The following FAQs provide answers to many of the common questions that arise when helping consumers apply for and enroll in health coverage through the marketplace, Medicaid, and CHIP.
Table of Contents
- Modified Adjusted Gross Income (MAGI)
- Tax Filing Status and Eligibility for Premium Tax Credits
- Dependents for Premium Tax Credits
- Determining Household Size for Medicaid
- Young Adult Coverage
- Coordination between Medicaid and Premium Tax Credits
- Changes in Income
- Immigrant Eligibility for Premium Tax Credits and Medicaid
- Employer Coverage
- Coordination with International Coverage
- Special Enrollment Periods
- Exemptions from the Individual Responsibility Requirement
- Plan Design
What income counts when determining eligibility for premium tax credits and Medicaid?
Eligibility for premium tax credits [and for the Children’s Health Insurance Program (CHIP) and most people in Medicaid] is based on “Modified Adjusted Gross Income,” (MAGI). MAGI is Adjusted Gross Income (AGI), determined in the same way as for personal income taxes, plus three types of income that AGI omits: excluded foreign income, tax-exempt interest, and the non-taxable portion of Social Security benefits.
What types of income does Modified Adjusted Gross Income count?
The best place to start is “gross income.” Next, adjustments to gross income result in Adjusted Gross Income (AGI). Then, three modifications are made to AGI to get to Modified Adjusted Gross Income (MAGI). Under tax rules, gross income can be in the form of money, goods, property, and services, and includes any income that is not specifically exempted under tax rules. Common types of income that are counted are wages and tips, unemployment benefits, pensions and annuities, income from a business, alimony received, dividends and taxable interest, and rents and royalties received. And gross income may include a portion of Social Security benefits for people who have other income.
What types of income are not counted as part of gross income?
The most common types of income not counted as part of gross income include cash assistance benefits such as SSI (Supplemental Security Income) or TANF (Temporary Assistance for Needy Families), child support, gifts, inheritances, some scholarship income for tuition, most Social Security benefits, and salary deferrals (i.e., contributions to cafeteria/flexible spending plans and “401(k)” retirement plans).
How is gross income adjusted to result in Adjusted Gross Income (AGI)?
To get to Adjusted Gross Income (AGI), one would need to subtract the following from gross income: contributions to a health savings account, job-related moving expenses, student loan interest, Individual Retirement Account (IRA) contributions, alimony paid, and in some cases tuition and fees (although for many families the education tax credit is more valuable than the deduction for tuition and fees). (See lines 23 to 35 on the IRS-1040 form for the complete list of deductions.)
How are Social Security benefits counted in Modified Adjusted Gross Income (MAGI)?
Social Security benefits received by a tax filer and his or her spouse filing jointly are counted when determining a household’s MAGI. For people who have other income, a portion of their Social Security benefits may already be included in their Adjusted Gross Income (AGI). These people will need to add in any Social Security benefits that have not already been included in AGI to determine MAGI.
Do Social Security benefits received by a dependent child count as part of Modified Adjusted Gross Income (MAGI)?
Whether the Social Security benefits received by a dependent child counts towards MAGI depends on whether the child is required to file a tax return. A household’s MAGI is the sum of the MAGI of the taxpayer, the spouse filing jointly, and dependents who are required to file a return. Dependents who have income above a certain amount ($12,000 in earned income and $1,050 in unearned income for the 2018 tax year) must file their own tax return even though someone else claims them as a dependent. (Social Security benefits do not count toward these thresholds.) If the dependent with Social Security benefits is not required to file a return, any Social Security benefits he or she receives are not counted.
If a child claimed as a dependent receives Social Security survivor’s benefits and has earnings from a summer job, would the Social Security benefits be counted in the family’s income for premium tax credits?
Yes, if the child has enough earnings from the summer job to require him to file taxes. The household’s income is the Modified Adjusted Gross Income (MAGI) of the taxpayer (and joint filer) plus that of any dependents who are required to file a tax return. For the 2018 tax year, dependents with earned income is greater than $12,000 are required to file taxes. (Because Social Security is typically untaxed, it doesn’t count toward his filing requirement.) If, for example, the child earns $12,500 from a part-time job, he would have a tax filing requirement, and his MAGI would be $12,500 in earnings plus the amount of Social Security he receives. If he did not have a tax filing requirement (e.g., if his earned income was below $12,000 or if he had only Social Security benefits), none of his income – neither wages nor Social Security – would be counted.
Are Supplemental Security Income (SSI) benefits counted as part of Modified Adjusted Gross Income (MAGI)?
No. SSI benefits are received by seniors and people with disabilities (including children) who have little or no other income and limited assets. While they are administered by the Social Security Administration, they are not counted in determining a household’s MAGI.
Why is child support received not counted as income, whereas alimony received is counted?
Child support payments received by a household for the support of a child in the household are not counted in determining the family’s gross income for tax purposes. The parent paying the child support likely already paid taxes on the income being paid as child support. Therefore, it is not counted when computing Modified Adjusted Gross Income for Medicaid or premium tax credits. Alimony received is treated differently. The person paying the alimony is able to deduct it from his or her gross income to determine Adjusted Gross Income, and the person receiving the alimony payments will need to count it in his or her gross income for tax purposes.
Does the MAGI methodology apply in all state Medicaid programs, even those that did not expand Medicaid?
Yes, the MAGI methodology applies in all states. However, it is only used to determine income for certain groups: parents and caretaker relatives, children, pregnant women, and the adults who are newly eligible under the Medicaid expansion. It is not used in determining eligibility for seniors (people aged 65 and over) and people who are receiving Medicaid based on disability.
What poverty levels will be used to determine eligibility for premium tax credits and cost-sharing reductions?
The poverty guidelines, which are used to set income eligibility for premium tax credits and Medicaid, are revised and typically released in January each year. The federal poverty levels that will be used for marketplace coverage in a calendar year are those that were in effect on the first day of the open enrollment period for that calendar year. This means the marketplace uses the prior year poverty levels (which were the levels that were in effect on the first day of open enrollment) to determine eligibility for premium tax credits and cost-sharing reductions throughout the following coverage year. For example, the marketplace used the 2017 federal poverty levels to determine eligibility for all of the 2018 coverage year. It is important to note that Medicaid and CHIP are different. State Medicaid and CHIP programs may use the new poverty levels as soon as they are published – usually in late January – or can choose to make them effective at a later date.
When the most up-to-date poverty levels are used to determine eligibility for Medicaid and CHIP and the prior year poverty levels are used to determine eligibility for premium tax credits and cost-sharing reductions, will fewer people qualify for Medicaid?
