Medi-cal vs ACA market subsidy in unemployment

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Medi-cal vs ACA market subsidy in unemployment

Post by newlyconfused » Tue Dec 04, 2018 5:56 am

I was just laid off and I'm having trouble figuring out the best path for medical insurance in 2019; my goal is to minimize summed out of pocket costs at the end of year, and minimize claw back and legal risks. Should I be shooting for Medi-Cal or an ACA-subsidized marketplace plan? I could use the sage advice of wise bogleheads on the complexities / income cliffs of these two eligibility systems, and the risks associated given my re-employment uncertainty.

About me: In my 30s.

Assets: Roughly $60k in 401k, 5500 in Roth, 0 in traditional ira, ~30k in the bank.
I also have significant student debt, but I assume that doesn't apply to medi-cal asset test

Unemployment duration: Laid off in late November 2018. I'm facing unemployment for 6 to 12+ months, judging by my job search (un)readiness, skill gaps I'm addressing, and the general timeframes for completing interview processes at certain companies. If I get a job in the middle of year, it might be for around $120-140k annual salary (so ~$70k+ earnings for 2019). But it could also be much, much lower or nearly nil, especially if I have no luck finding a job.

Current Insurance: Just came off employer-provided Kaiser, but my ex-employer will pay for Cobra costs for December and January soon so I can re-sign with Kaiser. After that, Kaiser is available in both Covered CA and Medi-Cal.

Unemployment benefits: $450 per week or ~$1900 per month. Since I'm starting i've started it this month, only 21 weeks will be in 2019 (max 26 weeks minus 5 weeks in December 2018). Benefits will will max out at $9,450 unless I qualify for some kind of extension.

Given paid-for cobra coverage, I'm assuming that I should wait until January then apply for either Medi-cal or ACA market plan.


1a. Eligibility -- The unemployment benefit of $1900 is above the monthly Medi-Cal limit, but $9,450 over 5 months is below the annual limit. Would the monthly disqualify me from Medi-Cal? Should I report an annualized monthly for that $9450?

1b. Would my assets affect Medi-Cal eligibility (greater than $2000) if I'm applying through (only MAGI applies I believe?)

2. Is there clawback risk through Medi-cal if I'm eligible? Being on an ACA plan means reemployment would trigger a clawback of premium subsidies at the end of the year. Medi-cal would be superior, right? People seem to advise ACA over Medi-cal, and I haven't quite figured out why.

3. I could technically forego Cobra altogether, ignoring my employer's 2-month free cobra offer, and just start Medi-Cal or ACA right now. Not sure if that would be more or less advantageous, though completely free insurance starting right now (or is it January?) does seem to simplify...

4. If I am in Medi-Cal, with no clawbacks, what's stopping me from doing a big Roth conversion at the end of 2019 to lower future tax burden in retirement? This would raise my MAGI to say 20k above the Medi-Cal limits at the very end of the year, what penalties would I be facing -- none right? Then in January of 2020, could just go back onto Medi-Cal on a monthly basis if I'm still unemployed?

Thanks for your guidance!

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Re: Medi-cal vs ACA market subsidy in unemployment

Post by fareastwarriors » Wed Dec 05, 2018 8:50 am

bumping this

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Re: Medi-cal vs ACA market subsidy in unemployment

Post by fh2000 » Wed Dec 05, 2018 9:14 am

I know in CoveredCA, you can start your ACA or Medi-cal on 2/1/19. You can sign up between 12/16/18 and 1/15/19. I will be doing the same. So, if you can get 2 months Cobra free, I would at least get that.

You can call CoveredCA: (800) 300-1506. I have called them few times during the past 2 weeks, and there is no wait time.

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Re: Medi-cal vs ACA market subsidy in unemployment

Post by newlyconfused » Fri Dec 07, 2018 4:02 am

Thanks everyone. I did place some calls as suggested but there is still some ambiguity.

First, I gotta say that it’s really nasty that ACA plans are more expensive than equivalent private plans. If you fall below 138% at the end of the year, you repay full price, and if you are above 400%, you also pay full price. So finding a job or not finding a job, there’s a chance there’s a financial time bomb waiting at the end of the year.

It’s this time bomb risk that I’m trying to mitigate. I see Medicaid / Medi-Cal as a possible solution: if I get a job and my income changes, there is no tax credits or subsidy to claw back, and no penalty as long as I notify within 10 days. Having spoken with the folks at covered ca and county Medi-Cal, they were a bit cryptic on guaranteeing no financial impact of any kind, so would appreciate any boglehead’ers confirmation on my solution.

My secondary question is: what happens if I’m on Medi-Cal all year, I don’t find a job, so there’s an opportunity to do some Roth conversions, say $20k worth. That means end-of-year income is at $30k, but it’s a one-time spike of unearned income that’s really just tax-based paper gains. Effectively a one-time change in income, with an immediate change back to $0 or equivalent. Has anyone had any experiences doing this, and how did it affect eligibility (penalty, kicked onto ACA, disqualified for future, etc)? The good folks at the offices couldn’t or wouldn't answer this one.

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Re: Medi-cal vs ACA market subsidy in unemployment

Post by nalor511 » Fri Dec 07, 2018 6:01 am

Medi-cal counts lump sum income only in the month it's earned, so you'd have no claw back, and no eligibility change, if you do your conversations say dec 15, and you can do as many as you want, you can go over the MAGI limit as long as your next month is still low (i.e. only dec is high). No fees for services, but Dr selection may be severely limited, in network services may have many HMO hoops to jump through than you would see on non mediCal plans. Best of luck

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