By TARA SIEGEL BERNARD
Millions of consumers rushed to the online health care exchanges on
Tuesday only to be greeted with long waits and frustrating error
messages.
Those who managed to create accounts or peruse the plans offered in
their state left with many questions about the Obama administration’s
health care plan. Among them: What does all of this mean for my
26-year-old child, who is now too old to remain on my own policy? The
premium subsidies are based on my income, but what if I have no idea
what I may earn next year? How is “modified adjusted gross income”
calculated anyway?
Last week, my column
addressed the broad outlines of how the exchanges will work, from how
the different tiers of coverage would be structured to what types of
individuals would qualify for tax credits on their premiums.
Dozens of additional queries landed in my in-box this week. Here’s are some of the most frequently asked questions and an attempt at answering them:
Q. I haven’t seen any discussion about students. My
son will be 26 next month, and thus can no longer be on my plan. He is a
full-time student in another state and fully dependent on my financial
support. Do you know where he fits into this system?
— Mark Alper, Berkeley, Ca.
A. Adult children lose coverage through a parent’s
policy on their 26th birthday. But they can then immediately enroll on
the exchange — even outside the open enrollment period, which ends on
March 31. Individuals under age 30 may also qualify for a “catastrophic”
plan, which carries a lower premium but a very high deductible
(equivalent to the out-of-pocket maximum, or $6,350 for a single person,
in 2014). Tax credits, however, cannot be applied to catastrophic
plans.
Q. My difficulty and confusion is I don’t actually
know what my annual income is or will be in the coming fiscal year. I am
a freelance classical musician, meaning I have seasonal employment from
as many as 20 employers in a year and I file tax returns in seven
states and three countries.
— gibarian, San Francisco
A. The experts I spoke with said you needed to make
your best educated guess when estimating your income. The exchange will
verify it by checking your tax return from last year as well as your
current income. (The federal government has contracts with firms that
provide that information.) If your self-attested income varies by more
than 10 percent when compared to those two sources, you will be asked to
provide more documentation, according to a spokeswoman at the
Department of Health and Human Services.
Q. I have very little annual personal income, but
am fortunate to have other savings/resources that would allow me to pay
for one of the better plans with higher premiums. (I have no access to
any employer-sponsored plan). I am willing to enroll in one of these
better plans on my state’s health exchange even if I don’t get any
subsidy for it. (I seem to earn too little to qualify for a subsidy
anyway.) Will I be allowed to do this, and do this without penalty or
added taxes?
— KRyan, New York City
Q. I am currently unemployed but have a sizable
trust fund. Do I qualify for discounts/tax credits when buying health
insurance? Will I be required to show my federal tax return?
— Jory, Columbus, Ohio
A. You can certainly buy coverage on the exchanges when
you don’t have coverage through an employer. Whether or not you pay
full price or qualify for a premium tax credit depends on your modified
adjusted gross income, which is based on your latest tax return (and
yes, the exchanges will check your return).
If your household’s modified adjusted gross income is from 100 to 400
percent of the federal poverty level (that’s $11,490 to $45,960 a year
if you’re filing as an individual and $23,550 to $94,200 for a family of
four), you may be eligible for a premium tax credit, according to CCH, a
tax and accounting service.
Several readers had questions about how the modified adjusted gross income is calculated. It’s basically your “adjusted gross income,” which can be found on line 37 of your 1040 tax return form.
But it requires that you add back certain items like nontaxable Social
Security income, tax-exempt interest and foreign-earned income, Mark
Luscombe, a principal analyst at CCH, said.
The figure also includes income from items like dividends, interest,
real estate and retirement account withdrawals. So even if you do not
have much earned income, but have significant income from other sources,
you obviously won’t qualify for financial assistance.
Premium tax credits and cost-sharing subsidies are generally based on
your household income, which includes your spouse and any dependents for
whom you file a personal exemption and who also earn enough money to
file a return, he added.
Q. I get insurance through my employer. My same-sex
husband has little to no income and will be using the exchange. Our
state of residence (Virginia) is letting the federal government run the
exchange. Our state does not recognize our marriage, but the Internal
Revenue Service does. How will he determine income when using the
exchange?
— S.G., Eastern U.S.
A. The I.R.S. said last month that all married same-sex couples would be treated as married
for federal tax purposes, regardless of where they live. And starting
in the 2013 tax year, all married couples will be required to file their
returns together as either “married filing jointly” or “married filing
separately.”
The insurance exchanges will also see you as married. In fact, if you’re
a married couple buying insurance on the exchange — gay or straight —
you’re required to file a joint federal return, the Treasury Department
said. (Why? Imagine how many more people would qualify for subsidies if
they used “married filing separately” status.)
Your premium tax credits will ultimately be reconciled against your 2014
household income. So when the exchange asks for your information about
your projected income, it’s probably wise to use what you expect your
combined household income to be in 2014. The exchange will verify it by
checking your tax returns from last year as well as your current income.