No. In general, eligibility for Medicaid is determined before eligibility for marketplace subsidies. The marketplace will look at one set of poverty levels to determine eligibility for Medicaid and will use the other set of poverty levels to determine eligibility for PTC and CSR if the individual is ineligible for Medicaid.
However, the impact of which poverty levels are being used is different in states that have expanded Medicaid and states that have not. An adult in an expansion state will be eligible for Medicaid if their income is below 138 percent of the poverty level using the guidelines in place for Medicaid eligibility. That means that the eligibility level for Medicaid will go up slightly when the current year poverty levels are used to determine Medicaid eligibility. In a non-expansion state, adults with income above the poverty line using the prior year guidelines will still be eligible for premium tax credits, even though the state will be using current year poverty levels to determine eligibility for its Medicaid program.
What are the different ways people file their taxes and how does that affect a person’s eligibility for premium tax credits?
Every taxpayer chooses a “filing status” on his or her tax return.
- Single is someone who is not married or is legally separated from their spouse.
- Married filing jointly is a couple who are legally married and wish to file their taxes together.
- A qualifying widow/widower is a person with a dependent child whose spouse has died in the last two years.
- Head of household is someone who has a dependent child living with them, pays more than half the cost of keeping up the home, and is either not married or is married but lived apart from their spouse for the last 6 months of the tax year.
- Married filing separately is the tax status used for a legally married couple that chooses to file their taxes separately.
A person cannot claim a premium tax credit if he or she plans to use the filing status married filing separately in that year. This means that a married person will need to file jointly with his or her spouse or qualify as head of household in order to claim a premium tax credit.
Are people eligible for premium tax credits if they didn’t file a tax return in the previous year?
Yes. There is a requirement that a person who receives a premium tax credit file a tax return for the year in which he receives the credit, but there is no requirement to file a return in previous years. So anyone who receives a premium tax credit in 2018 must file a 2018 tax return in 2019. However, if a person receives a premium tax credit and does not file a tax return for that year and reconcile the credit, they will not eligible for premium tax credits in the following year.
Do people earning less than the threshold for filing taxes have to file taxes in order to receive premium tax credits?
Yes, anyone receiving an advance payment of premium tax credits and anyone who wants to claim a premium tax credit must file a tax return even if their income is below the filing threshold (which is $12,000 for a single individual and $24,000 for a married couple filing jointly in tax year 2018). This requirement applies in the “coverage” year. It does not matter if people have not filed taxes in previous years, but they must agree to file taxes in the coverage year that they apply for premium tax credits to help them pay for marketplace coverage.
Is the household used to determine eligibility for premium tax credits the same as the household size that buys coverage as a family?
The definition of household for purposes of eligibility for and the amount of premium credits is based on tax rules. It does not always match the composition of the family that can buy coverage together. For example, children may have coverage through the Children’s Health Insurance Program or the household may include an aunt or other dependent not usually treated as a family member for the purposes of family coverage.
How do you indicate a “Head of Household filing status on the marketplace application?
Since the marketplace application does not have a specific option for filing as “head of household” and those filing as “married filing separately” are ineligible for premium tax credits, individuals in this situation should apply as “unmarried.” Married filers who meet all of the head of household rules – living separate from their spouse for the last six months of the tax year and paying more than half the cost of keeping up a home for a qualifying person (often a dependent child) – are “considered unmarried” by the Internal Revenue Service (IRS).
Who can file as “Head of Household?
To file as Head of Household, a person must be unmarried or considered unmarried, meaning they have lived apart from their spouse for the last six months of the tax year, and they must pay more than half the cost of keeping up the home for a “qualifying person.” The definition of a qualifying person is different depending on whether the taxpayer is single or is considered unmarried. For a person who is married but considered unmarried, the “qualifying person” must be your child, stepchild, or foster child. For a person who is single, a “qualifying person” can be your qualifying child who is single and lived with you for more than half the year (whether or not you claim that person as a dependent); a parent who is a dependent; or a dependent who is a qualifying relative, is related to you (except as a cousin) and lived with you for more than six months. To review who can be a qualifying child or a qualifying relative, see the Health Care Assister’s Guide to Tax Rules.
Is there a way for people who are separated from their spouses, and who don’t file a joint return, to qualify for premium tax credits?
Yes. In general, someone who is married must file a joint tax return with her/his spouse to qualify for premium tax credits. However, there is another tax filing status called “head of household” that is available to individuals living separately from their spouses. People who meet the requirements to file as head of household are considered to be unmarried by the Internal Revenue Service (IRS). A person will be considered unmarried and able to file as head of household according to the IRS if: (1) she/he lives apart from her/his spouse for the last six months of the tax year; (2) she/he will file a separate return from her/his spouse; (3) she/he pays more than half the cost of keeping up her/his home; (4) her/his child, step-child or foster child (of any age) lives with her/him for more than half the year; and (5) she/he claims the dependency exemption for that child. [Note that for people who are single, a more expansive list of relatives will qualify them as head of household.] A person who meets these tests can file as head of household should indicate on the marketplace application that she/he is not married and can qualify for premium tax credits.
Can someone who is estranged from her spouse but not divorced, and who claims her granddaughter as a tax dependent qualify for premium tax credits?
No. The tax filing status of a person in this situation will be married filing separately. Although she is eligible to claim her granddaughter as a dependent on her tax return, her granddaughter is not a qualifying person, and therefore will not allow her to file as head of household. Only a child, step-child or foster child who lives with the taxpayer for more than half the year and will be claimed as a dependent can qualify the taxpayer as a head of household. Since she is married filing separately, she does not qualify for premium tax credits.
Under what circumstances can a married person decide not to file taxes with a spouse and still claim the premium tax credit?
A person who is married but does not wish to file or cannot file taxes with a spouse may be able to file under a different filing status, which would also allow them to claim premium tax credits. First, if a person has been granted formal legal separation through a court, he or she qualifies to file as a single individual. Second, a person may qualify to file as head of household if a qualifying person lives with them for more than half the year (usually a dependent child but some other dependents qualify as well), the taxpayer pays more than half the cost of keeping up the home, and if the spouses have been living apart for the last six months of the tax year. Since eligibility for premium tax credits is based on a projection of the income and household for the coming year, it can be difficult for someone to know in advance if they will be separated from a spouse in the final six months of the following year but if spouses have been consistently separated, yet have not divorced, the head of household filing status may help one or both spouses claim the premium tax credit. There are also exceptions to the joint filing requirement for a married person who is the survivor of domestic abuse or for a married person who has been abandoned by his or her spouse. A person can only claim each of these exceptions for a maximum of three consecutive years.
What happens when a married person receives premium tax credits, but then for personal reasons need to file as married filing separately? Do they need to return the full premium tax credit?
