ACA and Health Insurance (Covered California)

Photo by Sharon McCutcheon on Unsplash

Author: Andrew Lee About 5 minutes reading.

Since the Affordable Care Act (ACA) pass, do you know California is the first state to elect to implement its own marketplace/exchange (Covered California) and rolled out in Oct 2013 for health plan issuers to provide health insurance to individuals and families, including small business? Yes, it also covers small business as well under Covered California Small Business (CCSB), and ACA also established a federal level marketplace called Small Business Health Options Program (aka SHOP) if the state has not offered its own exchange to provide coverage to small businesses.

Note: In California, small business definition is 1 - 100 employees (14837(d)(1)(A)) which is larger then the federal definition 50, and if you are doing business and domiciled in California, you are considered small business even with 50+ employees but fewer than 100 for CCSB.

For individuals and families, when you apply for coverage with Covered California, you should know that:

• With the same application, it also checks if you are eligible for Medi-Cal (aka Medicaid for California). You should take this advantage, even if you decide not to opt-in for Medi-Cal or to enroll with Covered California.
• All health plans covers preventive and diagnostic care, including pediatric dental and vision for children under 19 in the same household.
• Certified Insurance Agents (CIA) contracted with Covered California provides free assistance for application and health plan inquiries regardless of whether you decide to enroll or not.
• Eligibility and qualification are based on “Strictly Necessary” - in other word, only the minimal information required for the applicant eligibility to enroll, and will not ask other unnecessary info.
• Open enrollment period starts on Oct 15th. See here for enrollment start date and deadline, and what a Qualified Life Event (QLE) is for Special Enrollment Period (SEP) outside of the open enrollment period. (Note: Medi-Cal can enroll at anytime).
• When you open/renew/re-enroll an application, or submit a Change of Address, CIA provides free assistance on voter registration. Whether you decide to register to vote does not impact your eligibility for health coverage.

In my opinion, I would strongly encourage individuals, self-employed, and small business to explore health plan options to fit your need. It is FREE to consult.

Individuals including American Indian and Alaska Natives (AIAN), pregnancy, or children <= 18 (check out CCHIP) could qualify for Covered California or Medi-Cal health plan, and possible for a subsidized monthly payment (e.g. Premium Assistant, or Advance Premium Tax Credit/APTC) or Cost-Sharing Reduction that reduce your out-of-pocket expense. Your household size, income (based on Modified Adjustment Gross Income, aka MAGI, and most individuals Adjusted Gross Income number on your 1040 form line 8b is similar to MAGI), and location are the main factors that influence the premium and subsidy.

Economic Impact/Stimulus Payments (come from the IRS as a result of the COVID-19 emergency) is NOT included as income here.

The following table shows whether each CARES Act payment or income type is included in a consumer's income for thee purposes of program eligibility (source: CARES Act FAQ for Enrollers)

Self-employed should be aware that the income is based on MAGI (some/partial deduction added back to AGI), not your Gross Income or AGI, and if you are not sure, it is FREE to consult and ask for help. Items such as:

• health insurance premium
• 1/2 self-employment tax
• SEP IRA (different than the traditional IRA)
• qualified distributions from a designated Roth account as income

etc. are not included in MAGI. Pull out you previous year tax form and take a look at this, or consult with a qualified tax professional to derive an estimated MAGI for the coming year.

Small business (excluding 1099 independent contractor and sole proprietorship) with 1-100 Full-Time Equivalent (not the same as Full-Time Employee) could also qualify for Federal tax credit for the first 2 consecutive years and can carry the credit back or forward to other tax year. CCSB also provide budget control (aka Reference Plan Strategy), and employee-only plan, etc.

My take is simple, it is free to consult whether you decide to enroll or not. Instead of doing your own home work and making mistakes or guessing, leveraging a Covered California Certified Insurance Agent (CIA) or go online and visit https://www.coveredca.com/find-help/ are both great resources for a free and confidential enrollment assistance.

Note: For those that are becoming qualify for Medicare and enrolled in Covered California, you do want to read this and this.

References

Covered California - https://coveredca.com/
Covered California Small Business (CCSB) - https://hbex.coveredca.com/toolkit/PDFs-Collateral/OE7_Small-Business_4-Page-Brochure_English.pdf
The County Children’s Health Initiative Program (CCHIP) - https://www.coveredca.com/county-childrens-health-program/
ACA Estimator Tools For Individuals and Small Businesses - https://www.irs.gov/affordable-care-act/affordable-care-act-estimator-tools
Small Business Health Care Tax Credit and the SHOP Marketplace - https://www.irs.gov/affordable-care-act/employers/small-business-health-care-tax-credit-and-the-shop-marketplace
Determining FTEs and Average Annual Wages - https://www.irs.gov/newsroom/small-business-health-care-tax-credit-questions-and-answers-determining-ftes-and-average-annual-wages
Full-Time Equivalent Calculator - https://www.healthcare.gov/shop-calculators-fte/ CARES Act FAQ for Enrollers - https://hbex.coveredca.com/toolkit/webinars-briefings/downloads/CARES_Act_FAQ_for_Enrollers.pdf