Obamacare Q&A, part 3: Medicare, erratic income, and small business options

This week’s reader questions on the federal health reform law center on the options for people with Medicare, how people with erratic income can tell if they qualify for discounted insurance through the state’s new marketplace, and whether small businesses can buy coverage for their employees through the individual market to save money.

To read last week’s Q&A, which addressed penalties for not having insurance, what kind of coverage will keep you from getting penalized, and what options a person will have after losing a job, click here.

For the first round of reader questions, which included inquiries about what insurance would cost, which doctors will take the new insurance being offered, and health savings accounts, click here.

If you have a question about Obamacare that you’d like us to try to tackle, email Mirror Health Reporter Arielle Levin Becker at alevinbecker@ctmirror.org.

Medicare and the new marketplace

Is dental coverage available with any health care plans sold through the new insurance market? I am wondering if any coverage would be better than Medicare, especially if dental care is covered.

The answer to your first question is no, the plans sold through the new insurance marketplace, called Access Health CT, do not include dental coverage for adults. You could purchase a stand-alone dental policy through the state’s existing insurance market. Access Health’s website is expected to provide links to those policies, but they won’t be sold through Access Health.

As for the larger question about whether you should consider Access Health as an alternative to Medicare, experts say don’t. Access Health, like the marketplaces in states across the country, is not intended for people with Medicare. It won’t sell Medicare policies or Medigap coverage. Experts say that if you have Medicare, you should make your decisions about Medicare Advantage, supplemental policies and Part D coverage the way you have in the past, and avoid Access Health.

Obamacare provides for federal subsidies to cut the cost of insurance for many people buying coverage through the state marketplaces, but people who get Medicare don’t qualify for those discounts. There are two exceptions: People who qualify for Medicare because of end-stage renal failure, and people who don’t have enough work history to qualify for premium-free Medicare Part A will be eligible for federal subsidies if they buy coverage through Access Health.

Aside from people in those relatively small groups, “People with Medicare can never get tax credits, and in general, a qualified health plan through the exchange is really not going to be as good for them as, say, a standard Medigap policy,” said Andrea Callow, a policy attorney at the Center for Medicare Advocacy.

What if your income is erratic?

If you are a contractor and your income is erratic, how do you know if you qualify for the federal assistance to discount your insurance premiums?

You should do an estimation of what your 2014 income will be, said Chad Brooker, chief exchange policy and legal analyst for Access Health CT, the new insurance marketplace created by Obamacare. He offered the following overview of how the income verification process will work:

The Access Health computer system will compare the income you enter for 2014 with what you reported on your 2012 tax returns. If your 2014 estimate is higher or up to 10 percent lower than what you made in 2014, it will accept that amount and calculate your eligibility for assistance based on that amount.

If the amount you enter for 2014 is more than 10 percent below what you earned in 2012, you’ll be asked to submit documentation to show why your income will be lower. You will have 90 days to do so. If it’s accepted, your potential financial assistance will be calculated based on that figure. If you don’t submit documentation, or it’s not accepted, you’ll still be able to buy insurance through Access Health, but you won’t be able to get any discount.

There are some checks and balances in the system: Ultimately, this will get reconciled when you pay your federal income taxes for 2014. If you end up making a lot more than you estimated when applying for insurance, you’ll have to pay back some of the financial assistance you got with your taxes. If you end up earning less than you projected, you could end up getting money back from the government, to compensate you for insurance premium subsidies you would have gotten based on your actual income.

Can a small employer buy coverage for workers through the individual market?

I’ve compared the Access Health small-group market’s “gold” plans (the most generous ones available) with the individual market’s “gold” plans from the same insurers. For the same ages and same coverage, the individual market policies are noticeably less expensive than those sold through the small-group market.

I am a small-group employer and cover two full-time employees, as well as myself and my family. Since the individual market plans cost less, would I have the option of paying our employees the equivalent of a premium and letting them buy it themselves?

You could terminate your employer-sponsored insurance plan and give your employees the money that you would have spent on their coverage, so they could buy their own.

But Brian Driscoll, chief operations officer at Ovation Benefits in Farmington, said there are two things to keep in mind if you do that:

The additional money you give your workers wouldn’t be tax-free, the way your contributions to an employer-sponsored health plan are. So if you decide to forego spending $5,000 a person for the company’s health plan and instead pay all your workers an extra $5,000, they won’t actually be able to spend all of it to buy insurance (some will be taken out in taxes).

In addition, discounted premium rates are available to people buying coverage through the exchange, but qualification is based on income (the exact levels are in the table below). “The more you make, the less you’re subsidized,” Driscoll said. So if you increase your employees’ income by giving them extra money to buy insurance, you’ll reduce the size of any discount they could receive.