Obamacare: on the edge between private plan and Medicaid

I live in California, am single, and have no children.  I can only find part-time work, and make about $13,000 a year.  Someone told me that if I could get my income higher, I could get regular health insurance instead of being put on Medicaid.  Regular insurance sounds a lot better.  I hear that almost no doctor or hospital takes Medicaid anyway. 

Is it true that if my income were higher, I could get real insurance?  I don’t know if I can get more hours.  What happens if I say I’ll earn $15,000 but I end up getting less? 

Thrifty
Dear Thrifty,

It is true that people whose income is higher than 133% of Federal Poverty are given subsidies to purchase private health insurance.  People whose income is lower are enrolled in Medicaid, at least in those states that have “expanded” Medicaid to include all low-income people (and not just parents).

Before you reject Medicaid, there are a few things you should know.  It is not true that “no doctor or hospital takes Medicaid”.  I am not aware of any hospital that turns away Medicaid members.  It may be true that fewer doctors accept Medicaid patients, but it’s a far cry from none.  A recent study found that Medicaid members had to call two physician offices to get an appointment; privately insured people had to call one.  Yes, it’s double but it’s not outlandish.

Medicaid will likely have lower co-pays and almost certainly no deductible.  At your income, a subsidized private plan would give you a break on co-pays and deductibles too if you choose a Silver plan.  Even with subsidies, the private plan will have more out-of-pocket costs for you.

Last, you will have at least some monthly cost to join the private plan.  The Medicaid plan would not have a monthly cost.

All of which is to say, Medicaid is not a terrible option.

Now, if you say that you will earn $16,000 — enough to get you the private plan option — and you earn less, it’s not exactly clear what the government will do.  Technically, you would have received a government benefit that you did not qualify for; the government would have the right to take back the money from you.  The problem is that the government will have given your benefit (subsidy) to the insurer to pay for your plan.   It’s water under the bridge, so to speak.  And by definition, these are low income people — not likely to have savings or assets that the IRS could seize.

Nevertheless, if you miss your income target, you risk having a sizable debt to the government.  Government debt does not go away.  I do not know any adviser telling clients to inflate their income and hope that the feds don’t come after them later.

It’s your choice, but I would proceed cautiously and go with Medicaid for now.

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Linda Riddell

About Linda Riddell

A published author and health policy analyst with 25 years’ experience, Linda Riddell's goal is to alleviate the widespread ailment of not knowing what your health plan can do for you.