“I wish I knew then what I know now.”—Rebecca Wells, Divine Secrets of the Ya-Ya Sisterhood

CHAPTER 1

I began my adventures with the Affordable Care Act (ACA) in late 2023. I applied twice: once in November for the single month of Dec. 2023 due to a “change in life circumstance”, and again in December for the 2024 year. The application response for December 2023 suggested that I could be eligible for NC’s Expanded Medicaid, which I ignored. After all, my 2023 income would be above the income limit for Expanded Medicaid (138% of the federal poverty level). But also North Carolina’s first implementation of Expanded Medicaid (with a planned enrollment of 600,000) would also begin on Dec. 1. I didn’t see any way that would end well!

I planned my income to be above the limits for NC’s Expanded Medicaid in 2023, figured out a plan for my income in 2024 to ensure eligibility for ACA, and moved on. I selected and enrolled in an insurance plan for 2023 and 2024, and signed up for a (separate) dental plan (again, for the month of December 2023, and then again for 2024). Paperwork showed up, I paid my premiums offset by the ACA subsidy (determined by the ACA on my projected income for 2024) and I moved on.

Until late March 2024, when I received notifications from North Carolina’s Department of Health and Human Services (NCDHHS). On March 19 I received an email to my Marketplace email that I would receive email updates for NC Medicaid, which seemed weird. Then March 20 I received a text and USPS mail (generated March 19, for an application date of Dec. 29, 2024 that I had never made) that I was enrolled in Medicaid backdated to Dec. 1, 2023 (almost 4 months earlier!). THAT got my attention. And a problem. The ACA and Expanded Medicaid are mutually exclusive. If I was eligible for Expanded Medicaid, I wasn’t eligible for the ACA subsidy, which could catch up with me when filing my taxes (potentially about $4000).

Note: If I HAD waited for a response from Medicaid from the ACA application, I would have had 4 months where I didn’t know my insurance status, and would have missed the ACA application window.

March 21 I started with the ACA support line, which confirmed I couldn’t be on both ACA and Medicaid insurance at the same time. They cautioned that NCDHHS would offer to cancel my Medicaid insurance, which was not the same thing as ineligible for Medicaid.

That day I called Durham County Health and Human Services (DCHHS, not to be confused with NCDHHS). As cautioned, DCHHS offered to cancel my Medicaid. I drove to the DCHHS office to drop off my income information. I left for Europe May 1. Unbeknownst to me, April 30 DCHHS canceled my Medicaid as of May, with the letter arriving at my home the day after I left. However, they hadn’t reversed my eligibility; would have to file an appeal to be declared ineligible for Medicaid.

I reached out to NC Legal Aid. Their written respond July 1 post our conversation was that I could request DCHHS find that I was never eligible for Medicaid. I filed an appeal mid-June (immediately after returning from 6 weeks in Europe). I explained my finances, and that I wanted my Medicaid eligibility (not just my Medicaid insurance) revoked. DCHHS didn’t know what to do with my appeal, and eventually forwarded it to the State level. On July 2,  NCDHHS sent my appeal directly back to DCHHS unreviewed with instructions to follow the process and first hold a local hearing. This was the first indicator that no one at the local level knew what they were doing or had ever done this before. The State had immediately bounced the appeal as a process DCHHS hadn’t followed, and DCHHS should have known better. NCHHS scheduled a local hearing for July 10. I described the problem— I was inappropriately enrolled in Medicaid. From the telephone hearing DCHHS determined that the decision to cancel my Medicaid was correct, but that DCHHS was unable to declare me retroactively ineligible. The hearing officer did not know how that would interact with ACA insurance.

Here I hit a real problem. I could just let things ride out. However, Medicaid has strict windows for appeals (appropriately, as if someone needs health care, they need that process to be swift). If I didn’t do anything assuming everything would work out, and I was wrong, I would pass the appeals windows and have no recourse.

So I appealed to the state level, with the hearing on August 20. In person this time. A hearing which upheld that my Medicaid was canceled, but did not completely address the eligibility requirement.

Have I mentioned yet that at each of these hearings, I was the first person they’d ever dealt with who was trying to NOT be eligible for Medicaid?

As part of the NCDHHS response for that hearing, I was presented with a final opportunity to provide written clarification to any points from the hearing. This was to be my last opportunity to appeal before entering the NC Court system. On August 29, I concisely detailed my points in my written response. If this didn’t work, I was giving up and just hoping everything would work out. The response to my response? Dated September 11th, the finding was that I was correct. Not only should my Medicaid have been canceled, but I should never have been approved for Medicaid as my income was not recognized in the system correctly.

INTERLUDE

Back in college I contemplated how much money I would need to retire, and I picked $40,000 / year (back in ~ 1990). My father had raised two children on that salary, and I never felt that I wanted for anything.

