Where Do Individuals and Families Pay Monthly Premiums & How is the Tax Credit Applied?
Lots of questions are being asked around how the new plans being sold through Covered California will be administered, from paying the monthly premiums and how the tax credit is applied in the payment process as well. First, let's take a look at where individuals and families pay their monthly premiums.
Currently, Covered California is processing online and paper applications for coverage to start January 1st, 2014. In order for the coverage to take effect January 1st, the application needs to be submitted by December 15th, and payment needs to be processed by December 26th.
Some have been confused thinking that payment is made to Covered California. This is not the case. The monthly premium payment is made to the private health insurance carrier issuing the policy.
Others have asked if the tax credit is a monthly or annual reimbursement or paid in advance lowering the total monthly cost. Technically, you can pay the full premium and receive the tax credit as a refund when filing taxes, but for the majority of people it will be applied in advance to keep monthly cost down for households. This means a portion of the total premium would be paid monthly by the government direct to the insurance company, and the remainder of the premium (if any) would be paid by the applicant to the insurance company. In some cases, the tax credit offered on the Silver plan is large enough to fully cover the monthly premium to purchase the less expensive Bronze 5000 deductible plan.
Garrett Viggers is a Northstate employee benefits specialist (Viggers Benefits) and Affordable Care Act (ACA) & Health Insurance Marketplace consultant. He has spent 11 years in the industry as a broker for large and small employers. He helped launch pioneer CDH company Veritas Health Systems (HRAs / HSAs) in 2002 and the spin-off technology company, Inovius, in 2006.
Most recently, in July 2013, Garrett founded Windfall App Technologies with the launch of the first-to-market, Health Insurance Marketplace cross-platform Affordable Health App to find affordable coverage with a health premium tax credit in the Marketplace (Covered California). Windfall App Technologies is a team of ACA insurance experts and technology (App & Web) experts committed to providing relevant solutions in the new world of ACA and Health Insurance Marketplace Exchanges.