Individuals and families who have enrolled in health plans through Healthcare.gov, or a state exchange like Covered California face new challenges as they report income and household changes. Families reporting changes to household size and income may also be triggering changes to their health plan. These changes may result in the entire family becoming eligible for Medicaid, being shifted into a different Enhanced Silver plan or losing the Advance Premium Tax Credit all together.
Little communication on income and household changes affect ACA health plans
The lack of clear communication these changes may have from the health insurance exchange will leave some families confused about their new health plan coverage. Aside from the slow telephone assistance from Healthcare.gov and Covered California during open enrollment, the next weakest link of the customer service component has been the confusing correspondence about a family’s health plan status. Below I’ve outlined how certain changes to household size and/or income may result in different outcomes for an individual’s or family’s health plan enrollment.
Changes to income
Changes to wages, self-employment profits or other income should be reported within 30 days on your ACA exchange account. When the income is adjusted up or down, there may be several potential results:
Increasing family income will reduce ACA tax credits.
Income increases
Premium increases: If you receive the Advance Premium Tax Credit (APTC), also known as premium support or subsidy, increasing the income will decrease the tax credit. A smaller tax credit will increase your monthly health insurance premium.
Loose APTC: Household income pushed over 400% of the federal poverty line will result in the termination of the APTC. You will pay the full premium and receive no assistance to lower it. This might be a shock when you open the health insurance bill to see it has jumped significantly over the previous month after you increase the household income.
Children lose Medicaid: if the household income exceeds 250% of the federal poverty line, children will lose Medicaid eligibility. The family will receive additional APTC and the children will have to be enrolled in a private health plan. It’s important to check the summaries to see if you need to enroll the children in a health plan after increasing the income.
Adults Loose Medicaid: adults in the household lose Medicaid and become eligible for the APTC. The adults must choose a health plan or they will have no health insurance.
A decrease in income will increase ACA tax credits.
Income decreases
Premium decreases: even small reductions in household income will trigger corresponding increases of the APTC. The tax credit increase will reduce the monthly premium amount a family has to pay.
Children become Medicaid eligible: if the household income drops below 250% of the federal poverty line (FPL), the children will be put into the states’ expanded Medicaid or Medi-Cal if it is available in the state. The APTC will be adjusted to reflect only tax credits for adults in the household. This may decrease, or under certain circumstances, increase the monthly premium.
Family becomes Medicaid eligible: if the household income is changed low enough the whole family will become eligible for Medicaid or Medi-Cal. The APTC will be terminated in the month following the income change that puts either the whole family in the Medicaid range. The APTC will be terminated and there will be no monthly premium that the family or individual has to pay. The original private health plan may not be notified of the termination and you may continue to receive invoices.
Household member changes
When you add or subtract a household member through birth, adoption, marriage, divorce, death or a child leaving the home, the net impact is similar to changing household income. The addition of a family member, not a dog or a cat, changes the household income relative to the federal poverty line. It also changes the formula for computing the APTC. The addition of family member raises the monthly health insurance premium and will usually trigger additional APTC to keep the family’s health insurance premium within a certain range. If reported in time, the private health plan will become effective on the day child was born or formally adopted.
Adding a baby changes ACA tax credits.
Add a member
Increases APTC: with the birth or adoption of child, the family will usually get additional APTC to offset the increased health insurance premiums for the new child or children.
Children become Medicaid eligible: adding a child will, with the income being the same, place the household income closer to the federal poverty line. The additional child or children may put the family’s income below 250% of the FPL and all the children will be subject to Medicaid. The family will lose the APTC for the children, but they will no longer have to make premium payments for the children’s private health insurance.
Family becomes Medicaid eligible: If the children were already Medicaid eligible, adding another family may push the whole family into Medicaid. This will stop the APTC for the adults and their private health plan will be terminated. Again, this is similar to reducing the household income.
Losing a household member to graduation changes ACA tax credits.
Lose a member
Decreases APTC: with the loss of household member, there will be a corresponding decrease in the APTC since the family no longer has to pay the health insurance premium for that person. The formula for determining the APTC can be complicated as it considers the household income in relation to the federal poverty line and a sliding scale limit on how much of the family’s budget should have to be spent on health insurance.
Children move out of Medicaid: removing a member from the household raises the family income against the federal poverty line. This could mean that the children that were Medicaid eligible will now receive the APTC to purchase private health insurance.
Family moves off Medicaid: If enough family members leave the household and are no longer dependents, the family income could be high enough that all members are eligible for the APTC and private health insurance plans.
Special Enrollment Period
If an individual or family increases their income and are no longer eligible for Medicaid, they receive a special enrollment period to select a private health plan outside of open enrollment. They are also eligible to have the APTC applied to the health insurance premium to reduce the monthly payment.
Enhanced Silver Plans
Income and household changes will also move the household in between or completely out of the range of the Enhanced Silver Plans. A small income raise at work or securing a second job, when reported, can permanently change the deductible, copayments, and coinsurance of the health plan. The movement between Enhanced Silver plans does not constitute a special enrollment period. The individual must remain with the same health plan.
Unresolved carrier issues
I have not been able to find definitive answers to the changes to the Silver Plan coverage benefits if you move between them because of income or household member changes. It’s possible that the carriers don’t even know how they will handle some of these situations. Here is a “rule of thumb” guide for anticipating changes to the Enhanced Silver plans.
Deductibles
Deductibles will carry over between plans. If you’ve met your deductible and then have a change that puts you into higher Enhanced Silver plan with a lower deductible, you shouldn’t be asked to meet the new deductible. If you move to a lower Enhanced Silver with higher deductible you will probably have to meet the higher deductible, even if you had already met the lower deductible of the higher benefit Silver plan.
Copayments and coinsurance
Copayments and coinsurance will change correspondingly. You may or may not receive a new member ID card from the health plan showing the new benefits of the Enhanced Silver plan you’ve moved into because of a reported change to income or household. Be prepared to pay a higher copayment if your income or household changes and that places the family in a different Enhanced Silver plan.
Private plan to Medicaid to Private plan
It is possible that if a family starts a private health plan and then moves down to Medicaid and then moves back to the private plan because of income changes during the year, they might be able to reinstate their old plan and any contributions toward the deductible. This makes sense, but I have not heard if the carriers will be treating this situation as such. If you select a completely different private plan from a different carrier, you can expect the deductible and to be reset back to zero. Some carriers have mentioned that they will carry over deductibles and contributions to the maximum annual out of pocket amount if the members switch from PPO to PPO, or HMO to HMO, but they won’t allow any credit if the members switch from PPO to HMO or vice versa.
Correspondence
While I’m not familiar with the notices sent from healthcare.gov or the other state exchanges, don’t expect Covered California to provide much guidance when you make changes to your income or household size. The letters they have sent out are confusing and never discuss the actual health plan coverage. To be on the safe side, you should check you enrollment summary of your ACA account to make sure the changes were accepted. Then call the health plan to make sure they received either terminations or enrollments depending on the situation. Overtime, both the federal and state exchanges will improve communication with members as they change their income and household sizes.