If a married person intends to file jointly and accepts advanced premium tax credits but instead files as married filing separately, a portion of the premium tax credit will need to be paid back. The repayment is subject to the same income-based limits that apply when a family receives excess advanced premium tax credit for other reasons. (See Reference Guide: Yearly Guidelines and Thresholds for repayment limits based on income as a percentage of the federal poverty line.)
Can someone file as head of household if they are divorced and do not have custody of his child, but pays child support that equals over half of the child’s expenses?
No, in order to qualify as head of household, the child must live with a person. There is no exception to the filing status rules for non-custodial parents.
Who can be claimed as a tax dependent (and be included in the premium tax credit household) on someone’s return?
Children, siblings, parents, grandchildren, other family members and even people who are unrelated to the taxpayer can be claimed as dependents if they meet the criteria to be either a qualifying child or a qualifying relative under IRS rules. All dependents on the tax return will be included as household members when premium tax credits are calculated.
What are the rules for claiming children on a tax return?
The child must be a citizen or resident of the U.S., Canada or Mexico. (Note that eligibility for premium tax credits is limited to U.S. citizens and lawful residents despite the broader tax dependency rule.) The child must also live with the taxpayer for at least half of the year and be under the age of 19 by the end of the tax year (or under age 24 if a full-time student, or any age if disabled). The child must have a relationship with the taxpayer; a “child” can be the taxpayer’s child, grandchild, younger sibling, or younger niece or nephew. Finally, the child must not be paying more than half of his or her own support. Some children who do not meet this test (e.g., an adult child) may qualify as another type of dependent.
Other than children, who else might qualify as a dependent on a tax return?
Other relatives – or even unrelated people – that the taxpayer supports may be claimed as dependents if they meet the Internal Revenue Service (IRS) test as a qualifying relative. To be a qualifying relative, the person must be a citizen or resident of the U.S., Canada or Mexico. (Note that eligibility for premium tax credits is limited to U.S. citizens and lawful residents despite the broader tax dependency rule.) In addition, the person must be financially dependent on the taxpayer; he can’t have income greater than $4,150 (2018 figure) and the taxpayer must pay more than half of his support. A person who is related generally is not required to live with the taxpayer to be his dependent, but an unrelated person must live with the taxpayer all year.
Can an adult child living with his parents be claimed as a dependent?
Yes, if the tests for dependency are met. If a child is too old to be considered a “qualifying child” under the Internal Revenue Service (IRS) rules, he or she may still be a dependent (whether or not he lives with his parents) if he earns less than $4,150 per year (2018 figure) and if his parents pay for more than half of his food, housing and other necessary support.
Can an adult child or relative who is a tax dependent apply for premium tax credits to be used for his own individual health plan?
No, premium tax credits are only available for the taxpayer who claims the personal exemption for the dependent. If a child or relative is eligible to be someone else’s dependent, they cannot claim their own personal exemption and therefore, they cannot receive premium tax credits on their own. Dependents can still qualify for premium tax credits, but the credits would be based on the income and household of the individual filing taxes and claiming the personal exemption for the dependent.
If a tax dependent does not provide more than half of his own support, but makes more than the tax filing threshold, would that income need to be included in the parent’s MAGI?
Yes. In tax year, 2018, a dependent has a tax filing requirement if his or her earned income is greater than $12,000, if unearned income is greater than $1,050, or if the combined earned and unearned income is greater than either $1,050 or earned income (up to $11,650) plus $350. If the dependent meets any of these conditions, then they must file a tax return and their income must be included in the calculation of his household’s MAGI.
If a child lives with one parent (custodial parent) but is claimed by the other (non-custodial parent), who may claim the premium tax credit for the child?
Typically, a child is required to live with the taxpayer for more than half the year in order to be that person’s qualifying child. However, there is an exception that allows the custodial parent to release their claim on the child’s exemption to the non-custodial parent. If the non-custodial parent gets that release and claims the child on his or her tax return, the child will be in that non-custodial parent’s household when calculating the premium tax credit, even though the child does not live there.
Can a person qualify for a premium tax credit on her own if she could be claimed as a dependent on another taxpayer’s return but is not claimed?
No. A person who qualifies as a taxpayer’s dependent cannot claim themselves and so cannot claim the premium tax credit independently. Even if a taxpayer decides or agrees not to claim a dependent, that doesn’t make the dependent eligible to claim herself.
For example, let’s look at Bob, who is caring for his uninsured mother, Marie. Bob provides more than half of Marie’s support and Marie has no income. Marie qualifies as Bob’s dependent. He wants to enroll Marie in a marketplace plan, but Bob’s income is too high to qualify for marketplace subsidies. Even if Bob chooses not to claim Marie as a dependent on his tax return, Marie is not eligible to claim herself on a separate tax return. Because Marie qualifies as Bob’s dependent—whether or not he claims her on his tax return—she cannot qualify for PTC on her own. If Bob claims Marie as a dependent at tax time, any APTC Marie received during the year will be reconciled on Bob’s tax return based on his income and may need to be repaid if his income exceeds 400 percent of poverty.
How do you determine the household of an adult child who is applying for Medicaid when he is claimed as a dependent by his parents on their tax return? Is he always in his parent’s household or is there an age limit when he would be considered as his own household?
For Medicaid, an adult child who is claimed as a tax dependent would be considered as part of his parent’s household regardless of the child’s age.
See Figure 4 in the Health Assister’s Guide to Tax Rules for a chart that explains the households rules that apply to Medicaid.
When someone applying for Medicaid is claimed as a tax dependent by her parents, is her age ever a factor in figuring out which rule to apply to determine who is in her household?
For individuals claimed as a tax dependent by their parents, age is not a factor if the parents file a joint return. Under this circumstance, the household rule for tax dependents always applies, which states that the household of a tax dependent is the household of the tax filer claiming the dependent.
For example, in the case of two married parents who file a joint return and claim their 9-year-old daughter as a dependent, the household of the daughter will include herself and both her parents. If the daughter was instead 30 years old (in which case she would be claimed as a qualifying relative instead of as a qualifying child) but everything else remained the same, her household would still include herself and her parents.
Age does affect which Medicaid household rule is applied to an individual claimed as a tax dependent by her parent if she lives with both parents but they do not file a joint tax return, or if she is a tax dependent claimed by a non-custodial parent. Under these circumstances, the tax dependent rules continue to apply if the individual is at least 19 years old (or at state option, a full-time student 21 years old). However, if the individual is under 19 years old, then the non-filer/non-dependent rules apply. (See Figure 4 in the Health Assister’s Guide to Tax Rules for a chart that explains the households rules that apply to Medicaid.
When is a child’s age a factor in figuring out which rule to apply to determine who is in a child’s household for Medicaid?
