San Francisco Chronicle, October 15, 2013
My Sunday column focused on ways people could lower their 2014 income enough to qualify for tax-subsidized health insurance on a state-run exchange. Today's column is for people with the opposite issue - their income is too low to buy an exchange policy with a tax subsidy. Unless they increase their income above a certain threshold, their options are to enroll in Medicaid (called Medi-Cal in California) or pay full price for health insurance.
The Affordable Care Act expanded Medicaid to a large group of people who were previously ineligible, but expansion was voluntary and not all states adopted it. California did, and I will stick with the rules for Medi-Cal.
Starting next year, if your income is between 138 and 400 percent of poverty level for your household size, you can purchase health insurance on Covered California (our state-run exchange) and get a federal tax credit to reduce your premium, in some cases to almost zero. The lower your income, the bigger the credit.
If your income falls below 138 percent of poverty, you qualify for no-cost medical, dental and vision coverage through Medi-Cal. If you qualify for Medi-Cal, you cannot get the tax credit, although you could buy a policy without a subsidy on or off an exchange.
Although many people will be happy to get Medi-Cal, some would rather get subsidized insurance from an exchange. Not all doctors and hospitals accept Medi-Cal, and "there is a perception that Medi-Cal is connected to welfare," says Bonnie Burns, training and policy specialist with California Health Advocates.
Take Rick L., who is 57, single, retired and living in San Francisco on savings and a small amount of dividends and interest. His income is less than $10,000, so he qualifies for Medi-Cal.
To get a subsidized policy on Covered California, his modified adjusted gross income would have to reach $15,857 a year, which is 138 percent of poverty for a single person. (For other household sizes, see www.tinyurl.com/pwugnus.)
Rick pays $906 month for a Kaiser Permanente health plan. Next year, he would like to get a subsidized policy on Covered California, but can't because his income is too low. "I don't think Medi-Cal is what I should be taking, because I can afford a reasonable premium," he says.
Rick says he doesn't want Medi-Cal because he would rather stick with his Kaiser doctors, and he "assumes there would be an asset test that would disqualify me."
In fact, there is no asset limit for most people.
No asset test
Historically, to qualify for Medi-Cal you had to be low income and meet other criteria, such as being a single parent, pregnant, 65 or older, younger than 19, blind or disabled. Different groups had different income limits.
The health act expanded Medi-Cal to cover most Californians with incomes below 138 percent of the federal poverty level, including childless, able-bodied adults ages 18 to 64 - a group dubbed newly eligible. (They also must have been legal U.S. residents for at least five years.) Somewhat higher income limits will continue to apply to pregnant women and children younger than 19.
Historically, there was an asset test for some Medi-Cal recipients (elderly, blind and disabled) but not for others (pregnant women and children). Those subject to the test could not get Medi-Cal if their assets (excluding a home and certain other items) exceeded a very low amount.
Under the health care law, those who were previously subject to an asset test will remain subject and those who were exempt will remain exempt, says Tony Cava, a spokesman for the California Department of Health Care Services.
However, the newly eligible childless adults ages 19 to 64 will not be subject to an asset test.
The rules for determining whether a household meets the income limits are slightly different for Medi-Cal versus the tax subsidy.
For the subsidy, it starts with adjusted gross income, then adds in non-taxable Social Security benefits, tax-exempt interest and foreign earned income and housing expenses.
Medi-Cal generally uses the same formula, but then subtracts certain income from scholarships and certain income received by American Indians and Alaska natives. For a synopsis, see www.tinyurl.com/k8jwk4h.
Another difference: The subsidy calculation is based on a household's projected annual income for the benefit year, whereas Medi-Cal eligibility is based on the applicant's current actual monthly household income, says Anne Gonzales, a spokeswoman for Covered California.
Rick could qualify for a subsidized plan from Covered California if he bumped his income above 138 percent of poverty by getting a job or taking taxable distributions from a retirement plan, says Karen Pollitz, a senior fellow with the Kaiser Family Foundation. (Warning: Taking distributions before age 59.5 could result in a 10 percent penalty.)
A single, 57-year-old San Francisco man earning $16,000 a year could go to Covered California and get a Kaiser bronze-level plan for $1 a month (after a tax subsidy) or an enhanced silver Kaiser plan for $65 a month.
Before messing with their income, newly eligibles should see if their current health care providers are available in their county's Medi-Cal program.
Some counties offer only one plan but San Francisco offers two: Anthem Blue Cross and the San Francisco Health Plan. The San Francisco Health Plan subcontracts with a variety of health care providers, including Brown & Toland Physicians and UCSF. It has a limited number of spaces available in Kaiser. "I believe we are at that cap," says Adrian Nunez, the health plan's director of enrollment.
Joe Fragola, a spokesman for Kaiser Permanente, says, "KP participates in Medi-Cal in San Francisco underneath the San Francisco Health Plan. But currently we are only accepting Medi-Cal individuals who have been a KP member in the last 12 months or are immediate family of a KP member."
To compare San Francisco's Medi-Cal plans, go to www.tinyurl.com/mcyn8ke.
To find Medi-Cal plans in other counties, contact your county's Medi-Cal office. For a list of offices, go to www.tinyurl.com/krq29e2 or call (916) 449-5000.