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On Covered CA and getting a subsidy on your health insurance? BE AWARE!

Opening your mail as you normally do and to your surprise, there’s a letter from Covered CA saying ‘Congratulations, you’re eligible for MediCal’!  Well, in all fairness, they don’t actually say ‘Congratulations’ but you get the gist.  This is what is transpiring right now as thousands of Californians that receive a subsidy, are getting pushed into MediCal because their income on their Covered CA account is $1 too low.  Yes, you read that correctly.  If you are $1 off, you too could lose your doctor!

Why?  The government released the 2017 Federal Poverty Limit Chart that gives guidance to which plans you are eligible for based on your MAGI (modified adjusted gross income) that you reported in Covered CA.  Why they don’t release this at year end, we’ll never know.  That would make too much sense!  For most people, your MAGI is Line 37 on your personal tax return.  If you receive social security and/or tax exempt interest, that’s added to your AGI to come up with your MAGI also.  If that figure is off by $1, instead of that amazing Silver 94 plan you’re enjoying, you could get that wonderful letter saying ‘Welcome to MediCal’.  Or if your MAGI is $1 to high, you could be pushed from the wonderful Silver 87 plan to the not so great Silver 73 plan (HUGE difference in benefits!).  It is vitally important that you check your Covered CA account, look at what income is reported to see if you are in danger and if so, get it changed asap!  I would even go so far as building a buffer for when it’s increased next year.

This mostly affects self employed people because you’re able to write off expenses from your income.  And the income in your Covered CA account is a guess-ti-mate anyway because how on earth are we supposed to predict the future?  I’m sure your tax person could find an extra dollar or two.  And if they can’t, we’ll get you to someone that can!  Are you making too much money?   Did you know that you could put money into an IRA or 401(k) and that would lower your MAGI?  And if you’re self employed, always make sure your tax pro is deducting your health insurance.

Here’s an idea!  Would you rather have someone deal with this for you and not have to pay them any extra?  It’s your lucky day!  While Covered CA really doesn’t advertise it very well on their website (not sure why), you can have an advocate on your side to take care of things like this and it doesn’t cost you ANYTHING extra!  You’re read that right, you won’t pay one extra dime to have us keep up with things like this AND MUCH MORE!   We accept just what the insurance companies pay us.  If you already have an agent and they aren’t pro-active like we are, while they may be really nice, it’s time to change agents!  Once we find out that Covered CA is utilizing the new chart, we review each account to see if they are in danger.  If Covered CA has to be called or your case needs to be appealed, we do that for you. We’re that breathe of fresh you’ve been looking for 🙂

Call or email us and we’ll walk you through how to easily add us as your advocate on your Covered CA account or your ‘off exchange’ health insurance plans.

Debbie Hoffman, Insurance Designs

323.455.4961

debbie@debbiehoffman.com

medicare

Avoiding Medicare Part B Penalty, Part 1 – Medicare Eligible and Covered Under an Employer Group Plan

Welcome and thank you for reading my very first blog!  I’m extremely honored and grateful you chose to spend a few minutes of your time with me.   My goal is to bring something valuable to your life that will put you in a better health and wealth position AND make confusing subjects, easier to understand.  One of the most disheartening parts of our job as an independent insurance agent is to give bad news to a client and not being able to do anything about it.  From our vast experience, I’d like to use this blog to help you avoid some of the ‘gotchas’, pitfalls and crazy rules that could get you in a pickle later.    

If you hadn’t noticed, Medicare can be very confusing.  There are some really quirky rules in Medicare and this is one of the craziest.  It’s relatively easy to enroll into Medicare when you turn 65 and your situation is pretty straight forward.  However, if you have something out of the ordinary, you need to know the rules so you won’t get penalized in the future.  This has popped up a few times in my career so it’s good to realize it’s a problem in case you know of anyone that fits the situation. You don’t have to know ALL the rules, you just have to be aware it could be a problem and know where to seek guidance.  Unfortunately, many of Social Security’s own staff do not understand this rule.  It has to do when do you apply for Part B if you are covered under an employer group plan.  The rule (from Medicare.gov) is you can delay Part B (and avoid the penalty) if:

  • You have insurance through an employer or union.
  • You or your spouse (or family member if you’re disabled) are still working.