The age of the child affects which rule to apply in determining the child’s household if the parents live together but do not file a joint tax return, or if the child is a tax dependent being claimed by a non-custodial parent. To illustrate, let’s use an example of an unmarried couple, Dan and Jen, who live together with their son, Drew. Because they are not married, Dan and Jen file separate returns and Dan claims Drew as a dependent on his tax return. If Drew is 19 years or older (or a full-time student under 21 at state option), Medicaid would use the tax dependent rule to determine Drew’s household. Using that rule, Drew’s household would be the same as the household of Dan who is the tax filer claiming him. Therefore, Drew would have a household size of two, which includes himself and Dan. However, if Drew is under 19 years old (or a full-time student under 21 at state option), Medicaid would use the non-filer/non-dependent rule. Under that rule Drew’s household would include himself, his parents and any sibling under 19 years old who live with them. Thus, Drew would have a household of three that would include Dan, Jen, and Drew.
Can someone who is under 26 and can gain coverage under her parents’ health plan be eligible for premium tax credits?
Yes, she would be eligible to buy insurance for herself on the marketplace and could be eligible for premium tax credits, depending on her income. A provision [1-36B-2(c)(4)] of the IRS/Treasury regulations on eligibility for premium tax credits makes it clear that under 26-year-olds who could obtain coverage through a parent’s coverage but are not claimed as a dependent by their parents can qualify for premium tax credits.
Does a student who is enrolled in student health coverage need to wait until a marketplace open enrollment in order to enroll in a qualified health plan (QHP) and be eligible for premium tax credits? Alternatively, could she enroll in a QHP even if she is already enrolled in a student health plan?
Similar to COBRA, the option to enroll in a student health plan does not bar a person from being eligible for subsidies through the Marketplace. (Nor does the availability of a student health plan prevent someone from being eligible for Medicaid.)
Anyone who wants coverage through the marketplace needs to enroll during an open or special enrollment period. If it is open enrollment, a student could drop her student health plan and enroll in a marketplace plan and receive premium tax credits if she is eligible for them. Outside of open enrollment, if she decides to drop her student health plan, this action would not qualify her for a special enrollment period. She would have to experience some other triggering event that qualifies her for a special enrollment period (such as losing her student coverage, for example because she leaves school) or wait until the next marketplace open enrollment period to enroll in a marketplace plan.
The fact she has student health coverage does not prevent her from signing up for additional coverage through the Marketplace, but she would not be able to receive premium tax credits through the marketplace while also covered under the student plan. This is because the student coverage is considered “minimum essential coverage” once she has enrolled in it.
Can someone who is under 26 and currently covered under her parent’s employer plan stay on that plan even if she starts a job that offers health coverage?
Yes. If the parent’s plan offers dependent coverage for children, they must provide that coverage until the child turns 26. Age is the only factor that can affect the child’s eligibility to be covered as a dependent on a parent’s plan. Plans cannot place additional requirements – such as being a full-time student, being unmarried, having another offer of coverage, living with one’s parents, or being financially dependent on one’s parents – on when children can be eligible for coverage as a dependent on their parent’s plan.
When do adult children who live with their parents need to include their parents’ information on a Medicaid application?
Adult children who live with their parents only need to include their parents’ information on a Medicaid application if they are claimed as a dependent by their parents. If they are not claimed by their parents, they are considered as their own household for Medicaid and only their income (and their spouse’s income, if any) would count towards determining their Medicaid eligibility.
Do people whose income is between 100 and 138 percent of the poverty line have a choice of eligibility between Medicaid and premium tax credits?
No. People who are eligible for “minimum essential coverage,” which includes most categories of Medicaid, are not eligible for premium tax credits. People with incomes between 100 and 138 percent of the poverty line who are determined eligible for Medicaid would thus not be eligible for premium tax credits. However, if they are not eligible for Medicaid because their state has not expanded or they are not eligible for another reason, they could qualify for premium tax credits.
Are there types of Medicaid coverage that do not disqualify people from receiving premium tax credits?
Yes. There are certain limited types of Medicaid coverage that are not considered minimum essential coverage (MEC). Eligibility for limited Medicaid coverage would not disqualify people from receiving premium tax credits. (They would still have to meet the criteria for eligibility, including having income between 100 and 400 percent of the poverty line.) The types of limited Medicaid coverage that are not minimum essential coverage include coverage only for family planning services, tuberculosis-related services, and coverage for treatment of emergency medical conditions. Also, certain types of pregnancy-related Medicaid, coverage for medically needy, and coverage through 1115 demonstrations are not considered MEC. For more information on what types of Medicaid are not considered MEC, see our Minimum Essential Coverage Reference Chart.
Could someone who is eligible for Medicaid with a “spend down qualify for premium tax credits?
Many states provide Medicaid “medically needy” coverage to people with high medical expenses who have incomes above the level for Medicaid eligibility. In general, these individuals must “spend down” their income to the Medicaid income level by incurring medical expenses in the amount of the difference between their income and the income eligibility level, at which point Medicaid kicks in for a set period of time. Most people with this type of Medicaid move in and out of coverage over the course of the year. HHS clarified that all medically needy Medicaid coverage with a “spend down” is not considered minimum essential coverage (MEC), which means eligibility for this type of coverage would not bar someone from being eligible for premium tax credits. In addition, HHS determined that in five states—Florida, Iowa, Louisiana, New Jersey and Virginia—the medically needy coverage provided without spend down is also not recognized as MEC. If a person is enrolled in Medicaid coverage for the medically needy that is not considered MEC, she will be eligible for a hardship exemption from the penalty for failing to maintain MEC.
Is pregnancy-related Medicaid coverage considered minimum essential coverage?
Pregnancy-related Medicaid is considered minimum essential coverage (MEC) if it provides full Medicaid benefits or coverage that is equivalent to full Medicaid benefits. Coverage that does not provide full benefits and only covers pregnancy-related services is not MEC. HHS has reviewed pregnancy-related Medicaid benefits in each state and has determined that only three states – Arkansas, Idaho and South Dakota – provide pregnancy-related Medicaid coverage that is not recognized as MEC. In these states, women enrolled in pregnancy-related Medicaid will get a hardship exemption from the penalty for failing to maintain MEC. For more information, see the HHS guidance on when certain types of Medicaid coverage are recognized as MEC.
If a woman receiving advance premium tax credits becomes pregnant and eligible for Medicaid based on her pregnancy, does she have to change her coverage?
No. Most Medicaid coverage for pregnant women (sometimes referred to as pregnancy-related Medicaid) is considered minimum essential coverage. Having access to MEC would make an individual ineligible for APTC, but a special rule allows women who become pregnant while receiving APTC to choose either to stay in their QHP coverage with APTC or to enroll in pregnancy-related Medicaid coverage.
