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.
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.
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.
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.
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.
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.