Notice the 2nd part of the rule…’still working‘.  That’s the part most people miss.  But wait…there’s more!  In addition to being penalized, you cannot apply for Part B at just anytime of the year unless you have a ‘special circumstance’.  This situation does NOT fall under one of their ‘special circumstances’ and therefore you can ONLY apply during the Part B Open Enrollment which is from January 1 – March 31st.  But wait…there’s even more!!  Your Part B won’t become effective until July 1st!

Here are a couple of stories that illustrate the problem:

  1.  Betty retires at age 60, her spouse, Bob, is 65.  Part of her School District’s contract with the union covers her for insurance till she turns 65.  That’s normally a great benefit, UNLESS your spouse is eligible for Medicare!  In this case, Bob delays Part B because he is still covered under the group plan.  When she turns 65, they both go into their local Social Security to apply for Part B where they are informed Bob will have to pay a penalty because he did NOT obtain Part B when she ‘stopped working’. The Part B penalty is 10% for each year he didn’t have the Part B = 50% of the current Part B premium!  For 2017, the Part B premium is $134, therefore, he pays an additional $67/month…FOREVER!  AND it will increase as the Part B premiums increase.

AVOIDING THE PENALTY:  When Betty retired at age 60, Bob should have applied for his Part B at that time. 

  1. Susan, age 64, has an accident at work and goes onto worker’s compensation.  When she turns 65 (even though she isn’t technically working), her company continues to keep her on the employer group plan.  At that time, she goes to her local Social Security office where she meets with an agent and is upfront, informing the agent that she is out on disability but still covered under her group plan.  The Social Security agent tells her that she can delay her Part B.  After 2 years of being on disability, the employer group plan stops.  She goes back to the Social Security office and they inform her that she will be penalized 20% for 2 years of not having Part B when she was eligible.  The good news is she kept VERY good notes, recorded the date/time and name of the agent.  This is IMPORTANT because everything is video recorded at the SS office and they can look back at the recordings to verify her story.  Because it was a Social Security agent that misinformed her, she is currently appealing through Medicare (we’ll discuss appeals in another blog).  My thought is she will have the penalty reversed because she kept good notes and SS misinformed her.

AVOIDING THE PENALTY:  When Betty turned age 65, she should have applied for his Part B at that time. 

So think about it, if Bob or Susan tried to apply for their Part B on April 1st, they have to wait till January 1st of the NEXT year AND they won’t have coverage till July 1st of the NEXT year.  Yikes!  That means they will have to go without doctor/out patient medical coverage for 1 year and 3 months or have to purchase an individual plan at exorbitant rates because they are over age 65 (ESPECIALLY during ObamaCare).   In my opinion, this is insane and should be changed!

In summary, keep excellent notes when you speak with Social Security or Medicare.  Record the date, time and everyone’s name you speak with!   I also suggest asking different agents the same question to see if their answers coincide.  If possible, obtain something in writing.  AND hold onto to that info FOREVER!

https://www.medicare.gov/sign-up-change-plans/get-parts-a-and-b/should-you-get-part-b/should-i-get-part-b.html#collapse-3156

 

Debbie Hoffman is an independent insurance broker specializing in Medicare and individual/family health plans, contracted with over 40 companies and Medicare certified with 13 carriers.  Located in the Los Angeles area, she is contracted in many states throughout the country.  She prides herself on educating her clients, being their advocate and exceeding their expectations.  She accepts only the insurance company commissions so there are no extra charges for her assistance and guidance.  From ObamaCare through MediCare…Debbie cares.

debbie@debbiehoffman.com    323.455.4961