Could a pregnant woman enroll in Medicaid coverage for pregnant women and receive advance premium tax credits?
In general, no. Most pregnancy-related Medicaid is considered minimum essential coverage (MEC). Therefore, if a woman enrolls in pregnancy-related Medicaid, she will be ineligible for APTC. However, women enrolled in pregnancy-related Medicaid in Arkansas, Idaho and South Dakota, which are not considered MEC, could also be eligible for APTC.
What happens when someone living in a state that has not expanded Medicaid receives advance payments of premium tax credits based on an estimate that income would be over the poverty line, but ends up with income below the poverty line? Does he have to pay back all the advance payments he received when he files his taxes?
No. There is a special rule (found at 26 CFR 1.36B-2(6) and (7)) that applies in this situation. As long as the marketplace estimated at the time of enrollment that his income would be between 100 and 400 percent of the poverty line and he was otherwise eligible for premium tax credits, he won’t have to pay back the advance payments he received during the year.
What happens when someone living in a state that expanded Medicaid receives advance payments of premium tax credits, but whose actual income for the year ends up being 125 percent of the poverty line (which would have made her eligible for Medicaid)? Does she have to pay back the advance payments when she files her taxes?
No. She would still be considered eligible for premium tax credits because the marketplace found she was not eligible for Medicaid based on her estimated income, and her final income is between 100 and 400 percent of the poverty line, which is within the eligibility range for premium tax credits.
If someone who is receiving advance payments of premium tax credits is found retroactively eligible for Medicaid after reporting a drop in income, does she have to pay back advance payments of premium tax credits received during the retroactive period because she was eligible for Medicaid during those months?
No. The Internal Revenue Service (IRS) rules for premium tax credits say that people receiving advance payments who are determined to be eligible for Medicaid on a retroactive basis are treated as being eligible for minimum essential coverage no earlier than the first day of the first calendar month after approval of the Medicaid application. The IRS rules have a helpful example to illustrate this. In the example, “F” is receiving advance payments when she loses her part-time job. She applies for Medicaid on April 10, 2015. Her application is approved on May 15, 2015, retroactive to April 1. Based on this, F is not considered to have minimum essential coverage until June 1, 2015, the first day of the calendar month after approval of her Medicaid application.
When the income of someone who is receiving premium tax credits falls below the poverty line for the year, would they have to pay back the credits they received? How does reconciliation work in this case?
No. The IRS has a special rule that applies in this situation. As long as the Marketplace estimated at the time of enrollment that the household’s income would be between 100 and 400 percent of the poverty line and the household was otherwise eligible for premium tax credits, the fact that the household’s income fell below the poverty line does not mean the household will have to pay back all the premium tax credits it received. In determining the final credit amount, the IRS will use the household’s MAGI-based income as reported on its tax return.
To illustrate this, assume John is a student in a state that had not expanded Medicaid in November 2017. When he applied for premium tax credits for 2018 coverage during open enrollment in November, his projected income from his part-time job was $13,000 for the year, which was over the $12,060 poverty line for a single individual in 2017. John does not work as many hours as he thought he would and his actual income ends being about $11,000. When the IRS reconciles his premium tax credits, it will use his actual income even though it is slightly below the poverty line.
What happens when someone reports a change in income that changes the cost-sharing reduction they are supposed to receive?
When a person reports a change in income, federal rules require the marketplace to determine the person eligible for the level of cost-sharing reductions that corresponds to the person’s expected annual household income for that year. Based on the newly calculated income, the person could become eligible for cost-sharing reductions for the first time, lose cost-sharing reductions they already have, or be determined eligible for a different level of cost-sharing reductions.
If a change in cost-sharing reductions occurs, federal rules also provide enrollees in a marketplace plan the option to change plans using a special enrollment period (for example, to get into a plan in the silver level, which is required to receive cost-sharing reductions). If a person with a change in eligibility for cost-sharing reductions already has a silver plan and does not change plans during the special enrollment period, then the insurer providing the person’s plan is required to move him to the appropriate version of the silver plan, which is either a new cost-sharing reduction variation of the plan or to a silver plan without any cost-sharing reductions.
How are cost-sharing reductions affected if income at the end of the year ends up being higher or lower than estimated?
Unlike advance payments of premium tax credits, there is no “reconciliation” of cost-sharing reductions based on actual income for the year. This means there is no obligation to repay any cost-sharing reductions received if income is above the amount that was estimated. Similarly, there will be no refund of cost-sharing paid if income ends up below the estimate.
If someone ends up changing from a marketplace plan to Medicaid and back to a marketplace plan because their income fluctuates during the year, does she get credit for cost-sharing charges she already paid while she was in the marketplace plan when she returns to it from Medicaid?
Yes, federal rules ensure she would get credit for any cost-sharing charges that she paid before moving to Medicaid – but only if she re-enrolls in the same marketplace plan from the same insurer when she returns to the marketplace. The rule on this is at 45 CFR 156.425(b), and the preamble to the final rule provides examples showing how insurers will account for past cost-sharing.
The requirement for continuity of cost-sharing charges is not just limited to movement between the marketplace and Medicaid. It applies any time someone re-enrolls in the same marketplace plan they had during the same year.
Many people who move between the marketplace and Medicaid are likely to be eligible, while in the marketplace plan, for a federal subsidy called a cost-sharing reduction that lowers their out-of-pocket costs in the plan. To receive the cost-sharing reduction, an eligible person must enroll in a plan at the silver level. If she is eligible for a larger or smaller cost-sharing reduction when she returns to the marketplace from Medicaid in the same year, she gets credit for past cost-sharing charges under the plan as long as she enrolls in the same silver plan she had before.
What happens to cost-sharing charges people have already paid if their income drops and they become eligible for a different level of cost-sharing reductions?
Qualified health plan enrollees who are eligible for a cost-sharing reduction qualify for a special enrollment period if their income changes and as a result, they become eligible for a different level of cost-sharing reduction. In such cases, if the enrollee stays in the same silver plan offered by the same health insurer, any cost-sharing charges already paid will carry over into the new variation of the silver plan and will count towards the new deductible and out-of-pocket maximum. However, if the enrollee chooses to enroll in a different QHP, any out-of-pocket spending during the year would not be counted towards the new deductible and out-of-pocket maximum.
Are individuals who are lawfully present in the United States and have incomes below the federal poverty line eligible for premium tax credits?
Yes. The general rule is that people with incomes below the poverty line are not eligible for premium tax credits. However, an exception to the rule applies to individuals who are lawfully present in the U.S. who are not eligible for Medicaid because of immigration status. A person in this situation can qualify for premium tax credits even if her income is below the poverty line. For general rules on immigrant eligibility for Medicaid and CHIP, see our Key Facts: Immigrant Eligibility for Health Insurance Affordability Programs.
