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Should I have switched to Medicaid or will I just receive more credits?
July 15, 2014 8:42 PM   Subscribe

My income has changed but I don't want to switch to Medicaid. Will I just receive health tax credits on next year's tax return?

At the start of the year I was receiving unemployment insurance benefits. I signed up for health insurance through the local state exchange. Based on my monthly UI income, I was eligible for a tax credit of about $100/month off the monthly premium price.

I picked a bronze plan that was attached to my provider and although the monthly premiums aren't super cheaper, they've been do-able.

When my UI ended I never reported a change in income to the health exchange. I believe if I told them that my income was now zero, I'd by forced to switch to the Medicaid system. I didn't want to necessarily go through the trouble of that switching (especially since I thought I was going to be getting a job sooner rather than later) and I was happy with current plan and provider. Am I being stupid? Will I be eligible for more tax credits at the end of the year as my monthly average income for the entire year will be way less than what it was during the first months of the year? What is the max credit?
posted by 1001 questions to Work & Money (9 answers total)
 
One approach you can take to maximize the subsidy on your current plan, and avoid getting moved to Medicaid, is to find out what the threshold income is for Medicaid. In my state (CA), it's somewhere under $18k annually. You can then calculate how much you've earned in your UI benefits this year, and calculate how much you'd need to make for the remainder of the year to stay above that threshold. Then, when you file a change in life circumstances with the insurance exchange, you simply tell them that you will be self-employed for the rest of the year, and that you project that you will be making x-amount over the course of the remainder of the year. While this may seem like gaming the system, it's quite possible that you WILL find a job between now and the end of the year...it's just you taking your best guess.

If your state has an online system for the insurance exchange that you used to sign up originally, you might be able to go back in and run some scenarios.

I just last week had to file a change in life circumstances with my exchange, and it was a bit of a pain in the butt. Everyone is still trying to figure it all out, so there was a lot of hmming and head-scratching on the other end of the phone. And somehow the agent ended up not making the change correctly, so I had to redo it myself online.

I was told by the CA exchange folks that yes, if a person ends up making less than they'd originally estimated, they will get a tax credit. So, if you don't need the money right now, the easiest thing to do is chill out.
posted by nacho fries at 9:23 PM on July 15


(You haven't even said what state you're in, so you're only going to get very broad answers here.)

In general, Medicaid coverage is a ton better than the lower-tier exchange plans, and you'll almost certainly be much better off with it. Medicaid expansion is the best part of the ACA! Don't be afraid to take advantage of it.
posted by RogerB at 10:48 PM on July 15 [4 favorites]


You must go through healthcare.gov to get the tax credit. Stop what you're doing right now and call them. They are open 24 hours, 7 days a week. You won't get it at the end of the year. You won't get it at all unless you go through them.

Your local exchange might be tied to them, I don't know how it works in your state. You stand to lose hundreds of dollars a month if you buy your plan the wrong way. No one will warn you about the tax credit. Like you said, no one knows what is going on. That is, no one but the people at the healthcare.gov call center.

You won't have to opt for Medicaid if you do it through healthcare.gov. In fact you probably won't qualify for Medicaid. The determination depends on how much you made in the 2014 tax year, not on how much you're making now.

You can buy the same plan you have and get that credit now. It'll lower your premium, your copays and everything else by... a lot more than 100 dollars per month.

You have about two months to submit documents to them verifying your 2014 income. It's not like the IRS in that you have to mail in things and wait weeks to see what happens next. It's set up so you can upload pay stubs, bank statements, lucky charms, whatever, right to the website.

Once you get a job and your income changes, you report that to healthcare.gov and the insurance company via the website. They will then adjust your 2014 credit.

Everything can be done online.

After you get a job, your tax credit will decrease or you'll lose it altogether if you're making the big bucks. Whatever happens, you can keep your healthcare.gov plan at least through the end of 2014. You don't have to switch to your employer's plan. It's your choice. It's the law.

Yes the website is confusing. Health insurance is confusing. That' is the downside of choice I guess. The call center people are very well trained and patient.

The insurance companies will dissuade you from calling healthcare.gov. They hate the ACA. Also, it is said that the government is slow reimbursing them for the credits.

*If what I wrote is wrong, blame healthcare.gov.
posted by CtrlAltD at 10:52 PM on July 15


On preview: the downside to Medicaid is that fewer doctors will accept it. Then again, by April doctors in some areas were turning away patients with ACA individual carrier plans because insurance companies were slow in processing claims. Doctors and insurance companies should be ashamed and held accountable.
posted by CtrlAltD at 11:04 PM on July 15


Definitely call healthcare.gov. If you are no longer eligible for a subsidy, you probably want to know that ASAP (not sure what the penalty is for claiming a subsidy when you are actually a Medicaid candidate; this is one of the really confusing parts of ACA implementation, how it handles life changes during the year).
posted by ThePinkSuperhero at 5:12 AM on July 16 [1 favorite]


Doctors and insurance companies should be ashamed and held accountable.

