In addition to the advantages, we have documented at least 9 disadvantages i.e. 9 risk factors applying to Covered California. Despite limited media attention, these factors require caution and understanding, because of the potential for problems after you apply to Obamacare.
9 Risk Factors Applying To Covered California
We encourage California residents to study the balance of this report carefully, in order to make the best decision for your family.
9 Risk Factors Applying To Covered California
Description of Risk
Risk Factor 1
The State of California (via county social services agency) verifies the financial information on your CoveredCA application and has the power to make you “ineligible” for CovCA insurance if there are discrepancies between the application, filed income tax returns, immigration documents etc.
Understand that CovCA uses last year’s tax return information to estimate your APTC subsidy, however the true amount will not be known until you file this year’s tax return. Work with a Certified Agent who can discuss these issues with you.
Risk Factor 2
The verification of your application occurs during an indeterminate period of time, usually between January and August, but usually after you have cancelled your former insurance.
Risk Factor 3
A frequent and undesirable outcome of the agency’s application verification process is that your insurance is revoked and you are temporarily placed in Medi-Cal, pending approval by a Medi-Cal eligibility case worker.
Medi-Cal representatives will use the authority of the State of California to issue a system-generated freeze, named “soft-pause” on your file at CovCA. It effectively prevents Covered California IT engineers from “fixing” or undoing this Medi-Cal action. Your only recourse is to personally visit the county social services agency and attempt to determine the identity of your case worker, and then to arrange a meeting in the hope of opting out of Medi-Cal.
Risk Factor 4
Placement into Medi-Cal, outside of “open enrollment” season is not a qualifying “special event.” This prevents you from re-applying elsewhere, since no health plan will accept your application until the next open or special enrollment.
If this occurs during an open enrollment period, you can re-apply directly to Kaiser or another health plan. Otherwise, you will have to stay on Medi-Cal until the next Open or Special enrollment period.
Risk Factor 5
Involuntary loss of health insurance could result in losing access to your personal physician(s).
There is really no remedy, except to find a Medi-Cal doctor or specialist and transfer your chart.
Risk Factor 6
Involuntary placement into Medi-Cal mid-year could occur during a course of treatment, surgery etc.
We have observed cases where this has happened, and it is unfortunate.
Risk Factor 7
Split Family Coverage: Since Medi-Cal eligibility for children is at 250% of FPL, compared to 138% for Adults (in most cases), a common outcome of a family application is that the adults are processed for CovCA insurance with a subsidy, but the children are declared ineligible and are pended for Medi-Cal.
Work with a Certified Agent who can estimate the probability of this occurrence and will be prepared to submit child-only applications directly with the insurance carrier (off-exchange) to avoid Medi-Cal. It may be necessary to submit dual applications (on and off exchange) if the open enrollment deadline is near.
Risk Factor 8
f your income increases during the year, your APTC subsidy could be less, resulting in you having to repay the IRS for part or your entire APTC subsidy.
Ask your Certified Agent to lower the monthly APTC subsidy to give a safety margin. When you file your tax return, you will get the difference paid to you, assuming you are eligible for it.
Risk Factor 9
If the IRS determines you were eligible for qualified, affordable employer-sponsored health coverage, your APTC subsidy will be reversed, subjecting you to penalties and interest.
When an employer offers an employee health insurance, a report is sent to the IRS, identifying the employee by name and social security number, even when you decline the coverage. This is how the IRS cross-checks this information. If you declined coverage, you may still qualify for the subsidy via an exception. Work with a Certified Agent or your tax preparer to see if you qualify for the exception.
Caution is advised when you buy Obamacare through CoveredCA. To read more about the pros and cons of Covered California in general, and whether you should buy the Obamacare Kaiser plan, read this story at KaiserPlanet.org.
Thousands of small employers reimburse or “pay a little extra” to reimburse employees who purchase individual health insurance…However, beginning this month huge fines are possible…even for a small family business of 2 employees if you reimburse employees for individual health insurance.
“Illegal reimbursements can also take on more subtle forms e.g. paying a higher wage in exchange for declining health plan coverage. Some of these indirect arrangements are also illegal. If you think this affects your small company, here’s someone you can talk to for free. Time is running out.”