If a husband, who became a Lawful Permanent Resident (LPR) last year, is applying for coverage in a Medicaid expansion state with his wife, who is a citizen, and their income is below 100% of the poverty line, are they eligible for Medicaid or premium tax credits?
The wife will be eligible for Medicaid coverage because she is a citizen and her income is below 138 percent of the poverty line. Although the husband’s income is also below 138 percent of the poverty line, he is not eligible for Medicaid because he does not meet Medicaid’s eligibility rules related to immigration status– he is a “qualified immigrant” but he must have his lawful permanent resident status for five-years before being eligible for Medicaid. The husband is eligible to purchase a qualified health plan in the marketplace with a premium tax credit even though his income is below the poverty line because he is lawfully present but not eligible for Medicaid based on his immigration status.
How is the size of the premium tax credit calculated for a lawfully present individual who is eligible for it, even though his income is below the federal poverty line?
For the purposes of determining his expected contribution to the cost of coverage, he will be treated as if his income were at 100 percent of the poverty line. The expected premium contribution for people with income at the poverty line is 2.08 percent of income in 2019. For example, if his income is $10,000, then his expected premium contribution is $208 per year (2.08% of $10,000). His premium credit will be the cost of the second lowest silver plan available to him minus his expected contribution. It is important to note that the expected premium contribution is not necessarily what he will pay for coverage – that will be affected by the plan he ultimately selects.
Because he is treated as if his income is at the federal poverty level, he would qualify for a cost-sharing reduction which would raise the actuarial value of his plan to 94 percent. This means he would be able to lower his deductibles, copayments and other out-of-pocket charges. He would need to purchase a silver plan in order to receive the cost-sharing reduction.
If an adult living in a Medicaid expansion state arrived in the United States as a refugee four years ago and became a Lawful Permanent Resident (LPR) two years ago, is he ineligible for Medicaid based on his immigration status because he became an LPR less than five years ago?
No. Based on this information, the person is considered a “qualified” immigrant for Medicaid, and as a refugee, he is not subject to a five-year wait to qualify for Medicaid. Even though he also became a Lawful Permanent Resident, the fact that he is a refugee does not change and therefore the five-year bar does not apply to him. For more information on who is exempt from the five-year bar, see this resource from the National Immigration Law Center (see eligibility for Medicaid and CHIP).
Is someone who is offered affordable employer-based health coverage, but misses the open enrollment period, eligible for premium tax credits on the marketplace?
No. The Treasury rule on eligibility for premium tax credits says that an employee is considered eligible for minimum essential coverage for a month (and therefore ineligible for premium tax credits) if they could have enrolled in the plan for that month during an open or special enrollment period.
Is there an exemption from the penalty for not having health coverage for someone who is offered affordable health coverage from their employer but misses the open enrollment period?
People who have an offer of affordable employer coverage but do not sign up for it during the employer open enrollment period are subject to the penalty for not having health coverage.
Can someone who is eligible to enroll in COBRA or other continuation coverage be eligible for premium tax credits?
The general rule is that eligibility for COBRA is not a bar to eligibility for premium tax credits. During the marketplace open enrollment period, an individual enrolled in COBRA could drop COBRA coverage and enroll in a marketplace plan with premium tax credits if he is otherwise eligible. However, if someone dropped COBRA coverage outside of open enrollment, the loss of COBRA coverage would not trigger a special enrollment period. Unless the individual qualifies for a special enrollment period for some reason other than loss of COBRA, he would not be able to enroll in a qualified health plan (or receive premium tax credits) until the next marketplace open enrollment period. See questions 160 and 161 in this FAQ from the Center on Health Insurance Reforms for more information.
Can a person who loses their job outside of the marketplace open enrollment period and becomes eligible for COBRA qualify for premium tax credits and enroll in a marketplace plan instead of enrolling in COBRA coverage?
Yes, this is a choice an individual would have in this situation. Loss of employer-sponsored coverage triggers a special enrollment period for the marketplace during which individuals could enroll in a marketplace plan with premium tax credits, assuming they meets the eligibility requirements for the credits. Even though someone is eligible for COBRA he can still enroll in a marketplace plan during the special enrollment period.
When can someone who is enrolled in COBRA drop that coverage and enroll in a marketplace plan?
A person who is enrolled in COBRA can drop COBRA coverage and enroll in a marketplace plan during open enrollment. Outside of open enrollment, people enrolled in COBRA can only enroll in a marketplace plan: (1) when they exhaust their COBRA coverage; or (2) if they qualify for any other special enrollment periods (such as marriage or birth of a child.)
If an employer-sponsored health plan does not provide inpatient hospital benefits, is the employee eligible for premium tax credits?
Yes. An employer offer of health coverage only bars someone otherwise eligible from receiving premium tax credits and cost-sharing reductions if the employer offers a plan that meets minimum value and is considered affordable. Federal guidance and regulations make clear that an employer plan cannot meet minimum value if it does not include “substantial coverage of inpatient hospital benefits and physician services.” If an employer does not offer a minimum value plan—for example because the employer’s plan covers preventive services but provides few or no other benefits—the employee can still receive Marketplace subsidies if otherwise eligible. Large employers offering plans that are missing these benefits have some additional time to adjust their coverage offers to avoid paying any shared responsibility penalties.
Would a U.S. citizen living outside the U.S. need to pay the penalty if they do not have health insurance coverage?
U.S citizens who live abroad for at least 330 days within a 12-month period are not required to pay a penalty if they do not have health insurance. Instead, they are treated as having minimum essential coverage for the whole year, as explained in this FAQ from the Internal Revenue Service.
How do I enter the address of someone who does not live in the U.S. into Healthcare.gov?
Only people living in the U.S. can qualify for premium tax credits. However, in certain cases, a person’s application will need to include information on members of her tax filing unit who may not live in the U.S. For example, a woman who claims her daughter who lives in Mexico as a tax dependent will need to include information about her daughter in the application. Healthcare.gov currently does not allow people to enter non-U.S. addresses for anyone whose information is needed for the application. However, according to a CMS assister newsletter dated February 25, 2014, people applying for coverage for themselves should enter their own U.S. address when asked to provide an address for their tax dependents living outside of the U.S.
Do parents who claim their children living outside the U.S. as a tax dependent have to show that their children have access to minimum essential coverage before they can be found eligible for Medicaid?
No. In general, parents who have dependent children living with them must ensure that their children have access to minimum essential coverage before they can enroll in Medicaid. However, parents will not have to show that their child has coverage if their child is not living in the U.S.
Does being released from prison trigger a special enrollment period?
