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Managing Your Money Under Obamacare

My inbox is brimming with your personal Obamacare stories, and most of them aren’t joyous odes to the new health law.

Sure, I’ve received a handful of emails from satisfied customers, but most of the happy people don’t have much reason to contact me.

Instead, I hear from those who are stuck, justifiably frustrated and looking for help. They have tried everything to enroll in a new plan or use its benefits. They’ve spent scores of hours on hold or online. They’ve been told their problems have been resolved when they haven’t been. They’re getting nowhere.

I dedicated my last two columns to them and offered what little advice I could. Now, I’m going to take a break and answer some broader questions. But let me share one more piece of advice:

If you’re trapped in bureaucratic limbo, take your fight to the web, specifically to the Facebook pages and Twitter feeds of Covered California and/or your health insurer. They’re buzzing with consumer rants, raves and complaints.

And guess what? Insurers are responding to some with promises to help. Right there on social media. I don’t know if they actually have followed through and solved the problems. But, heck, it’s worth a shot. You can even do it while you’re on hold.

Q: How does Obamacare affect Flexible Spending Accounts?

A: Obamacare’s alphabet soup thickens. Flexible Spending Accounts are perhaps better known by their acronym: FSAs.

FSAs are offered by some employers as part of their benefits packages, and allow participants to pay for certain medical expenses with money that’s set aside before it’s taxed. (FSAs also are available for child-care expenses.)

I’ve had a flexible spending account for years, and use it for my co-pays, contact lens solution, prescription drugs and other costs.

If you’re like me, you’ve noticed that Obamacare has made changes to FSA rules, some consumer friendly, some not so much:

  • It used to be that you could use your FSA dollars to pay for over-the-counter drugs. Not anymore. Starting in 2011, Obamacare prohibited reimbursement of unprescribed medications. So, now, if your doctor tells you to take Benadryl for your allergies, ask her to fill out a prescription.
  • The Affordable Care Act capped how much money you can put into an FSA each year. The limit is currently $2,500 per person. There was no limit before.
  • ​The most recent change is probably the only one consumers cheered. The FSA “use-it-or-lose-it” rule requires participants to spend all of their FSA money in their plan year – or forfeit it. But in October, the federal government modified the rule to allow participants to carry over up to $500 into the next year.

There’s a catch, of course: Your employer has to elect to offer the carryover. Many already have, says Jody Dietel, chief compliance officer for WageWorks, a San Mateo-based company that administers about 2.3 million FSAs nationwide.

Want to know if your employer is one? Dietel suggests checking with your human resources department. If they don’t allow the carryover, ask them to!

Q: What if someone signs up for a Covered California plan, then due to job loss or other reasons, their income drops below the Medi-Cal income threshold? If they transfer to Medi-Cal midway through the year, will the tax credits they received through Covered California have to be paid back?

A: Time for a quick refresher. You can receive tax credits for health plans purchased through the state’s health insurance exchange, Covered California, if your income qualifies. But how can you be sure that your 2014 income will qualify if your income fluctuates?

You can’t. When you apply, make your best guess.

Here’s the rub: If your actual 2014 income varies from your estimate, you’ll either owe, or be owed, money, because your tax credit amount varies with your income. (To avoid major sticker shock at tax time, call Covered California right away when your income changes to adjust your credits.)

Jessica’s question is a twist on the same issue. She’s a licensed tax preparer in Arcata who says some of her clients’ incomes may swing them from a subsidized Covered California plan to Medi-Cal – and maybe even back again.

Here’s why: To receive tax credits for a Covered California plan, your household income must fall between 138 percent and 400 percent of the Federal Poverty Level (FPL). Under 138 percent of the FPL and, generally speaking, you’re eligible for Medi-Cal, the state’s health no-cost insurance program for poor residents.

If your household income is just above 138 percent – qualifying you for tax credits – it wouldn’t take much to push you under the Medi-Cal threshold. (Say if you lose a job or contract.)

Are you on the hook financially if that happens? No, says Jen Flory, senior attorney at the Western Center on Law & Poverty. Assuming you played by the rules, that is.

“As long as the person submitted an application to Covered California and truthfully projected their income, they will not have to return any taxes” for the period they were on a Covered California plan, Flory explains.

In Obamacare, as elsewhere, honesty is the best policy.

Provided by the Center for Health Reporting at the University of Southern California.

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