Nearly 10,000 Covered California policy holders have lost their federal tax credits — at least temporarily — due to a bookkeeping error by the state health insurance exchange.
But Covered California is still trying to contact these individuals and families to fix the problem, and the agency promises to reinstate their tax credits retroactively if they give it permission to verify their income, said Covered California spokeswoman Lizelda Lopez.
“We’re really, really focused on reaching out to them and getting their consent,” she said.
Covered California needs consent from its enrollees to verify their income against a federal database. The tax credits consumers receive to reduce their monthly premiums are based on income, so when incomes fluctuate, so do tax credits.
Covered California discovered in December that approximately 24,000 policy holders hadn’t provided consent to the agency, even though it thought they had, Lopez said.
“We realized looking over our data that we didn’t have their consent, and didn’t tell them that their [tax credits] would be zeroed out … as a result,” she said previously.
When Covered California discovered the error, officials said they scrambled to call and email those policy holders, asking them to provide their consent by Dec. 31 so they wouldn’t lose their tax credits on Jan. 1.
About 60 percent did, Lopez said.
There’s still time for the remaining 9,600 or so enrollees. If they provide consent, Covered California pledges to recalculate their tax credits and apply them retroactively to the beginning of the year, Lopez said.
She expects they soon will start receiving bills from their insurers for the full, unsubsidized amounts of their premiums and will realize something’s amiss.
“We anticipate that people will start calling, and that way we can retroactively turn on their” tax credits, Lopez said.
The 9,600 policy holders probably include people who have found other coverage and planned to drop their Covered California plans anyway, she said.
“Many of those folks we have not been able to reach are probably not signing up again,” Lopez said. “That’s common. People go into employer coverage or Medi-Cal or whatever the case may be.”
Neighborhood Health Insurance Center, an insurance agency with five locations in San Diego County and about 2,000 Covered California clients, has helped a handful of people contacted by Covered California in the past few weeks about income verification, said director Michael Bergstrom.
His clients tend to have low incomes and speak English as a second language, so many didn’t quite understand what Covered California was requesting, he said.
“We review their accounts and say, ‘Hey, we need to update this information,’” Bergstrom said. The fix is an easy one, but because many of his clients are new to health insurance as a result of the Affordable Care Act, “they’re still figuring out how it works,” he said.
“Not only are they immigrants to the United States, they are also ‘digital immigrants’” who don’t rely heavily on email, Bergstrom added.
He said he has not yet heard from anyone whose tax credits were cut Jan. 1.
Lopez’s advice for consumers who have been contacted by the exchange is to immediately give their consent online, call Covered California at 800-300-1506 or get help from the person who helped them enroll in the first place, such as an insurance agent.