People released from prison are eligible for a special enrollment period based on being newly eligible for enrollment in the Marketplace because they are no longer incarcerated. For more information on the definition of incarceration for the purposes of eligibility for Marketplace coverage, see this FAQ on incarceration and Marketplace eligibility.
Does marriage trigger a special enrollment period for someone who is not already enrolled in a qualified health plan in the marketplace?
Yes. However, in order for the special enrollment period to be triggered, at least one spouse needs to have had minimum essential coverage at least one day in the 60 days prior to the marriage (unless at least one spouse either lived abroad for at least one day in the 60 days prior to the marriage or is a member of a federally-recognized tribe or is an Alaska Native). To trigger this SEP, neither spouse has to be currently enrolled in coverage, and the prior coverage—at least one day in the last 60 days–does not need to be from a plan in the Marketplace.
Does divorce trigger a special enrollment period in the marketplace?
No, divorce or legal separation by itself does not trigger a special enrollment period in Healthcare.gov. State-Based Marketplaces have the option to implement this SEP, but it is an option that is not being implemented by Healthcare.gov. However, people who lose other minimum essential coverage because of a divorce (for example, because a divorce causes them to lose employer-sponsored coverage they had through the former spouse) an get an SEP based on this loss of other coverage.
Does job loss alone allow someone to access a special enrollment period in the marketplace?
Job loss alone is not enough to trigger a special enrollment period, but if a job loss causes a person to lose other health insurance, then a special enrollment period will be triggered based on the loss of the other coverage.
When a person voluntarily leaves his job and loses employer-based coverage, does that trigger a special enrollment period?
Yes. The loss of minimal essential coverage triggers a special enrollment period. In this situation, the person doesn’t have a choice of keeping his employer-based coverage when he leaves his job, therefore he would qualify for a special enrollment period in the marketplace. However, if he stays in his job and voluntarily drops the coverage (as opposed to quitting his job) it would not trigger a special enrollment period.
When one member of a family loses minimum essential coverage (MEC), does that trigger a special enrollment period for the entire family?
Yes. The special enrollment period would apply to the family as well, even if the family is not losing coverage or previously enrolled in coverage.
How can a person who is losing minimum essential coverage (MEC) enroll in a marketplace plan in a way that avoids or minimizes a gap in coverage?
Individuals who are losing MEC qualify for a special enrollment period that can be used either 60 days before or 60 days after the date that they lose coverage. Depending on when the person selects a plan, it is possible to avoid a gap in coverage.
If the person selects a plan on or before the date that he loses MEC, the effective date of coverage for the newly selected plan would be the first day of the month following the loss of coverage. For example, someone who reports he is losing coverage on June 30 and selects a marketplace plan on or before June 30 will be able to start his new coverage on July 1, thereby avoiding a gap in coverage.
If the plan selection is made after the date that MEC is lost, the coverage effective date would be the first day of the month following plan selection. Thus, someone who loses coverage on June 30 and selects a Marketplace plan anytime in July will have a coverage effective date of August 1 for the new plan.
In states that run their own marketplace, there is the option to apply the regular rules for coverage effective dates if plan selection is made after the date that an individual loses MEC. (This means that if plan selection occurs between the first and the fifteenth day of any month, the coverage effective date would be the first day of the month following plan selection. If plan selection occurs between the sixteenth and the last day of the month, the coverage effective date is the first day of the second following month.) Individuals living in states with SBMs should check to determine which rules are in effect in their state.
Does the birth of a baby trigger a special enrollment period for just the baby or for the entire family?
The birth of a baby triggers a special enrollment period (SEP) for the entire family. The entire family would be entitled to this SEP even if they are not already enrolled in a marketplace plan or other coverage. The family would have 60 days from the birth of the baby to select a plan in the marketplace.
When the birth of a baby triggers a special enrollment period, what is the effective date of coverage for the baby and the family?
According to 45 CFR 155.420(b)(2)(i), families that qualify for a special enrollment period based on the birth of a baby are guaranteed to have their coverage be effective as of the date of the baby’s birth, or the family can choose to have coverage begin the first day of the month following plan selection.
How far must a person move to trigger a special enrollment period?
Access to new qualified health plans (QHPs), not distance, is what determines whether an individual who is making a permanent move can qualify for a special enrollment period. An individual who moves to a neighboring county just a few miles away may qualify for a special enrollment period if he gains access to new QHPs that he did not have access to where he previously lived. Conversely, the same individual can move to another part of the state that is a hundred miles away and not qualify for a special enrollment period if the QHPs that are available in the new area where he moved to are the same as the QHPs that were available where he previously lived.
In addition, to trigger a SEP based on a permanent move, a person needs to have had at least one day of minimum essential coverage in the 60 days before the move, or be moving from another country or a U.S. territory.
If a person is making a permanent move that will trigger a special enrollment period, can she start the process of selecting a plan before the move occurs?
In general, no. Each marketplace has the option to allow people planning to make a permanent move to access a 60-day special enrollment period prior to the move, to help people avoid gaps in coverage, but Healthcare.gov is not implementing that option.
Does a rise in income above the poverty line trigger a special enrollment period for a consumer who did not qualify for Medicaid due to her state’s decision not to expand Medicaid?
Yes. If the consumer was previously in the “Medicaid coverage gap,” meaning she was ineligible for premium tax credits because her income was below 100% of the poverty line and was ineligible for Medicaid because her state’s decision not to expand eligibility for adults, then a rise in income above 100% of the poverty line will trigger a SEP. To access this SEP, an eligible person needs to attest to that he or she was previously ineligible for Medicaid.
Does losing Medicaid coverage for pregnant women trigger a special enrollment period?
Yes. Even though some Medicaid coverage for pregnant women is not considered minimum essential coverage, 45 CFR 155.420(d)(1)(iii) clarifies that a woman who loses pregnancy-related Medicaid coverage qualifies for a special enrollment period.
The effective date of coverage for newly selected plans is either the first day of the month following the loss of coverage if the plan selection is made before or on the day of the loss of coverage, or the first day of the month following plan selection.
Do people need a special enrollment period if they just want to change plans?
Yes. People who want to add coverage or change their type of coverage need a special enrollment period to do so. However, people can drop their plan at any time.
If employer-sponsored insurance is considered affordable for the employee, but the cost of covering the family is unaffordable, does the entire family qualify for an exemption from the penalty?
If the cheapest family plan costs more than a certain percentage of household income (8.05% in 2018), then members of the employee’s family can qualify for an exemption. However, the employee, can only qualify for an exemption if the cheapest employee-only plan costs more than 8.05% of household income.
How and when can someone apply for an exemption based on a lack of affordable coverage?
