Kevin Knauss: Health, History, Travel, Insurance
Posts related to calculating the Premium Tax Credit received through Covered California, subsidy, form 8962, MAGI household income.
Without an extension of the enhanced subsidies of the Affordable Care Act, older Americans will be hit the hardest by high health insurance rates. The prime culprit is that there are no Affordable Care Act health insurance subsidies for incomes over 400 percent of the federal poverty level. This leaves older Americans potentially paying over 30 percent of their household income on health insurance premiums.
I would suggest that the ACA Premium Tax Credit subsidies are a natural evolution of our society’s desire to achieve equal opportunity and security for all regardless of income or employment.
The explanation of the rule changes by CMS is peppered with terms like “protect consumers”, “stable marketplace”, “reduce adverse selection”, and “improve risk pool.” However, the individual and family market has been very stable for many years. I have not heard of any California health plans getting sick, going bankrupt, or dying because they could not get health care.
We will see some health plans not be offered if there is a parallel marketplace with non-subsidized plans that have gaps and caps. Healthy people will migrate to the lower cost health plans leaving people who need health care services in the subsidized plans. This will cause the death spiral of the health plan as claims expenses increase with shrinking premium dollars.
Just because Joey’s 2023 final Modified Adjusted Gross Income was in the range for Medi-Cal, he will not lose his 2024 health plan and subsidies. The IRS does not report his income to Covered California to flip him into Medi-Cal. His 2024 subsidy is based on his good faith honest estimate of his 2024 income.
While some incorrect information may be corrected by calling the Covered California customer service line, other errors can only be fixed by filing a dispute form. The data that can be disputed are coverage start and stop dates, health insurance premiums, monthly subsidy forwarded to the health plan, missing family members, or household members who should not be in the tax family 1095-A.
In the second half of 2023 and continuing into 2024, we have seen some cases where the subsidy has mysterious disappeared. The estimated income is high enough for subsidies and nowhere near Medi-Cal range. The household member is enrolled in the selected health plan, but the subsidy has vanished.
When the income estimate was increased in their Covered California application, the subsidy was properly calculated for the remainder of the plan year. The first thing Sandi and Thom notice is that they lost the Silver 87 plan and with the higher income are now only offered a Silver 70. Another disturbing problem for them is that instead of $336.57 monthly premium, their new premium for the Silver 70 is $657.31. They went from paying $16 a month for a great Silver 87 plan to $658 per month for Silver plan that has higher copays, coinsurance, and deductibles.
No one at Covered California calls the IRS for information and the IRS does not send Covered California any of your information. No one at Covered California will ever see your federal tax return unless you provide it to them.
Lines 24 through 26 of Part II of form 8962 determine if the household is eligible for an additional Premium Tax Credit. In this situation, the final household MAGI was slightly lower than estimated income amount of the Covered California application. The result is that the household is eligible for an additional $23 in Premium Tax Credit. They were eligible for an annual subsidy of $16,832, but only received $16,809.