I can't speak for doctors, but most insurance companies are having trouble processing claims because they're being deluged with new members and new processes. I say this as someone who works at one - albeit a non-profit one - doing extensive work with ACA implementation and the Medicaid expansion. I'm not in claims, but I can tell you that the people who are, at my company at least, are working round the clock at basically slave wages and still drowning. This is in large part because no one in the federal government and almost none of the state governments were prepared for the technological challenge of making legacy systems talk to brand new systems, or to OTHER legacy systems. Most legacy systems in Medicaid managed care organizations have been put together piece by piece to respond to specific challenges within states, NOT to the challenges of talking on a daily basis to the federal government.

But to answer the OP's question, no one is going to force you to accept Medicaid. RogerB is right, though. The coverage you'll get under Medicaid Expansion is way better than an ACA Bronze plan, plus it's free. I can't imagine why you wouldn't want it.
posted by kythuen at 8:21 AM on July 16 [2 favorites]


The following info is from Covered California. I've emphasized that part that might apply to your situation:

Question: I qualify for the monthly premium assistance to help pay my new health care. So how does that tax credit work? Do I have to pay the full monthly amount, then the insurance company refunds the difference, or does the government pay them directly (leaving me responsible to just make my part of the payment)?

Answer: If you qualify for financial assistance through Covered California you can receive advanced payments of premium tax credits (payments to the insurer from the government on your behalf) and cost-sharing subsidies (reduce out of pocket costs such as co-payments and deductibles). You can take the tax credit (premium reduction) in advance or you can pay all of the cost and then take the credit on your tax filing.

What is the max credit?

Just to give you an example of why it might be beneficial to you to report your life change: The max credit for a person in my circumstances is something like $250/month for a person who is right above the Medicaid (MediCal in my state) threshold. I don't have the exact number in front of me -- sorry. YMMV.

My tax philosophy is, I'd rather have the money in my bucket during the year, so I can use it to make more money (or as a safety cushion), rather than having it in the Fed's bucket where it does me no immediate good. If I owe at tax time, I pay then. (But some people prefer it the other way around -- they see it as a "forced" savings account that will pay out come tax time next year.) By reporting the change, you put money in your pocket now, and avoid any possible blowback for not filing within the 60-day requirement for life changes.
posted by nacho fries at 8:22 AM on July 16


Forgive me for perhaps over-participating in this thread, but after doing more research, it appears (at least in CA), that if your revised income falls within certain levels, you may qualify for supplemental assistance, above and beyond the tax credit/premium -- it's called Cost Sharing Reduction -- and you qualify for a special Enhanced Silver plan.

You will have lower out-of-pocket overall than the Bronze, AND you will have lower premiums -- probably much lower than your current arrangement. Definitely worth making that call to find out if you quality. (And by "qualify," again, you can use projected income to make sure that you do.)

The healthcare.gov site is bit terse on the subject.

The Covered CA site goes into more detail; which, while it may not apply exactly to your state and situation, may give you more background info that is useful. Relevant detail:

It is important to note that if you are eligible for cost-sharing subsidies, you will also receive premium assistance. However, and unlike premium assistance, you cannot receive cost-sharing subsidies in any metal tier level, but ONLY if you enroll in a silver-level plan.

I do understand your hesitation to go on MediCaid, and at least here in CA, I would be wary myself, simply because many doctors don't accept it, and there is a huge bureaucratic backlog that has resulted in people having delayed/no treatment. I'm not pointing fingers or blaming -- this first year of the program is chaotic, everyone is doing the best that they can.

Again, based on my recent experience dealing with agents on the phone and online, you should expect some frustration and do-overs and snafus -- I think going into it with that mindset is probably useful. (One example: while on the phone with the agent, she discovered that "IT had made an error" and somehow their system kept adding $1k to my income. This necessitated a lonnnnnnng hold while "IT" was consulted. Caveat emptor.)
posted by nacho fries at 10:21 AM on July 16


You will have lower out-of-pocket overall than the Bronze, AND you will have lower premiums -- probably much lower than your current arrangement. Definitely worth making that call to find out if you quality. (And by "qualify," again, you can use projected income to make sure that you do.)

This is correct. Healthcare.gov calculates this supplemental assistance automatically when they use the site. The advantage is the tax credit PLUS this premium assistance.

My tax philosophy is, I'd rather have the money in my bucket during the year, so I can use it to make more money (or as a safety cushion), rather than having it in the Fed's bucket where it does me no immediate good. If I owe at tax time, I pay then. (But some people prefer it the other way around -- they see it as a "forced" savings account that will pay out come tax time next year.) By reporting the change, you put money in your pocket now, and avoid any possible blowback for not filing within the 60-day requirement for life changes.


This is what healthcare.gov agents recommend, taking the maximum credit available to you. Consumers have to report any change in income or life event anyway. That change adjusts your premium. You will not end up owing a huge amount at the end of the year. It is not a big risk.

Again, based on my recent experience dealing with agents on the phone and online, you should expect some frustration and do-overs and snafus -- I think going into it with that mindset is probably useful.

Yes.

I have dealt with so many health care orgs and corporations in the last few years that I started following how industry PACs spread their money around. The more I learn the more I snafus I am willing to tolerate because it is a miracle this bill got passed at all. I think of it like recovering free money (tax credit + adjusted premium). Otherwise healthcare.gov is rage-inducing. It really can't be navigated without phone assistance.
posted by CtrlAltD at 3:33 PM on July 18 [1 favorite]


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