An individual can obtain a hardship exemption based on affordability through the marketplace or can claim an exemption from the penalty when she files taxes. If she chooses to apply through the marketplace, she would have to do so during open enrollment or a special enrollment period, and affordability will be based on the cost of coverage relative to her projected household income. Once the exemption is granted, it will be valid for the calendar year regardless of changes in circumstances. To get an exemption for the entire calendar year, the individual must apply before the year starts.
Alternatively, a person can wait until tax filing and claim an exemption based on the cost of coverage relative to her actual income for the year. The exemption largely mirrors the affordability exemption the marketplace can grant during open enrollment, but the IRS exemption granted at tax filing is based on actual income whereas the marketplace exemption is based on projected income.
For an example, let’s say a person with an offer of employer-sponsored coverage has projected income of $36,000 in 2018 and the premium for her coverage at work is $3,000. The insurance costs more than 8.05% of her income (8.3%), which qualifies her for an exemption. Instead of applying in advance, she decides to wait until tax filing to claim the exemption. In December, she gets a $2,000 bonus. Her insurance now costs slightly less than 8.05% of income (7.9%), and she no longer qualifies for the exemption. She discovers this after the tax year is closed, so unless she qualifies for a different exemption, she will owe a penalty for being uninsured for the entire year. In this case, applying for an exemption early based on projected income would have saved her from paying the penalty.
Will someone who would have qualified for Medicaid but lives in a state that has not expanded Medicaid automatically qualify for a hardship exemption from the penalty for not having insurance coverage?
There are two ways for a person who falls into the Medicaid coverage gap to qualify for an exemption from the penalty for failing to maintain minimum essential coverage. If a person applies for coverage through the Marketplace and is in the coverage gap, she will receive an exemption certificate number on her eligibility determination notice that she can use at tax time to claim an exemption for the entire year, regardless of future changes income insurance coverage status. If she applies for Medicaid directly from a state Medicaid agency, she can use the denial letter from the Medicaid agency to apply at the marketplace for an exemption, which will exempt her from the penalty for the entire year.
People who, at tax time, have annual household income that is under 138% of the poverty line, resided at any time during the tax year in a state that did not expand Medicaid and would have been eligible for Medicaid had the state expanded will be eligible for a Code G exemption that can be claimed directly on the tax return.
During an open enrollment period, do enrollees have to return to the marketplace to get their premium tax credit eligibility re-determined for the next coverage year even if their income hasn’t changed?
It is strongly encouraged for people to return to the marketplace to update their eligibility information and actively shop for plans, because plans and pricing change each year. In states using Healthcare.gov, enrollees generally don’t have to return to Healthcare.gov to renew their premium tax credit eligibility.
People who don’t provide Healthcare.gov with updated information will have their APTC and CSR eligibility re-determined based on the most recent income information available to the marketplace, as well as updated benchmark plan premiums and poverty level thresholds. However, not everyone currently enrolled in coverage will be able to have their eligibility re-determined automatically. Those individuals must return to the marketplace to update their information, or else they will be renewed without ATPC or CSR. For more information, see Key Facts: Auto-Renewal of APTC for 2018 in Healthcare.gov.
The renewal process may be different in states that established their own marketplaces. People enrolled in coverage through State-Based Marketplaces should check with their state about the process for renewing coverage and re-determining premium tax credit eligibility.
During open enrollment, what will happen to enrollees’ coverage if they don’t select a new plan for the following coverage year?
People enrolled in coverage through Healthcare.gov will be automatically re-enrolled into their current plan if they don’t select a new plan for the following coverage year during open enrollment. If the enrollee’s current plan is no longer being offered in the marketplace, the FFM will enroll them in a new plan with the same insurer that is as similar as possible to their current plan. If a person’s current insurer is on longer offering plans in the marketplace, then the person will be enrolled in a similar plan with another insurer, but enrollment will not be effective until the person pays the first month’s premium.
Can a person who is auto-enrolled in a plan switch plans after January 1?
In general, people must make all plan selections by December 15. However, if a person’s current plan is discontinued for the following year resulting in the person being auto-enrolled in a new plan with the same or different issuer, then they are eligible for a special enrollment period due to the discontinuation of that plan. Individuals whose plans are discontinued have 60 days before or after the last day of the plan year (December 31) to enroll in a different plan.
Do copayments count towards the deductible?
In most cases, no. Copayments usually apply only after someone has incurred health costs that meet the amount of a plan’s annual deductible. In some plans, some services (such as prescription drugs or physician visits) are not subject to the deductible, which means the health plan will pay its share of costs before the patient meets the deductible for the year and the patient may have a copayment. Either way, copayments typically do not count toward the deductible. To know for sure how a specific plan’s cost-sharing charges apply, people should contact the insurer offering the plan. For Marketplace plans, all in-network cost-sharing charges (including copayments) count toward a person’s annual out-of-pocket maximum, which is the maximum amount of out-of-pocket charges patients can be required to pay. That’s a requirement of the federal health care law.
Does the premium cost of a health plan count towards the out-of-pocket maximum?
No. Monthly premiums—which are the cost of purchasing the health plan—do not count towards the out-of-pocket limit. Only the out-of-pocket costs a plan enrollee pays when receiving medical items, such as deductibles, copayments, and coinsurance, count toward the out-of-pocket maximum.
Are out-of-network expenses counted towards the deductible?
In general, no. The main deductible of the plan usually applies only to items and services that are within a plan’s network. However, some plans that cover out-of-network services may have a separate deductible and higher cost-sharing for services received out-of-network.
Are out-of-network expenses counted towards the out-of-pocket maximum?
Expenses incurred outside of a health plan’s provider network generally are not counted towards the out-of-pocket maximum. One important exception is when a person receives out-of-network emergency services; most plans must treat these services as in network as a result of the federal health care law.
Are qualified health plans required to cover the ten essential health benefits at no cost to a consumer, or are essential health benefits subject to cost-sharing?
All qualified health plans must include coverage of the ten essential health benefits, but insurers generally can require payment of cost-sharing charges (such as deductibles, copayments, and coinsurance) that apply to most of these benefits. The only services that must be covered 100% by a health plan, at no cost to the patient, are certain preventive care services, such as routine checkups. This is a requirement of the federal health care law. For more details about which services must be available without cost-sharing, see the three sets of preventative services that must be covered at no cost for all adults, for women and for children. For more general information, see Healthcare.gov’s Coverage to Care roadmap.
If a consumer enrolls in a Marketplace health plan after January 1st, does the plan continue for the subsequent 12 months or will it end at the end of the calendar year?
All health plans are valid through the calendar year, meaning they will run through December 31st of that year regardless of when a consumer enrolled in the plan. This also means that annual cost-sharing charges (deductibles and out-of-pocket maximums) apply for the calendar year. They reset each January and are not pro-rated for people whose coverage is effective later than January 1.