Tax Deductibility Is Not The Main Issue Here
This is true whether or not you take a tax deduction for reimbursing these premiums! We are referencing the latest IRS bulletin addressing the subject: Basically, the IRS argues such arrangements create the existence of a group health insurance plan…and since individual plans are not compliant with the same ACA regulations that apply to group health insurance, IRS conclusion…you are sponsoring an illegal plan! The penalties are punitive, to say the least (read further for details).
Expensive Mistake If You Reimburse Employees Improperly
I don’t think we can overstate this: it’s a mind-blowing change of policy that negatively impacts smaller employers. Recently, MarketWatch did a good job of bringing this subject to mainstream media, in this article:
“Under an employer payment arrangement, the employer reimburses participating employees for premiums paid for their individual health insurance policies or pays the premiums directly on behalf of participating employees….The penalty for running afoul of the market reform restrictions is $100 per-employee per-day, which can amount to $36,500 per employee over the course of a full year. (from MarketWatch: The full story)
If you think this affects your small company, don’t focus on the problem, focus on the solution: here’s someone you can talk to for free. Time is running out.
The previous articles covered Part I and Part II, and this final segment describes the 3rd of 3 Actions To Keep Affordable Health Coverage- Private Insurance. [Small Employers should read about huge penalties beginning August 2015]
Going directly to the insurance carrier (Kaiser Permanente, Anthem Blue Cross, Blue Shield of California, Cigna, HealthNet and others) is easier than going through Covered California and the prices are virtually identical under California law.
In our opinion, the only reason one would choose the Covered California exchange (Part II of story) over your 3rd option (private insurance) is the likelihood of receiving a subsidy or Advance Premium Tax Credt. Otherwise, CoveredCA is not worth the hassle, due to the burden of providing tax forms, proof of California residency, employment information etc.
Deadlines: Regardless of your choice among the 3 Actions To Keep Affordable Health Coverage, the 60 day limit applies.
In conclusion of this 3-part article, the easiest part of this process is choosing a plan, and the hardest is getting thetriggering loss of coverage form to the carrier (the specific document and method vary by health plan). Don’t risk losing your effective date, use a competent broker who is licensed and certified to help you compare your options under all 3 alternatives above, and will help you submit a properly completed application to the health plan of your choice!
Certified Insurance Agents are a free service to consumers under the ACA and California law. However, the best certified agents will also help you compare your private insurance (PPO, HMO) options vs. your CoveredCA options. Find a local office of one of these broker-agents, in order to keep affordable health coverage while looking for a job.
While Federal or Cal-COBRA is the conservative choice (as discussed in Part I of this article), the negative aspects are “higher costs.” This is true because Federal COBRA administrators add 2% to the premium and Cal-COBRA administrators add 10%. If finding a low cost health plan is your priority, your 2nd action to keep affordable health coverage- CoveredCA should be requesting information from Covered California: [Small Employers should read about huge penalties beginning August 2015]
Covered California provides access to most private health plans e.g. Kaiser Permanante, Anthem Blue Cross, Blue Shield of California, HealthNet EPO and PPO plans and some regional providers as well (although availability varies among each of California’s counties- check here for assistance): extra caution is advised, because you must complete and submit your application prior to the desired 1st of the month coverage start date to avoid a gap in coverage, and the 60 Day Limit also applies.
Warning: failure to enroll within the special event 60-day period will not only incur a possible IRS tax penalty, but will consequently lock you out of the U.S. health insurance market until the following open enrollment period i.e. January 1st! (This is a lessor known problem with the Affordable Care Act).
Yet there are other reasons to skip CoveredCA and go directly to a private carrier. Read more about the 3rd of 3 Actions to keep affordable health coverage while looking for a job in Part III of this article.
Time is of the essence during your qualifying event period (60 days). Yet some situations don’t qualify for special event consideration e.g. missing a COBRA premium payment. Either way, time is of the essence, consult with a Certified Agent as soon as possible. The ideal advisor is also an independent agent/broker:
Obamacare is Not Easy! ………………… Cake Pop?
An independent Certified Agent is knowledgable about private market health plans and Covered California plans.
An independent Certified Agent is also able to place you with temporary health insurance until the next regular Open Enrollment season begins.
