Why This Blog

I’m self-employed and I’ve always had health insurance.  I’m one of the lucky ones — I never get sick.  I haven’t been to the hospital in 25 years, back in the days when the hospitals were keeping costs low by whisking newly delivered mothers out the door, baby in hand, within 36 hours of their arrival.  A second night in the hospital? Nope, it wasn’t covered back then.

In any case, buying insurance on the individual market is easy enough if you never actually ask the insurance company to spend any money on you.  I had a policy,  I was happy.  Just to make sure, I gave them a call in July to verify that my policy was ‘grandfathered’ and would would be there for me after the implementation of the Affordable Care Act  (Obamacare) in January.  No problem – I was assured that I would be able to keep my policy.

Not so.  Contrary to the confident but deeply mistaken assertion of the insurance company’s telephone support agent, my policy expires as of December 31, 2013.  Come January, my insurance company will either automatically roll me into a new policy of its choosing, or else I will buy my own.   The insurance company sent me a letter explaining all this on September 30.   Fortunately, the exchanges were set to open the following day.

Well, of course it hasn’t been all that easy. I live in California so my state’s exchange – CoveredCa.com was up and running.  Except the part where you actually sign up for insurance was, er, having a little bit of difficulty when it came to actually functioning.

In the past week I’ve steeped myself in learning just about everything I can about the actual process of signing up for insurance, figuring out eligibility for subsidies, and making sense of various options in my state. And the first thing I’ve learned is this:

Nobody knows very much about anything. 

and

A good deal of the information out there is wrong.  (“Out there” means what is on other web sites and blogs, what my friends say, what my enemies say, what the common man on the street things — and most important, what the agents who work for the insurance companies say.)

So I decided to set up this blog to help guide others through this maze.

Please don’t take anything you find on this blog as gospel.  I’m pretty good at figuring things out and explaining them to others, but I can make mistakes just as others can. The reason that there is so much misinformation out there is the details are still very fuzzy and much of the information is late developing.  Many of the details will be ironed out in the weeks and months to come, but in the meantime you and I are likely to get contradictory information and advice.   I just help that this guide helps some people make sense of their options.

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6 thoughts on “Why This Blog

  1. Hi Freelancer,

    Read your comment on another site about getting the subsidy at the end of the year. Very detailed and helpful. Unfortunately as you said above “Nobody knows enough about anything”.

    Since I am consultant I have encountered the following issues:
    -COVERED operators will push you into Medical if the 2014 future reader (as in Nostradamus sw system) guess you do not make enough money in 2014.

    -Tried to buy UNSUBSIDIZED insurance through Covered operator but he said I could not do it, and I should pick Medical. This is not correct in my opinion.
    -After long struggle convinced the operator that is hard to guess future income as contracator and get an approval but need to submit more docs along the way like almost monthly!

    – Now I am scared that if my income is not exactly above the threshold they may cancel the insurance rather then giving me the option to pay the full premium and reconcile later when filling the taxes.

    For people with variable income they should keep the option open for the end of the year subsidy, inform clearly about this and definetely avoid pushing them outside of exchange or into Medical. Once you are pushed outside you do not have the chance to reconcile your income at the end of 2014 when we know the facts not now when we guess.

    Freelancer, any advice?

    • The easiest thing is simply to be familiar with the numbers before you apply, and fill out the the financial form with numbers that don’t fall outside either the upper or lower limits for subsidy eligibility. Obviously this has to be based on honest and realistic expectations for future earnings — but if your income from consulting is variable, then there is probably a fairly wide range of numbers that would be reasonable for you to estimate.

