Help Squad: Will Medicaid errors result in $4K tax penalty for couple?

The Chicago Tribune reports:

“Dear Help Squad,

I hope you can help us get the documents we need so our health insurance is not canceled.

For 2015, we signed up for medical insurance through the health care marketplace. The agent who assisted us determined our income level qualified my wife and me for coverage under Illinois Medicaid, which we continued throughout 2015.

In fall 2015, I obtained part-time employment. As a result of the additional income, my wife and I no longer qualified for Medicaid, so we enrolled with Blue Cross Blue Shield through the Illinois health care marketplace for 2016. Due to our income level, we obtained credits for a premium reduction.

However, there were two conditions that had to be met:

1. Proof of income, which we provided.

2. Notice of creditable coverage from the Illinois Department of Human Services/Medicaid that would verify that, based on our income and request to cancel, we were no longer covered under Illinois Medicaid for 2016. We’ve repeatedly tried to obtain verification of that cancellation since January.

Twice I called Medicaid and asked that our coverage be canceled. The first agent said it may take a while; I should call back to verify. When I called back in February, I was told there was no record of our request, so they put through a second cancellation request. I called back to verify, and again there was no record of our request. I was additionally told this was something I could not do over the phone! We needed to go to our local Medicaid office to cancel in person.

So, on April 22, we stood in line at the local office in Aurora, completed the necessary forms and handed them to the representative, who placed them in a box. Now, more than a month later, nothing! I have been calling and leaving messages, but am not optimistic I will hear back.

In the meantime, we continue to receive final notices from the Illinois health insurance marketplace stating we will lose our credits if we fail to supply the cancellation letters from Illinois Medicaid.

Please help! It should not take six months to get a piece of paper out of a state agency.

Roy, Oswego

I contacted the Centers for Medicare & Medicaid Services’ Chicago Regional Office, where I reached external affairs representative Gregg McAllister. Following a preliminary investigation, McAllister put a CMS caseworker directly in touch with Roy.

Everything seemed to be moving along quite nicely. Said Roy: “I spoke with a representative from the federal side of the family care insurance branch … She was extremely thorough and even volunteered to participate in a three-way call with marketplace representatives.

“She found the issue and said it was totally on their side. She then sent me a letter noting the Medicaid cancellation date and I uploaded it to the state site.”

Excellent! It sounded as though things were resolved. Then, two days later:

“Still fighting the battle. Spoke with a marketplace supervisor this morning. The problem is the cancellation letter Medicaid provides does not name individual coverage recipients, but only says ‘family.’ They need something that will provide proof that Catherine is not covered, and seem to have an issue with understanding that my wife is family.

“Now here’s the bombshell that hit us like a ton of bricks: I just learned that we have been covered by Medicaid during the entire time I have been trying to cancel it. As a result, there may be a huge impact on our taxes because we qualified for tax credits under the marketplace plan we selected! We may owe upwards of $4,000!

“It appears that the burden of proof is on me to provide dates and the names of the representatives I spoke to on all the calls I made to Medicaid to cancel the coverage, which I do not have. I can’t believe this!”

Check back to learn if the government program tasked with providing health insurance to low-asset individuals like Roy and his wife ultimately winds up costing them thousands of dollars in penalties.