Q. I am wondering whether moving to a new state is
considered a life event. My state, Maine, has only two choices of
providers and is said to be one of the most expensive states for
insurance. I am contemplating moving to another state which has many
choices, but can I cancel my Maine coverage and obtain new coverage in
my new location? — jwc, Maine
Q. We are currently living overseas. When we move
back to the United States, which will be after the enrollment period for
the exchanges has closed, will we still be eligible to sign up?
— Lisa, Melbourne, Australia
A. Moving to a new state is indeed considered a
qualifying life event, so you will be able to sign up even after the
open enrollment period closes. The same goes for people moving back to
the country. You do, however, need to be living in the United States to
buy a plan on the exchange. American citizens living abroad are not required to get health insurance under the new law.
Q. I’m looking forward to buying insurance for my
82-year-old mom. She came to live in the United States this year and got
her green card in July 2013. She is not eligible for Medicare since she
has never worked/paid taxes in this country. How much will it cost to
insure her?
— Martaines, Miami
A. Most immigrants who are “lawfully present,”
including people with permanent resident status (also known as green
card holders), can buy coverage on the exchange. Just like citizens,
they are also eligible for premium tax credits and cost-sharing
assistance if they meet the income requirements. (In fact, most legal
immigrants must have coverage by 2014, unless they qualify for an
exemption.)
As a green card
holder, your mother will be eligible for the exchange, but will need to
live here for five years to qualify for Medicaid. Since she is not
eligible for Medicare, however, she can apply for a premium tax credit,
said Lynn Quincy, a senior policy analyst at Consumers Union.
Premiums rise with age, but it’s hard to say how much she will pay since
the exact rules will vary from state to state. Generally speaking,
however, federal rules allow insurers to charge older adults (someone in
their sixties, for instance) up to three times the premium they would
charge younger adults, according to the Kaiser Family Foundation. It
will be easier to get a more specific answer by checking the plans on
your state’s exchange.
Q. I am eligible for Medicaid, but because of my
treatment needs, I want to purchase insurance on the exchange (even at
full cost). But when I state that I have no income, the Web site simply
directs me to Medicaid — no option for the exchange. Can I purchase on
the exchange? — Kate, Ill.
A. Yes. If you are eligible for Medicaid but not yet
enrolled, then you can still buy coverage on the exchange. The drawback:
people who can get Medicaid (or Children’s Medicaid, also known as CHIP)
are not eligible for premium tax credits, according to Kaiser. If you
can’t sign up on the Web site, try calling: 1-800-318-2596.
Q. I haven’t seen a clear statement as to whether
being on Cobra (from prior coverage on my ex-wife’s employer plan) will
exclude me from the exchanges. Can I drop the Cobra plan if there’s a
better deal on the exchange?
— John, Livingston Manor,
N.Y.
A. If you lose your job, you may be able to extend your
employer-based health insurance for up to 18 months through Cobra. (But
you often must pay the entire premium — the share you paid when you
were employed, plus your employer’s share.) If you have Cobra coverage,
you can keep it. But you also can go to the exchange, where you might
qualify for subsidized coverage. You can get exchange-based coverage as
early as Jan. 1, as long as you enroll in a plan by Dec. 15.
Q. My 26-year-old-son recently lost his job (which
did not provide insurance). He has very little savings. How is he
expected to purchase coverage with no ability to pay?
— Jim, Poughkeepsie
A. He may qualify for Medicaid if he lives in one of the states that expanded the program,
according to Cheryl Fish-Parcham, deputy director of health policy at
Families USA, a consumer advocacy group. Some states have already
started covering single adults, and others will begin later this year.
(In the states that are not expanding Medicaid, only low-income parents with children, or low-income adults who are elderly or have a disability qualify, she said.)
If his income is above the poverty line and he doesn’t qualify for
Medicaid, he may be able to buy a plan on the exchange and receive a tax
credit to lower the monthly premiums. “The costs of some plans are
quite minimal for people with low incomes,” she said. But the exchange
also asks about household income, so what he is eligible for depends
partly on whether he expects to file taxes on his own, or whether you
expect to claim him as a dependent, she said. He may also qualify for a hardship exemption.
Q. I am retired and have rheumatoid arthritis. I
had to enter a high-risk insurance pool and now pay exorbitant monthly
fees for not very comprehensive coverage. Do I drop this insurance and
go to the exchanges? Are there other private insurance I can qualify
for? When I fill out an application, will they ask if I have a
pre-existing condition?
— Robert, Conn.
A. Starting next year, insurance plans can’t refuse to cover people or charge them more just because they have a pre-existing condition, according to the Centers for Medicare and Medicaid Services.
This rule applies to all plans sold on the exchanges, employer-provided
or group plans and many individual plans sold outside the exchanges.
But there is an exception: individual grandfathered plans
which are essentially plans that existed before March 23, 2010, and
have generally remained the same, don’t necessarily have to follow the
new rule. The exchange application does not ask for health information.
The earliest you can get coverage is Jan. 1 (if you enroll by
mid-December), so don’t drop your current coverage before then.
