Every family is unique in their health care needs. There are situations when each family member may require a different health plan to meet their particular health challenges. Unfortunately, many families who enroll in a health plan through Covered California are unaware that not all the family must be on the same health plan.
You can mix health plans from Covered California, Medi-Cal and off-exchange
The main mission of Covered California is to qualify families for the Affordable Care Act premium tax credits to lower the monthly health insurance premium. Under the current enrollment application, if a family qualifies for the tax credit assistance, all of the family members must be enrolled in the selected health plan. You cannot split up different family members between plans and carriers and still receive the full amount tax credit the family is eligible for.
Covered California Premium Tax Assistance
However, you can, at the time of enrollment or renewal, designate some household members as not wanting health insurance through Covered California. Just remember that all household members (which include tax dependents or spouse) must be included in the household for the purposes of determining the tax credit for those family members who will be enrolled through Covered California. A health plan can be purchased directly from an insurance company given it is open enrollment or under a Special Enrollment Period. The “off-exchange” health plan is not eligible for any Premium Tax Credits either through Covered California or when the family reconciles their tax credit on their federal taxes.
Purchasing health insurance off-exchange
Purchasing a health plan off-exchange for a child who has special health challenges can be particularly advantageous. While most of the family might be enrolled in a Silver plan, the child with special health care considerations could be enrolled in a Platinum health plan that is more aligned with the child’s specialists. The higher benefit Platinum plan may also reduce the out-of-pocket expenses for the family. And the out-of-pocket savings may more than make up for the higher premium rate that is not subsidized by the premium tax credit offered through Covered California.
You are not locked into Medi-Cal
With the Covered California system, families’ whose household income is under 266% of the federal poverty level will have dependent children automatically enrolled in Medi-Cal. A family can still go outside of Medi-Cal and enroll their child in a private health plan during open enrollment or a Special Enrollment Period. Within a four person household (two adults and two children) you can have the parents receiving tax credits for a private health insurance plan, one child on Medi-Cal, and the second child with a private health insurance plan. Again, the child with the off-exchange health plan is not eligible to receive tax credits to reduce the monthly health insurance premium.
Adults can have separate health plan
But it doesn’t have to be a child who is enrolled in a private plan off exchange. Perhaps one of the parents has unique health challenges that are better served by a higher benefit health plan. In this case, one parent could be enrolled in a Covered California health plan, the children on Medi-Cal, and the remaining parent has an off-exchange plan. This is no different than if one of the parents was enrolled in Medicare. Everyone is still listed as part of the household through Covered California, but the person on Medicare, or who needs a different health plan from the family, indicates they wish not to be considered for the household plan through Covered California.
Employer group coverage
Another scenario that is becoming more common is when one of the parents is offered employer sponsored health insurance through work. Almost always the employer sponsored group plan is deemed affordable for the family, even if the employer makes no contribution toward the dependent’s premiums. The affordability of the group insurance, where the employee only premium is less than 8.5% of the Modified Adjusted Gross Income of the household, disqualifies the family from receiving the ACA tax credits. If the family is ineligible for the premium tax credit assistance to lower the monthly health insurance premium through Covered California, then The Covered California enrollment system (CalHEERS) will allow the family to select different health plans.
Who is the primary applicant?
If the person who is offered employer group coverage needs to exit the Covered California plan, but the family wants to maintain their current health plan through Covered California, then it is easy enough to remove the person from the plan. However, if the person who wants to be removed is also the primary applicant on the Covered California plan, the entire plan needs to terminated according to Covered California. Then the remaining family members can re-enroll in an on or off exchange health plan.
Sticking with Covered California without tax credits
It might be desirable for some families to remain in their Covered California plan if the employer plan is too expensive for the dependents or the employer plan offered doesn’t include the physicians or hospitals that the family needs. It might also be possible for the children to remain on Medi-Cal as long as the family income is below the Medi-Cal kid’s threshold. It’s possible to have one parent with employer sponsored health insurance, the children on Medi-Cal and the remaining parent enrolled in a private health plan with no premium tax assistance.
The benefits of keeping current health plan
There are plenty of good reasons to stick with the current Covered California health plan even if you lose the premium tax credits. First, the employer sponsored plan may not include the doctors and hospitals your family needs. This can be particularly crucial if a family member is going through treatment. If the family is a member of Kaiser, and the employer doesn’t offer Kaiser insurance, it may be best to stay enrolled until any treatment plan has concluded. (Although, most plans do have continuity of care provisions to allow members to maintain treatment started under physicians or hospitals that may not be in-network.) Second, your family may have already met, or is very close to meeting, any deductibles and maximum out-of-pocket annual amounts. With a new health plan, the deductible clock is re-set to zero. The switch to a new plan may actually cost the family more money if they have to again meet deductibles they already met under the old plan, this includes any pharmacy deductible.
Qualifying event verification letter
One bureaucratic hiccup that arises when employer sponsored health is offered and the family becomes ineligible for the premium tax credits is proof of the qualifying event to enroll in a health plan outside of open enrollment. The loss of the premium tax credits either as a result of an increase to household income or becoming eligible for employer sponsored health insurance is considered a qualifying event. A qualifying event allows the family or individual to enroll in a health plan outside of open enrollment, which occurs in the autumn of each year.
More hassle than it is worth
But to show you have lost eligibility for the tax credits you have to log the income change or the employer’s offered health insurance with Covered California and then wait for them to send you a letter. You can then submit the letter with your application for an off-exchange health plan to verify you truly have the qualifying event. In theory, if the changes are logged with Covered California soon enough, the letter should come in a timely fashion. But you only have a sixty day window from the date of the qualifying event in order to apply for health insurance off-exchange for a Special Enrollment Period.
Families can mix various health plans with Covered California
While it can be complicated and time consuming, it is possible to have a variety of different health plans within the household. I wish it were easier to make some of these changes. I certainly wish Covered California would be clearer that a family is not locked into just the health plans they offer or the only option for children and some adults is Medi-Cal. But before you make any changes, carefully consider the overall costs from higher premiums to having or having to meet a new deductible with new health plans.