The only way you can ever receive the Premium Tax Credit subsidy to lower your health insurance premium, either on a monthly basis or when you file your federal or state tax return, is to enroll in a health plan through Covered California. The subsidy can be a form of income protection. In the event that the household has a sudden drop of income in the middle of the year, the Covered California application can be updated with the lower income amount and trigger the subsidy to lower the health insurance premium.
Household Income Levels
Posts related to eligibility for health care programs based on household income such as Covered California, Medi-Cal, Medicare usually based on federal poverty levels.
Upon renewing Covered California coverage or applying for new health insurance, new questions will pop up if your income is listed as alimony. Specifically, Covered California wants to know the date of the divorce or modification of the decree. This is all to determine if the specified alimony payments can be considered as income for the Covered California premium tax credit subsidies.
You use the Attestation of Income form after you have diligently reported your MAGI using the Covered California income section of the application. The most difficult part of the Covered California application is the income section. Take your time and make sure the entries are correct and ensure that the start and stop dates of the income streams are also correct.
California policy states that Disaster and Emergency assistance payments received from federal, state, or local government agencies is exempt from both Modified Adjusted Gross Income (MAGI) and non-MAGI Medi-Cal programs. Consequently, county Welfare Directors have been directed to disregard the LWA when making income eligibility determinations. However, for Covered California, the LWA money is counted as taxable income for eligibility and calculation of the monthly Advance Premium Tax Credit subsidy (federal) and the California Premium subsidy.
Covered California doesn’t administer or enroll you into a MAGI Medi-Cal health plan. Through the Covered California income section where you enter you monthly income, the Covered California application system determines if you or your dependents are eligible for MAGI Medi-Cal. If your income indicates you are eligible for MAGI Medi-Cal in the Covered California system, that information is pushed over to the Department of Health Care Services and your county social services office.
The failure on the part of Covered California is that they waited two weeks before generating a letter to the consumer explaining the situation. While the letter apologizes for the error, they never really spell out how or why it happened. It is sad the family had to learn from their health plan that their monthly bill was being adjusted.
Joe and Jan report the income change to Covered California in June so the new lower subsidy will take affect July 1. Much to their surprise, instead of a $850 subsidy, they only receive a $500 subsidy. Their health insurance premium will double! Why? Because they already used $7,200 of the new lower $10,200 subsidy at the higher income amount.
Covered California screens for Medi-Cal eligibility based on your monthly income, not annual income. Therefore, it is imperative, that when you are reporting a change to your income that the monthly income be accurate relative to published 138% of federal poverty level for adults and 266% for children.
Covered California has released a document explaining how the Coronavirus aid payments count as income for individuals and families. What could be a real issue for many mixed households (adults in Covered California and children on MAGI Medi-Cal) is that some of the extra unemployment benefits will be counted differently for the purposes of household income between the two agencies.
Let me emphasize that you are ESTIMATING your income for the year. Your past income and tax return can be used as a guide, but may not be an accurate predictor of your future MAGI. For example, if your spouse is set to collect Social Security retirement benefits in 2020, that income needs to be added to the MAGI.