Under Obamacare ( Covered California Exchange)
One Cannot be Denied Coverage do to a Medical Illness.
As of January 1, 2014 all individual and family health insurance plans are guaranteed issue. This means that you can no longer be decline health insurance for medical reasons, nor can the insurance company refuse to cover you for preexisting conditions. This is true with health plans inside and outside of the Covered California Healthcare Exchange. Many people will also qualify for monthly premium assistance (tax credit). They will have to purchase a Covered California health insurance plan to receive the credit. Depending upon one’s income some people will qualify for “enhanced” benefits which can further reduce costs.
How Does One Qualify for Insurance Premium Subsidies (Premium Tax Credits)
Eligibility for Insurance Premium Subsidy is based on the household’s Modified Adjusted Gross Income (MAGI). Most of the time one’s MAGI is the same as their Adjusted Gross Income (AGI). One can find their Adjusted Gross Income on:
Line 4 on a Form 1040EZ,
Line 21 on a Form 1040A,
Line 37 on a Form 1040.
The Premium Tax Credits can be substantial. We strongly recommend talking to your tax advisor. For example, depending upon which tax form you file, contributions to your retirement plan and HSA can lower your MAGI. This can result in a substantial increase of your Insurance Premium Subsidies. On the other hand some Social Security benefits and earned non-exempt interest may increase your Adjusted Gross Income, thus decreasing your Insurance Premium Subsidies. All along it is been good practice to pay attention to one’s income tax situation, with the advent of Obamacare there is even more reason to do so. These Premium Tax Credits can reduce the cost of your health insurance, in some situations substantially reduce it.
Some People Are Not Eligible for Insurance Premium Subsidies (Premium Tax Credit)
Many employers who provide health insurance for their employees do not contribute to dependent coverage. In most cases they are required to offer it. When this is the case it can disqualify the employee’s dependents from receiving insurance premium subsidies.
Cost Share Reduction Plans. (Standard, 73%, 87%, and 94% AV Silver)
If your Modified Adjusted Gross Income is just above 140% of the poverty level you should qualify for two types of subsidies. Insurance Premium Subsidies and Cost Share Reduction. Cost Share Reduction is the reduction of co-pays and other out of pocket expenses, enriching the benefits of the health plan.
Obamacare has made it easier to qualify for Medi-Cal. One no longer has to be impoverished or meet some other very restrictive criteria to qualify for Medi-Cal. In most situations one’s Modified Adjusted Gross Income has to be below 140% of the poverty level to qualify for Medi-Cal. The Cost Share Reduction Plans enables one to transition out of Medi-Cal as there income increases. This is a very good example of a well thought out social safety net. There is no risk in pulling oneself out of poverty and hopefully one has been able to hold onto their assets so that they have a financial foundation to build on.