For people whose income changes shift them above or below the Medicaid threshold during the year, navigating their health insurance coverage can be confusing. Ditto for lower income people who live in states that may expand Medicaid this year.
Under the health law, states can expand Medicaid coverage to adults with incomes up to 138 percent of the federal poverty level (about $16,000 for an individual).聽聽have done so.
This week I answered three questions from readers about how Medicaid聽interacts with plans on the health insurance marketplaces.
Q. In my state, if my income drops below 138 percent of the federal poverty level, I聽have to drop my marketplace plan and sign up for Medicaid. But if my income increases聽and I become eligible for a marketplace plan again, what happens to any payments I鈥檝e made toward the deductible and out-of-pocket maximum for that plan? Do they reset to zero so I have to start all over again?
A. As long as you sign up for the same plan you were originally enrolled in when you return to the marketplace, any payments you鈥檝e already made for medical care that year will still count toward reducing your deductible , said Sarah Lueck, senior policy analyst at the Center On Budget And Policy Priorities.聽In 2016, that maximum out-of-pocket limit, after which the insurer generally picks up the whole tab for covered benefits, 聽for an individual.
Your payments would count whether you re-enrolled in a marketplace plan from Medicaid or another type of coverage such as a job-based聽health plan.
Insurers have the option of letting consumers who switch to a different plan when they return to the marketplace carry over the amounts already paid toward the deductible and out-of-pocket maximum, but they鈥檙e not required to do so, said Lueck.
Q. My state, Louisiana, has not yet implemented the Medicaid expansion, but with the new governor it may happen this year. My income is between 100 and 138 percent of the federal poverty level, and since I鈥檓 not eligible for Medicaid under the current rules, I鈥檝e signed up for a marketplace plan.聽What happens if Medicaid eligibility expands and I become eligible during the year?聽Will the marketplace automatically enroll me in Medicaid?聽And if I don鈥檛 enroll, do I face financial consequences for not cancelling my marketplace plan?
A. Your new governor, John Bel Edwards, . If that happens this year, don鈥檛 expect to be automatically enrolled in the program, says Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities.
Because your income is between 100 and 138 percent of the poverty level, you likely are receiving federal tax credits to help subsidize the cost of the premium for the marketplace plan you chose. If you stay in that plan instead of moving to Medicaid this year,聽you won鈥檛 be responsible for repaying the tax credits. The Internal Revenue Service will accept that you were eligible for those premium tax credits ,聽Solomon says.
Next year, however, if the marketplace determines that your income qualifies you for Medicaid, you鈥檒l have to sign up.
Q. I live in California. What happens if, at tax time, the income reconciliation shows that I should have been enrolled in Medi-Cal instead of a subsidized marketplace plan?聽Are there consequences?聽Will I be responsible for any of the benefits I received?
A. If your final income at year鈥檚 end was less than 138 percent of the federal poverty level, you were likely eligible for the California version of the Medicaid program, called Medi-Cal. But if when you signed up for coverage earlier in the year the marketplace determined that聽your estimated income made you eligible for a subsidized marketplace plan, you won鈥檛 have to repay any聽tax credits you got to help pay the premiums.
You also won鈥檛 be on the hook for any benefits you received while insured by your marketplace plan. However, you can鈥檛 recoup any premiums you paid for that plan either.
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