For most Californians, if you are offered employer-sponsored coverage, you are not eligible for premium tax credits if you apply for a subsidized individual or family health insurance plan through Covered California. One of the questions on a Covered California application asks if you are offered insurance through your employer. For most Californians, if they answer yes to this question, they are not eligible for subsidies through Covered California. However, there are exceptions to this rule. You may be eligible to apply for subsidies through Covered California if your household income is below 400% of the Federal Poverty Level AND if one of the exceptions below applies to you.
Exceptions to the rule:
- Employee-only premium fails to meet the affordability test – If the employee-only premium for the group health insurance offered is at 9.66% or higher of the total household income, the health insurance offered by the employer is deemed unaffordable by the Affordable Care Act. The affordability rule is measured from the employee’s premium only, not including dependents such as a spouse or children yet does factor in the whole household’s income. If your employee-only premium is at 9.66% or higher of your total household income, you should check to see if you qualify for premium tax credits through Covered CA. It is advisable to consult your accountant to go over your household income and to speak with your health insurance agent to weigh your options.
- During the waiting period for group insurance – If you are offered group insurance, you usually have a 30-90 day waiting period after your hire date before you are eligible to elect the group insurance. During this waiting period, you should take advantage of premium tax credits if you are eligible until your group coverage begins. Please remember that during the Special Enrollment Period for individual health insurance, you must have a qualifying life event within the last 60 days to be eligible to apply for individual insurance.
- Retiree health plans – If you are on a retiree plan and are under 65, you should consider weighing your options to see if your Covered CA individual/family plan options are comparable in cost and benefits to your retiree health plan. It is important to make sure that you do not cancel a retiree health plan during the Specail Enrollment Period as a voluntary cancellation is not a qualifying life event and you would have to wait until Open Enrollment to apply for a January 1st effective date for an individual policy.
- Medi-Cal – If you are eligible for Medi-Cal, the state’s welfare program (federally known as Medicaid), due to a lower income, you are eligible to apply for Medi-Cal at any time. Please review the Federal Poverty Level Chart to verify if you or your dependents may be eligible for Medi-Cal. For adults, they are eligible for Medi-Cal if their household income is at or below 138% of the Federal Poverty Level. Children qualify for Medi-Cal at or below 266% of the Federal Poverty Level.
If your employer is contributing towards your health insurance either by offering health insurance or a health reimbursement account (HRA), you cannot double dip by taking advantage of both subsidies and employer contributions. As an example, your employer gives you $200 a month through a qualified HRA to cover your medical expenses and you use that money to help pay for subsidized health insurance through Covered California, you are effectively getting “subsidies” by both premium tax credits and by your employer. This is simply not allowed and the IRS monitors through your social security that your employer offered you benefits and you also accepted premium tax credits through Covered CA. You will likely have to pay back your accepted tax credits when you file your tax returns in this scenario. This is why it is critical that you are accurate in filing a Covered CA application correctly as well as making sure you are eligible based on your income or based on one of the exceptions listed above.
At Solid Health Insurance Services, we will always strive to keep our clients informed about the healthcare trends and changes to the state and federal legislation around the Affordable Care Act. Our mission at Solid Health Insurance Services is to find for you affordable health insurance, life insurance, long-term care insurance and travel insurance which fits your medical needs and budget for your individual, family and business needs. Please contact us at 310-909-6135 or at info@solidhealthinsurance.com.