“Special Enrollment” flyer from Covered California
This Instruction on Qualifying Life Events list is rather cumbersome. The Covered California web source is here, but we suggest you should get free assistance before using this information. Tip: If you don’t qualify for one of the following life events, then consider purchasing interim health insurance from HCC: Click To Quote
Qualifying Life Events
What Qualifying Life Event to Select from the Drop-Down Menu
How to Enter the Date of the Event
Lost or will soon lose my health insurance Examples:
You lose Medi-Cal coverage.
You lose your employer-sponsored coverage.
Your COBRA coverage is exhausted. Note: Not paying your COBRA premium is not considered loss of coverage.
You are no longer eligible for student health coverage.
You turn 26 years old and are no longer eligible for a family plan.
You turn 19 years old and are no longer eligible for a child-only plan.
Enter the date of the loss of coverage
Permanently moved to/within California Examples:
You move to California from out of state.
You move within California and gain access to at least one new Covered California health insurance plan.
Enter the date of the permanent move
Had a baby or adopted a child
(If you receive a child in foster care, you will also qualify for a special enrollment period but will need to indicate “adopted a child” in the drop-down menu.) Examples:
A child is born, adopted or received into foster care. The entire family can use the special enrollment period to enroll in coverage.
If you place your child for adoption or foster care, you can use a special enrollment period to enroll in coverage.
Enter the date of birth, adoption or foster placement
Got married or entered into domestic partnership Example:
One or both members of the new couple can use the special enrollment period to enroll in coverage.
Enter the date on the marriage or domestic partnership license
Returned from active duty military service Example:
You have lost coverage after leaving active duty, reserve duty, or the California National Guard.
Enter the date you returned from active duty
Gained citizenship/lawful presence Example:
You become a citizen, national, or permanent legal resident.
Enter the date on the immigration document
Federally Recognized American Indian/Alaska Native Example:
If you are a member of a federally recognized American Indian tribe, you can enroll at any time and change plans once per month.
Enter the date you apply for Covered California
Other qualifying life event Examples:
You are already enrolled in a Covered California plan and become newly eligible or ineligible for tax credits or cost-sharing reductions.
Misconduct or misinformation occurred during your enrollment, including: An agent, enrollment counselor, Service Center representative or other authorized representative enrolled you in a plan that you did not want to enroll in, failed to enroll you in any plan or failed to calculate premium assistance for which you were eligible.
Eligibility for COBRA coverage: If you become eligible for COBRA coverage due to the loss of employer-sponsored insurance, you can choose coverage under COBRA, or you can use a special enrollment period to enroll in a Covered California plan.
Misrepresentation or erroneous enrollment, including:Incorrect eligibility determination. This includes if you applied during open enrollment and were initially told you were eligible for Medi-Cal and then later determined not to be eligible forMedi-Cal.The health plan did not receive your information due to technical issues.An error in processing your immigration documents resulted in an incorrect eligibility result.Incorrect plan data were displayed when you selected a plan: Data errors on premiums, benefits or copay/deductibles were displayed; incorrect plans were displayed; or a family could not enroll together in a single plan.
Your health plan violated its contract.
Exceptional circumstances occurred on or around plan selection deadlines, including natural disasters and medical emergencies.
You received a certificate of exemption for hardship from Health and Human Services for a month or months during the coverage year but lost eligibility for the hardship exemption outside of an open enrollment period.
You are required by court order to provide health insurance for a child who was been determined ineligible for Medi-Cal and CHIP, even if you are not the party who expects to claim the child as a tax dependent.
You are a member of AmeriCorps/VISTA/National Civilian Community Corps:
If you entered AmeriCorps or one of the other organizations listed above outside of open enrollment.
If you ended your service with one of the organizations listed above.
You have a “grandfathered” health insurance plan outside of Covered California, and you would like to switch to a Covered California health insurance plan instead of renewing your current plan.
Your provider left the health plan network while you were receiving care for one of the following conditions:- Pregnancy.
– Terminal illness.
– An acute condition.
– A serious chronic condition.
– The care of a newborn child between birth and age 36 months.
– A surgery or other procedure that will occur within 180 days of the termination or start date.
You were released from jail or prison.
Enter the date you apply for Covered California
None of the above (Continue to review my application for Medi-Cal/AIM)If none of these qualifying life events apply, you should still apply using “None of the above,” because you may be eligible for Medi-Cal or California’s Access for Infants and Mothers (AIM) program for pregnant women based on your income. Regardless of which life event you select, your application will still be reviewed for coverage through Medi-Cal and AIM.
