What You Need To Know NOW As Obamacare Debuts

Over the past six months, your Obamacare questions have steadily piled up in my inbox. Now, “steadily” is a description I can only think back fondly on. These days, words such as “barrage” or “deluge” are more fitting.

At last count, I tallied more than 800 comments and queries. And the pace has accelerated since enrollment began on Oct. 1 for Covered California health exchange plans and the Medi-Cal expansion.

Many of you are lobbing urgent questions at me about signing up. That’s why today, I’m including a few I have addressed in previous columns, with some important new details that have emerged. Open enrollment is upon us, and these are answers you need to know NOW.

Q: Do I have to give up my Medi-Cal and sign up for Obamacare? (Dear reader, this question – and the answer below – applies to people with different kinds of insurance as well, so please read on.)

A: Bob, take your hand off that health insurance application. I repeat: Take your hand off that health insurance application.

The Affordable Care Act (a.k.a. Obamacare) requires most people to carry a minimum level of health insurance starting in January, with some limited exceptions. Those who don’t comply must pay a tax penalty.

However – and this is very important – if you have Medicare or Medicaid (called Medi-Cal in California) or certain types of coverage for veterans (which I will get into in an upcoming column); if you receive health coverage through your employer; or if you purchase coverage on the open market, you comply with the requirement and won’t have to pay the penalty.

So, please, Bob and others, remember that you are covered. Don’t let someone talk you into buying more insurance.

Q: If I choose, say, Blue Cross during open enrollment and then in six months decide to switch carriers, will I be able to do that or do I have to stick with the carrier?

A: Well, Susan from Modesto, the answer is the opposite of open.

Sorry to say that the door to buying or switching health insurance closes after open enrollment.

As I’ve mentioned before, some open enrollment rules change under Obamacare. For people purchasing insurance from Covered California or on the open market, the open-enrollment period for individual and family plans will last six months this first year, from Oct. 1 through March 31, 2014. In subsequent years, it will last from Oct. 15 through Dec. 7.

(UPDATE: If you want to purchase a health plan for 2015, Covered California has changed the open enrollment  dates. Open enrollment now will occur from Nov. 15, 2014 through Feb. 15, 2015.) 

So, if you sign up for a health plan but have second thoughts, you can switch until the end of open enrollment, says Anne Gonzales of Covered California. However, if you’ve already paid your monthly premium and want to switch, you will have to quickly disenroll and enroll in the new plan within a certain timeframe to avoid a gap in coverage, she says.

“They can drop their coverage” after open enrollment, she adds, “but then won’t be able to re-enroll until the next open-enrollment period.”

For those of you with job-based insurance, Medi-Cal or Medicare, the open enrollment periods are different. To find out more click here.

Q: I understand the government will subsidize health insurance plans for individuals and families if their incomes qualify. Would you please define “income?” Is it gross income, adjusted gross income or something else? Is there a line for it on IRS form 1040?

It’s – surprise, surprise! – something else.

That something else is Modified Adjusted Gross Income, known as MAGI, which will be used to determine eligibility for tax credits offered by Covered California as well as Medi-Cal (in most cases).

For most of you, MAGI will be the same thing as adjusted gross income, as found on your 1040 federal income tax forms. There is no line for MAGI itself.

Of course, it’s not always that easy.

Technically, MAGI is adjusted gross income plus tax-exempt Social Security benefits, tax-exempt interest, and tax-exempt foreign income.

Please note that some common sources of income are NOT counted toward MAGI. These include Supplemental Security Income (SSI), veterans’ disability payments, workers’ comp and child support, says Laurel Lucia, an Affordable Care Act expert at the UC Berkeley Center for Labor Research and Education.

One more thing: If you have a dependent you claim on your taxes, but that dependent also earns enough money to be required to file taxes (such as a college student with a job), you have to include that dependent’s MAGI in your own, according to The Tax Institute at H&R Block. Having that extra income in your MAGI may affect your eligibility and the amount of your subsidy.

Oh, and just in case you’re tempted to Google “MAGI” for more information, beware that there are different definitions of MAGI for different tax purposes, according to the institute. Make sure you’re looking at Obamacare’s MAGI definition.

If you’re not ready to fling your keyboard at me in disgust, I can point you to two very helpful guides, found here and here.

Happy calculating.

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

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