      • I am familiar with the numbers but for example if as a consultant I got a one time payment in 2013 from a company the system will remove it from your future income. Chances are that in 2014 I will have multiple one time payments ranging from 5k to 15k. So it is not what you estimate but what you prove …to be. I am in for now with a Blue Shield PPO and waiting to pay.
        The CC operator was a smart guy but he didn’t know everything , keep consulting with colleges, managers. And he also tried to convince me to take the Medical. I could not convince him that I can pay the full premium now and get the rebate later in 2015.
        I half convinced him that if I do not have enough money to live I can pay from IRA/401k widthdrawals which is taxable income and included in AGI. Of course nowhere this is clearly stated but it should be in MAGI too. In the end ACA subsidy is based on tax rebate
        so as long as you have a tax liability in 2014 and fill 1040 you have a chance to get subsidy provided other conditions are met.

  2. Dan, I don’t know what you mean by “the system”. The Covered Cal web site had a form that asked me to list my income for the “last month”. Since I am self-employed with an irregular income, I disregarded that instruction and simply entered the amount that I thought was a monthly average. I was working from my 2012 tax return, so I just took the total income, divided by 12, and entered that for “last month.”

    I don’t even know where you would even enter information such as a one-time consulting fee. That is not information I share with the IRS or with Covered Cal — those numbers are all just added together for my total gross receipts on my schedule C. IRS sees 1099’s from my clients who recognize their obligation to submit them, but nothing on a 1099 indicates when or how the money was paid – it’s just a number. And Covered Cal does not even have access to that — all they have is the totals you chose to give them.

    I understand that you could face a problem if your 2012 AGI numbers are too low — but I have a lawyer friend who took a loss last year (so negative income). I suggested that he tell Covered Cal. that his yearly income was $18,000. He opted to enter a number slightly higher than that, and the application sailed right through. Now it is possible that Covered Cal will come back to him to ask for verification of that number — but at that point I think he could simply write an affidavit saying that his income is variable but that he anticipates that his 2014 income will be in the amount stated.

    It seems to me that you are filling out the forms incorrectly. Looking at the paper application form (https://www.coveredca.com/PDFs/English/paper_application/CCFRM604.pdf) at page 5, I am guessing that you entered that you had a one-time payment under “job 1” – but if you are a consultant, you should have left the “job” and “employer” lines blank, and instead indicated that you were “self employed” and filled out that section accordingly.

    A primary task of the Covered Cal. navigators and employees is to screen for MediCal — so that is how the staff is trained. If you give them MediCal numbers, they are going to do what they are trained to do. No one is training those staffers to understand the ins and outs of self-employment.

  3. The bottom line is your 2014 tax return MAGI to determine subsidy tax credit for 2014. It doesn’t matter when during the year you get paid, it’s the total for the year. Your 1099 forms should report only what was paid to you in 2014, although you should be reporting income received from those that don’t submit a 1099 (e.g. paid <$600). SE can put whatever they want as income, no requirement to base on prior tax returns. Covered CA only validates you are eligible based on personal data, tax filings, etc. and estimated income.

    The Covered CA website is woefully inadequate for assisting the self-employed but every SE person needs to estimate their future income for the year to pay estimated income tax. Estimates based on historical earnings may be inaccurate if working more or less or you can accelerate or delay payments. Also your business expenses that offset that gross income can vary (major purchases, auto expenses, etc.) Adding health insurance subsidies to the equation of projecting the future is fogging up my crystal ball. All SE need to monitor their situation throughout the year to see if they need to adjust projections.

    If you opt for advance subsidy to lower your monthly premium payments then you should try to not underestimate income. You can adjust advanced subsidies on Covered CA site if you want/need to. You can opt for no advanced subsidy and get full credit in 2015 when filing your 2014 tax return to reduce any tax due. There is an odd provision that limits what excess subsidy you have to "pay back" and a requirement to file by 04/15/15 to be aware of.

  4. Thanks for your help and Blue Shield phone number.
    But in the meantime found another way to pay for Blue Shield insurance.
    https://service.healthplan.com/

    This is a site just for billing.
    I was able to register without insurance ID just last four SSN numbers. The system recognized me (Yupii!) and posted the right amount to pay for the monthly premium. I paid by CC. I am relieved for now…

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