How you characterize your income on your Covered California application will change the monthly and income totals. There are three basic types of income in the Covered California system. Some will only add income to the month they are report and the annual total. Other income types will rollover into the next year.
The three basic types of income are annual, one-time lump sum, and recurring. Regardless of the type, they are very date sensitive as to how they affect your Covered California application.
Annual Income to Evenly Distribute Flucuating Income
Annual income. When entered on income section, Covered California will take the total amount and divide it by 12 and distribute an equal amount in each month. For example, you enter an annual income amount of $12,000 beginning in January. Each month through December will be allotted $1,000 to add to your monthly income and annual income totals.
Annual income entries will rollover into the next year. If you enter the annual income in July, it will continue into the next year’s annual income accumulation. The annual income type can be used to distribute fluctuating income that you have received in the past and expect will occur in the future. The income may come from investment returns, annuity, or even self-employment.
One-Time Lump Sum Does Not Rollover
One-time lump sum. When you enter a one-time lump sum distribution, it will only be added to the month in which it is added. It will not be added to successive months and it will not rollover into the next year. The lump sum entry will spike your monthly for the month entered. The one-time lump sum will increase your annual income and decrease your monthly subsidies for the remainder of the year.
The one-time lump sum may come from the sale of an asset, severance from a job or vacation pay. The income distribution will not occur again in the future. It is important to enter the one-time lump sum to properly estimate the income in the Covered California system. Without the income entry, you will have underestimated your income and may need to repay excess Advance Premium Tax Credit subsidy on your federal taxes. One-time lump sum entry will not rollover to the next year.
Recurring Income Like Wages
Recuring income. A recuring income entry has a start date will add to your monthly income every month and add to your total income. The entry(s) will rollover into the next year. There can be a start date and an end date to the income.
For example, you start a job July and you are paid $1,500 every two weeks. The Covered California system will calculate a $3,000 monthly income beginning in July through the end of the year. The entry will add $18,000 to your annual income ($3,000 x 6 months.) With no end date to the income stream, the system will continue to add $3,000 to your monthly income in the next year.
Recurring income types allow you to easily make changes to your income if your rate of hourly pay increases, you end the job, or start at a new job. The Covered California system will prorate the recurring income stream if it ends during the month.
Focus on Monthly Income Total To Avoid Medi-Cal Eligibility
For example, if the recurring income is $3,000 per month and you end the income on October 2nd, your monthly income total for that month will be credited with $200.
The income types and the dates associated with their entry impact the currently monthly totals and the annual income amount. When you make a change in Covered California, the current income is for the month in which you are making the change. Covered California screens for Medi-Cal eligibility based on your current monthly income, not what the monthly income will be next month.
If we put all of the sample income streams onto a spreadsheet, you get a sense of how Covered California is looking at your income. The Advance Premium Tax Credit is based on your annual income. The one-time lump income increases the annual income by $4,000. The subsidy would be based on an income of $34,000
The annual income and recurring income streams will rollover into the next year. If left unchanged, the subsidy will be based on an income of $30,000. It is important to review your income estimates during the Open Enrollment Period before you are automatically renewed into health plan with subsidies for the next year.
