How are cost-sharing reductions administered?

Consumers who get cost-sharing reductions will pay less out-of-pocket when they use health care services.

If all members are not in need of health insurance, will that affect the household number qualification for subsidy?

Households include individuals for whom a taxpayer claims a deduction for a personal exemption even if those individuals are not in need of health insurance.

Will the premium assistance and/or cost-sharing reductions go away or phase out after some period of time?

No.

Are assets included in the income calculation?

No.

Is income based on gross or net income?

Income is based on Modified Adjusted Gross Income (MAGI).

If the employer provides health insurance to the employee and the employee falls within the 138%-250% of the FPL, does the employee qualify for cost-sharing reductions?

An individual would not be eligible for the cost-sharing reductions if the employer provides minimum essential coverage that is affordable and of minimum value.  Affordable means the employee’s portion of the premium, for employee-only coverage, is 9.5% or less of the employee’s income.  Minimum value means the plan has at least a 60% actuarial value, i.e. for an average population, it is expected to pay at least 60% of allowed costs.

It is also important to note that the cost-sharing reductions are only available in the silver tier of Covered California’s Individual Marketplace.

Are tax credits or premium assistance shared by the state and federal government? Who essentially ends up paying for the assistance?

Premium assistance or tax credits are paid by the federal government from penalties and taxes that are part of the ACA.

What happens if one does not report changes in a timely manner?

It depends on the change.  For example, if the individual’s income changes, the individual may no longer be eligible for premium assistance.  There will be reconciliation at the end of the year and the consumer may be required to pay back advance premium assistance.  Another example is if the individual does not report a special enrollment qualifying event, the individual may not be able to take advantage of the special enrollment period.

What would be an example of change in health coverage that needs to be self-reported to Covered California within 30 calendar days?

Change in employer-sponsored coverage – for example, the individual’s employer now offers minimum essential coverage that is affordable and of minimum value.

What happens when a single parent with 2 children – children are covered by the other parent? How do we determine the single parent’s assistance?

Covered California’s individual marketplace application requires the applicant to include in the application children who live with them as well anyone on their federal income tax return. However, there is a section that asks whether the other individuals on the application aside from the primary applicant are also applying for health insurance. Moreover, there is a section on the application that asks whether the person claiming the dependents is a parent without custody.

As for the determination of the taxpayer’s family, a taxpayer’s family includes individuals for whom a taxpayer claims a deduction for a personal exemption (see IRS code: http://www.gpo.gov/fdsys/pkg/USCODE-2011-title26/pdf/USCODE-2011-title26-subtitleA-chap1-subchapB-partV-sec151.pdf).