will counter at least some of the rate hike. At Open Enrollment, starting November 1st you can keep the same plan at the new rate or switch to a lower cost plan if you wish.

Question: A am 25 years-old single person with Covered California Silver 87 Plan. I recently lost my job. I have a new job starting in January. I plan to use my 90-day grace period and stop paying my subsidized Covered California health insurance for the rest of the year. If so will I have to repay my subsidy?

Answer: When your Covered California coverage lapses after 90 days for non-payment, the subsidy which the feds paid to your insurance carrier during the 90-day grace period is returned to the IRS except for the amount covering the first 30 days of the grace period. When you file your 2017 federal tax return, you reconcile the total subsidy received. If more subsidy was paid than you was due, your federal taxes due will include any overpayment (or underpayment) of subsidies.

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