One of the common misconceptions about Covered California is that they automatically update an individual or household’s income every year. Consumers enrolled in health insurance through Covered California must update their own income estimate. Only in rare instances will Covered California change a household’s income estimate.
Covered California Will Not Automatically Update Your Income
There is a mistaken belief that Covered California will update a consumer’s estimated income based on their federal tax return. No such update occurs. Unless a consumer uploads their federal tax return to satisfy an income verification request from Covered California, they do not have access a tax payer’s tax return.
The Covered California application software will do a quick check and comparison of the consumer’s last adjusted gross income on their federal return compared to the consumer’s estimated income on the application. If the estimated income (Modified Adjusted Gross Income) is plus or minus 20 percent of the last filed federal adjusted gross income, that will trigger an income verification request. The consumer can then use a variety of methods to verify their estimated income such as uploading their last filed federal 1040 tax return or submitting the income attestation form.
Federal Poverty Level Creep
Many Covered California consumers estimated their income three or fours years ago when they initially enrolled. The adjusted gross income on their federal tax return has been within the parameters and has not triggered an income verification request. If the consumer estimated their income at $17,000 for a single individual in 2017, their income is still set at $17,000.
Unfortunately, many households get a rude awakening when they are deemed Medi-Cal eligible at the annual renewal period. This happens because of FPL creep. The FPL (federal poverty level) income amounts increase every year. For 2020 the FPL for Medi-Cal eligibility for a single adult is $17,609. If your income is registered as $17,000, Covered California assumes you are now Medi-Cal eligible and sends that information over to be reviewed by your local county social services agency.
Covered California will only adjust your income if:
- You tell them to
- You adjust it in your Covered California account
- You instruct your agent to change your income
Medi-Cal Will Adjust Your Income With No Warning
There is a situation where Covered California will adjust your income. It happens if you fail to submit the income verification documents. In this case, because you have not verified your stated income, Covered California drops the income to $0 and you then become Medi-Cal eligible. Once you are determined Medi-Cal eligible, ONLY your county Medi-Cal office can adjust your income upwards to make you eligible for a private plan with the subsidies.
This is where part of the automatic income adjustment confusion is created. While Covered California will not touch your estimated income, Medi-Cal will. With no invitation or authorization, a Medi-Cal case eligibility worker can tinker with your income. Usually, Medi-Cal will disallow income amounts that do not have any verification documentation. If you say you have a job that pays $2,000 per month, but don’t submit a paystub to verify the amount, Medi-Cal will reset the amount to zero. In general, Medi-Cal will only adjust your Covered California income estimate based on information you give them.
However, some individuals and families have become use to Medi-Cal making adjusts to their income, especially when verification must be supplied because there are children in the household on Medi-Cal and the adults are in Covered California. But once the individual or household is out of Medi-Cal, the consumer must make all of the income adjustments to their account.