Individuals and families enrolled in Covered California are receiving notices regarding the proper reporting of the federal unemployment compensation of $600 per week. The notice is adding an additional measure of confusion to the already complicated nature of reporting income to Covered California in order to receive the proper health insurance Premium Tax Credit subsidy.
Part of the confusion has been generated by the fact that Covered California added a special income field for reporting the federal Pandemic Unemployment Compensation (PUC) amount after many people had already enrolled. Some people enrolling shortly after they lost their jobs and employer-based health insurance due to the Covid-19 shut down, only entered their California unemployment insurance. Other households included both State and PUC amounts in one weekly amount or separate entries in the old Covered California income section.
Separating Federal Unemployment Compensation at Covered California
While it has not been fully explained to agents and enrollers, the separate income field for the PUC on the Covered California is not being considered as income for Medi-Cal eligibility. I am assuming that the Covered California business rules engine of the software removes the PUC income when screening for Medi-Cal eligibility of the household members. This is in contrast to the California unemployment benefits that are considered as income to determine either Medi-Cal or Covered California Premium Tax Credit subsidy for a private health plan.
Here are some of the different scenarios separating/reporting the PUC income.
1. Unemployment Lumped Together. If you reported just one weekly amount of unemployment compensation that was a sum of State and federal money, you need to separate the two amounts by reporting a change in Covered California. If the State unemployment insurance plus other household income is above Medi-Cal eligibility, nothing should change.
If your other household income is below the Medi-Cal threshold, even with the State unemployment, it should trigger Medi-Cal eligibility. For children, the income amount for Medi-Cal is higher, 266% of the federal poverty level. By separating the unemployment amounts, the children may be Medi-Cal eligible and the adults will receive the subsidy OR the entire family may be deemed Medi-Cal eligible.
2. Only State unemployment compensation reported. If you only reported the income from California, plus other household income such as wages from a spouse, you need to report a change to Covered California for the additional PUC income.
The $600 per week will increase the household Modified Adjusted Gross Income that is reported when you file your 2020 federal and State income tax return. This additional income will be higher than your original estimated income in the Covered California system. In other words, your estimated income is too low and you are receiving too much subsidy.
If your final Modified Adjusted Gross Income is higher than your estimate, you will need to repay some or ALL of the federal or State Premium Tax Credit subsidy.
3. Artificially high income with PUC. If you lumped the PUC income with the State unemployment benefits, you will need to report a change to the income once the PUC stops at the end of July. The lower income will increase the subsidy. It may also trigger Medi-Cal eligibility for any minor dependents you have.
Text of Covered California Notice
Due to the current public health emergency, the federal government passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The Act included Pandemic Unemployment Compensation (PUC). PUC is an extra $600 each week in unemployment insurance (UI) benefits. PUC started as early as March 29, 2020. As of this mailing, it is set to end July 31, 2020.
The $600 PUC benefit is counted differently for Covered California and Medi-Cal. It counts as taxable income for Covered California financial help. It does not count for Medi-Cal eligibility determinations. We updated our system to allow you to report the $600 PUC separately from regular unemployment insurance. If you are getting the $600 weekly PUC, you must report it now.
If you included your PUC with other unemployment insurance payments or you have not yet told us you are getting this benefit, you must update your application. Report your weekly $600 PUC separately. When you update your information, Covered California can make sure you qualify for the right health program. The change may mean you get free health care through Medi-Cal. It is also important to give the dates the PUC benefit began and will end.
If you do not report the $600 PUC, you may get the wrong amount of financial help through Covered California. This could mean you may need to pay back some or all of your Covered California financial help when you file your federal and state tax returns next year.
Report a Change information CoveredCA.com/RAC