Some agents have not been prompted to designate that the parent or guardian is taking the child as a tax dependent on the Covered California application. Without the designation, there will be no tax credit subsidy.
Covered California agents have been running into situations where they are enrolling families into health plans but the program is not awarding any subsidy to the family when the household income is clearly in the Advance Premium Tax Credit (APTC) range. The missing piece of information is whether the children are being claimed as dependents. The information is missing because the Covered California application is not prompting agents, and possibly unassisted consumers, to answer the tax dependent household questions.
I recently enrolled a family consisting of a single mother and her 17 year old dependent daughter. I answered all the questions properly in terms of the tax status of the mother and daughter, the correct relationship, and income within the APTC range. After I submitted the application the eligibility results came back that they were not eligible for premium assistance because the household income was not within the APTC program limits.
No Subsidy Even With Income In APTC Range
This was very perplexing because at $58,000 annual household income they were very clearly in the range for the subsidies. I deleted the self-employment tax, IRA contribution, and health savings account contribution that lowered the annual income hoping that the system was looking at the self-employment income without the deductions. I reset the income to $58,000 but that yielded the same result, no monthly tax credits.
The family income is clearly within the APTC tax subsidy range, but the Covered California system did not award any monthly subsidy to the family.
The eligibility results indicated the household income was not in the APTC range, but it clearly was. The system did not prompt the enroller to specify the daughter was to be claimed as a tax dependent of the adult on the application.
I reviewed the program eligibility summary and the each person had an Aid Code of X7. The X7 Aid Code is the designation for income outside of the APTC eligibility. But the monthly and annual income was in range for the Covered California monthly tax credit.
If the eligibility conditions by household member shows Aid Code X7 for an income to high for APTC, but the income is within range, check to make sure the dependents are being claimed as a tax dependent by an adult on the application.
Dependents Must Be Claimed As Tax Dependent Of Adult On Application
At this point I called Covered California to help me scour the application to see what I had missed. The helpful and friendly agent service representative told me I failed to indicate that the daughter Debbie was being claimed as a dependent by Susan the mother.
That is accurate because I was never asked the dependent status for Debbie in the new CalHEERS 17.9 application. I distinctly remember being asked if Susan the mother was being claimed as a dependent on anyone else’s tax return. That answer was No. I also remember under the old Covered California application having to indicate who claimed each child on the application and if it was a non-custodial parent. I was never prompted to answer any such questions on the new application.
The Covered California agent service representative said I was about the fifth agent he worked with to identify the missing dependent tax status question. He could see the question in his system, but I couldn’t see the question on my client application. When he indicated that Debbie was to be claimed as a dependent of Susan, the APTC monthly subsidy was awarded.
Dependents must be assigned to an adult on the Covered California application as being claimed as a tax dependent.
I can understand if the mother was not awarded the subsidy because the system did not recognize the daughter as a dependent, all of the household income would be attributed to the mother. But even Debbie’s eligibility was that the income was too high for the APTC subsidy. The application recognized two people in the household. With no income under the daughter Debbie, she should have been Medi-Cal. But the Covered California system said neither was entitled to the subsidy based on the income.
I don’t know if this glitch is happening with unassisted consumer applications or if it is only occurring with agent enrollments. I absolutely swear I was never prompted by the application to indicate who claimed the daughter as a tax dependent.
There are many reasons why a family may not be award the monthly tax credit subsidy. If a married couple indicates they are filing their taxes “Married Filing Separately”, no subsidy will be awarded. The household income may be too high for the tax credits or there may be a problem with the system not recognizing that the primary tax filer filed their 2016 taxes.
If you have completed and application and there is no monthly tax credit begin awarded, and the household income is clearly within the limits, and the application has children on it, check if the dependent(s) are being claimed by the parents. You may not have been asked those questions. This issue will most likely be resolved shortly at Covered California. But it is a reminder that this is complicated piece of software and sometimes things do go wrong. It’s not always your fault.