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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 2019 Archives

How to Report Rental Income?

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Question: We didn’t make any money besides on our rental property income in 2019. I’m not sure if that would apply towards our income. Would there be a penalty if we were supposed to be in Medi-cal instead of Covered Ca plan?

Answer: Your net rental income after expenses is taxable and counts toward your adjusted gross income (AGI) which is what you report to Covered California. If your adjusted gross income makes you eligible for Medi-Cal, your Covered California coverage will be terminated, but there is no penalty.

How to Report Dependent Income?

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Question: My son lives at home and and works part-time. This year, he must file a tax return for $9,000 income. I currently take a deduction on my taxes for him. My question is this, is it okay to list him as a dependent if he files his own tax return?

Answer: Your dependent can opt out of his personal deduction when filing his income tax return. This will allow you to continue to claim him as a dependent, but you must include his $9,000 to your household income. If he wants to keep his personal deduction, he must apply for coverage as a one-person household. His income of $9,000 makes him eligible for Medi-Cal. In that case, you would not include his income in your household.

Spouse Turning 65?

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Question: My spouse and I are renewing our Covered California health plan for 2020, but she will be going on Medicare in March. When she cancels her Covered California plan, how will that affect my rate?

Answer: Your current rate is actually your individual rates combined. When your spouse goes on Medicare, you will pay only your individual rate which should be about half of your current rate.

Capital Gains Income?

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Question: My wife and I sold our primary residence in 2019 with a capital gain of $100,000. We meet the certain conditions to exclude the first $500,000 of gain from the sale of our home from our income and thus don’t have to pay taxes on it to the IRS. Because of this fact, is this $100,000 capital gain not counted as income from Covered CA stand point and not affecting the Advance Tax Credits we receive? Thanks

Answer: No. While your adjusted gross income includes capital gains, the capital gain from selling your home is excluded from tax in your case, it will not affect your taxable income.

Question: I had Covered California with a big subsidy in 2019 because of my low income. I lost my job in October 2019, so I am now eligible for Medi-Cal. Will I have to repay the premium tax credits that I got this year?

Answer: No. You are still eligible for the tax credits you received this year. If your income later fell below the Medi-Cal eligibility level, you will not be required to repay the premium tax credit when you file your tax return.

IRA and Savings Affect Eligibility?

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Question: How much can you have in IRA’s or savings accounts to be eligible for Covered CA tax credit?

Answer: Your assets, whether savings, retirement accounts, or real estate do not affect your eligibility for premium assistance. Covered California considers only your adjusted gross income (AGI). Withdrawals from IRA are taxed as income and will affect your eligibility for premium assistance.

Question: I turn 65 in March and I will be eligible for Medicare. I am currently on Covered California with a subsidy. Can I stay on Covered California instead pf Medicate?

Answer: When you become eligible for Medicare, you are no longer eligible for a Covered California health plan with premium assistance. For a 65 year-old without premium assistance, coverage through Covered California is much more expensive than Medicare.

Effect of Divorce on Eligibility?

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Question: I will be divorced before the end of the year. My 2019 subsidy was based on 2-person household. How does that impact my Covered California going forward?

Answer: You will file your 2019 tax return as a single person. Your premium assistance for 2019 was based on your married household income. The IRS will recalculate your 2019 assistance based on your individual income. Should there be an adjustment required it will be part of your tax bill for 2019. Change your marital status and adjust your income with Covered California by December 15 for changes to be effective January 1, 2020.

Roth IRA Income?

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Question: My wife and I qualify for subsidized premiums in Covered California. If I withdraw $10,000 in 2018 from my Roth IRA, do I lose my eligibility for subsidies for 2018?

Answer: No. Since Roth IRA withdrawals are not taxed, the income from a Roth IRA does not increase your Adjusted Gross Income and does not affect your eligibility for premium assistance.

Sign-up Deadline?

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Question: My wife read that the deadline was December 7th. I thought it was December 15th. Who’s right.

Answer: You’re right this time. December 15th is the deadline for individuals and families in the under-65 health insurance market. You must enroll or make changes to your plan by December 15th to affect coverage on January 1st whether you enroll through Covered California or directly with an insurance company. Open enrollment in California extends until January 31st for new enrollments or changes to existing plans with effective dates to February 1st 2020.

Your spouse is correct if she is on Medicare. The deadline for changes to 2018 Medicare coverage is December 7th.

Medicare and Covered California?

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Question: I will be eligible for Medicare starting in January. Can I stay in Covered California and keep gettin my subsidy instead or as a supplement to Medicare?

Answer: If you are eligible for Medicare, you cannot purchase a Covered California health plan and get premium assistance. However, if your income is low you may still be eligible for Medi-Cal. The Covered California application automatically checks to see if consumers qualify for Medi-Cal. If you qualify for both Medicare and Medi-Cal, Medi-Cal will help pay for Medicare premiums and cost-sharing requirements. Medi-Cal may cover additional benefits, such as dental services, nursing home care, and personal care services. Medi-Cal may also provide extra financial assistance to help with the cost of Medicare Part D prescription drug coverage.