Time is of the essence in order to maintain or find affordable health insurance when leaving school. You must take action fast or risk being “locked-out” of the health insurance market for several months, due to a little publicized defect in the Obamacare legislation. We suggest 2 actions to find affordable health coverage when leaving school, which have been made possible under the Affordable Care Act:
First, if you have not yet turned Age 26 and have been covered on your parent’s health plan, the Affordable Care Act allows you to continue on through age of 25. Is this your best option? Maybe, but there are two reasons to look at other options available through the Affordable Care Act:
Your parent’s health plan may have limited medical facilities e.g. Kaiser where you live, or
The monthly insurance rate may be lower through Covered California with a subsidy, if you qualify
Second, the following are two new options made available through the Affordable Care Act:
Covered California provides access to most private health plans e.g. Kaiser Permanente, Anthem Blue Cross, Blue Shield of California, HealthNet EPO and PPO plans and some regional providers as well (availability varies according to each of California’s counties- these folks will give you free assistance).
Extra caution is advised, however: You must complete and submit your application prior to the desired 1st of the month coverage start date to avoid a gap in coverage, plus a 60-Day time limit applies. Warning: failure to enroll within the special 60-day period will not only incur a possible IRS tax penalty, but will consequently lock you out of the U.S. health insurance market until the following open enrollment period i.e. January 1st! (This is a lesser known problem with the Affordable Care Act) Read more about your special enrollment qualifying event here;
Apply Direct- to the insurance carrier (Kaiser Permanente, Anthem Blue Cross, Blue Shield of California, Cigna, HealthNet and others) is easier than going through Covered California and the prices are virtually identical under California law.
The only reason you would choose the Covered California exchange (above) over this 3rd option is if you were to qualify for a subsidy or Advance Premium Tax Credit. Otherwise, CoveredCA is not worth the hassle of providing personal tax forms, proof of California residency, employment information etc.
Deadlines: The same warning applies as above i.e. you must complete and submit your application prior to the desired 1st of the month coverage start date to avoid a gap in coverage; the 60 Day Limit also applies.
The easiest part of this process is choosing a plan, and the hardest is getting the triggering loss of coverage forms to the carrier (the required document and method vary by health plan). Don’t risk losing your effective date on a technicality: Use a competent broker who is licensed and certified to help you compare all your options, on or off the exchange. Especially valuable is the broker will help you submit a properly completed application forms to the health plan of your choice!
Certified Insurance Agents who offer educational meetings are a free service to consumers under the ACA and California law. Find a local meeting here. If you don’t use a certified agent, then you could run into the problems publicized by KPIX 5 (San Francisco): Watch this news story here.
Covered CA website causes suffering during open enrollment this week after being fortified for high utilization. An interview with a San Jose-based Certified Agent provided the following observation:
Today, I assisted at least 4 different clients on their renewal process and/or to start a new application. The website directed all of the clients into Medi-Cal, even if their income was well above 140% FPL
Calling Covered California directly is not an option, due to five-hour wait times. Cases such as these require special handling, which is a free benefit of Certified Agents. For example:
I had a family of three come in with a total annual household income of $49,666.73 and they were placed on Medi-Cal.
Certified Agents can provide local assistance with such glitches, and often times are willing to meet you in person. Read our related article about avoiding Open Enrollment mistakes. Open Enrollment is here, changes are coming, and websites are frustrating. If you did not use a Certified Agent last year, now is a good time to find one…they are a free service of Covered California and are here to help.
Covered California is shipping envelopes by Mail for Open Enrollment season (see above)
Members will receive Covered California open enrollment instructions over the next two weeks, informing them of the Renewal Process. If you need assistance understanding the 2015 changes, click here to request help. Read story, If you want to review details about last year’s open enrollment or just get a free quote at this website.
Due to an online systems limitation from October 13 to November 3, 2014 only, you will be unable to login to your account in order to report changes for the 2014 plan year. Covered California has developed a work-around during this period and you can receive assistance from Certified Insurance Agents here.
Remember, Open Enrollment begins November 15th: Changes are coming to certain PPO networks. If you did not use a Certified Agent last year, now is a good time to find one…they are a free service of Covered California and are here to help.