How to Report Income?

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Question: To be eligible for a subsidy, what income is counted?

Answer: Adjusted Gross Income (AGI) includes wages and salaries, interest and dividends, unemployment benefits, and several other sources of income. Covered California 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.

Question: What if I don’t have health insurance?

Answer: The penalty will be $695 or more when you file your 2020 state income tax return in 2021. The penalty for a dependent child is half of what it would be for an adult. A typical family of four that goes uninsured for the whole year would face a penalty of at least $2,000. The penalty will be applied by the California Franchise Tax Board when you file your state tax return.

Question: I currently have insurance through Covered California. I have KP Silver 94 HMO plan. I’m trying to predict if I’m going to be dropped into Medi-Cal based on my tax return for year 2019. It looks like my AGI will be around $18,000. Will I still qualify for Covered California or will I be dropped into Medi-Cal?

Answer: In 2020, the annual income limits for Medi-Cal eligibility for a one-person household is $17,237, a two-person household is $23,336, a three-person household is $29,436, and a four-person household is $35,535.

Subsidy Payback Blues?

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Question: I’m shopping for an insurance plan after not being covered for a number of years. The years I had Covered California subsidized insurance I had to pay back the entire amount they subsidized. My concern is whether this will happen to me again come tax season, and what’s the point of seeking financial assistance if I will just have to pay it back in a year.

Answer: Things have changed in California for 2020, namely there’s a penalty for not being insured and subsidies are available for higher income households. Only those taxpayers whose actual AGI exceeds the top eligibility limits (600% of Federal Poverty Level) will have to pay back the entire amount of premium advanced. It’s always better to take the money and give some of it back, than not take it at all. Consider it an interest-free loan.

Question: I will be getting laid off effective 12/31/2019, so if I elect, my COBRA coverage would begin on 1/1/2020. Can I get covered under Covered CA instead? When would I need to sign on with Covered CA if my job and coverage ends on 12/31/2019?

Answer: Yes. You can choose Covered California instead of COBRA. You must apply by December 15, 2019 for your coverage to begin on January 1,2020. If you already chose COBRA you can cancel it. You don’t have to wait for COBRA coverage to end.

Question: My dad is going to retire at the end of the year since he is turning 66. My mom is under his employer sponsored insurance. He will get Medicare and my mom would lose her insurance. Their income annually is ~90k but now that he is going to retire, their annual income will be about 36k. It would be from his social security and pension. My mom would still be 60 years old and taking care of my baby (her grandson). Would she qualify for covered California? We are confused if they will consider their previous years income or 2020's income which would be 36k. Please let us know.

Answer: Yes. Your mother will be eligible for Covered California coverage with significant premium assistance based on $36,000 annual income for a 2-person household. The only income that matters is their 2020 Adjusted Gross Income. If you use the $36,000 figure as an estimate and it turns out they actually have an AGI of $40,000, the IRS will take more tax to make up for the subsidy overpayment.

Question: I no longer get a subsidy. Is covered California just for people who qualify for subsidies? If so, how do higher income people apply?

Answer: If you are not eligible for financial assistance, it would be better to shop for coverage directly from an California insurance company (referred to as “off-exchange”). The reason? Silver plan rates are higher through Covered California. While Covered California Bronze, Gold, and Platinum Plans are the same price, you will pay more for Covered California Silver Plans. Click here to shop and apply for off-exchange health insurance coverage

Question: I recently retired and my dependent minor child receives Social Security benefits based on my retirement. She will be required to file a tax return in her name, although she will not pay any tax because her income is not high enough. How do I handle this income on the Covered California application?

Answer: Your daughter's taxable income is included in your household income. When she files her tax return, she should not take a personal exemption (0 exemptions) that will allow for you to continue to claim her exemption on your tax return

Question: I don't want Medi-Cal. I just want to pay for health coverage at subsidized rate. What should I do? Where do I need to apply for it?

Answer: You can start an online application at www.CoveredCa.com. Your eligibility for subsidized Covered California coverage will depend on your income.

How to Renew Medi-Cal Coverage?

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Question: My son is on Medi-Cal. How do I make sure he is renewed for 2020?

Answer: Medi-Cal coverage is renewed throughout the year on the anniversary of the person’s enrollment in Medi-Cal. This means that a Medi-Cal renewal may not coincide with a Covered California open enrollment. Your son will receive a Medi-Cal renewal form from his local county human services agency. Complete this form and mail or fax it, along with any needed information the county requests, to your local county human services agency. You can also renew by visiting your county human services agency in person or by calling the phone number on the renewal notice. Click here for list of County Services Offices

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