How did I retire early at 47? There are a number of factors. I started putting money into my retirement plan early. I was fortunate to graduate with minimal college loans. Living frugally, I paid off those college loans early. I was continuously employed throughout my work career, and paid well. I always lived well within my means. While I eventually had dogs, I never had children. As my income increased, that money first went to my 401k until contributions maxed out. Money beyond that maxed out my IRA contributions (varying between a Traditional and Roth IRA based on eligibility and the tax advantage at the time). And when I had money beyond that I started an investment fund.

It’s that investment fund that’s critical to retire early. While you can withdraw the actual contributions to a Roth IRA whenever you want, you can’t access money placed in a 401k (or Traditional IRA, or 403b, or other retirement vehicle) before you are 59.5 years old without a financial penalty. So I had to have enough money outside of traditional retirement methods to reach 59.5, where I could reach the rest of my retirement funds without penalty. That would then later (in theory) be supplemented by Social Security.

When I stopped working (aka retired) you’d think my income would be $0. However, as the investment fund (hopefully!) earns money, the fund pays monthly dividends and interest, which counts as “income” (small, still putting me below 138% of the federal poverty limit for income). Additionally, when I withdraw money from that investment fund, the sale generates long-term capital gains, which also count as income. That combination of interest, dividends, and capital gains determines my monthly and annual income during my retirement.

This brings us to the crux of the finances. When you invest money into a Traditional IRA, you defer paying taxes, which you pay when you withdraw the money on retirement (hopefully taxed at a lower income in retirement). You can, however, convert money in a Traditional IRA to a Roth IRA. When you do, that conversion counts as income at the time of the conversion.  I can increase my income with a Roth IRA conversion, letting me, to a certain degree, pick out my income. converting money from Traditional to Roth IRA can bring my income over the Medicaid limit.

And my income, not my assets, are what determine eligibility for Medicaid and the ACA.

CHAPTER 2

And that brings us to applying for healthcare for 2025. Tired of juggling money around for my 2023 & 2024 income, I applied for ACA insurance with a planned income for 2025 of less than 138% of the federal poverty level. After spending 2024 fighting against being eligible for Medicaid, I would be eligible for Medicaid in 2025. They were going to love me.

Leary from the last time, I called DCHHS to avoid similar application problems. To ensure my Medicaid wouldn’t start until January of 2025, I was told to wait to apply until December. I applied Sunday, Dec. 1, 2024. Within 30 minutes my application was declined. On a Sunday? I called DCHHS Monday morning. I was told my application had been declined due to a previous application still open. The person I spoke with said they’d cancel that application, and to reapply in a few days. I applied again on Dec. 4, 2024. I uploaded all of my financial documents into the system. When I received the initial letter confirming my application but requesting my financial documents, I replied to the email, also including the financial documents. In a later follow-up call to check why I hadn’t heard anything, I uploaded my financial documents again to the local DCHHS system. And still nothing.

Along the way I canceled my ACA insurance as of the end of December. If billed for January of 2025, I wouldn’t receive the subsidy.

INTERLUDE

While I have mostly left out exactly when I called DCHHS, calling DCHHS has been a travesty of frustration. The default answering message for DCHHS case workers is something like: “Thank for calling <name>. I will call you back within two business days. If you need immediate assistance, please call my supervisor, <name>, at <number>.” Each step up the chain has the same message. The first time I went through this path, with the suggested intervals, those voice mails sometimes included additional notes like, “I am on vacation until <date>” where <date> was a month in the past.

Initially I called, received no return called, call the next supervisor after a few days, and then repeated that process, which eventually took me up to the State Director’s office, where I reached a real person. Explaining the issue, THAT prompted a local response.

However, with few exceptions, no one calls back. Apparent gaps in my timeline tend to be me attempting to reach someone. My phone logs for the past year show 69 calls to DCHHS, with only a few incoming calls. By the time I reached 2025 I didn’t bother waiting the suggested days, because there wasn’t much point. I hit one point where every morning I’d just call the first several numbers on that tree, still with no response. I eventually learned to just go into the office.

BACK TO CHAPTER 3

With no updates by January, I drove over to the local DCHHS office, and hand-delivered my financial information to a case worker, who said my documents weren’t in the system (note previous attempts). She scanned them in. I also walked her through my financial documents, explaining how to determine my income after a lesson in capital gains. She noted the explanation, and my income, in the computer. Great.

The next week I got a call from DCHHS asking to confirm my income. Not great. I received no immediate follow-up from that call.

I suspected I knew the problem. When I transfer money each month from my investment account to my checking account for monthly expenses, DCHHS probably considered that as “income” instead of personal assets moved from one account to the other. While I’d explained that in person, the explanation was likely lost in translation (as were my financial docs).

Now mid-January, I had passed the 45-day legal requirement for NCDHHS to respond to my Medicaid application. Another round of calls, and another explanation, ended with a returned call from a supervisor. She had tried to call Fidelity for an explanation of my finances. Unsurprisingly, Fidelity wouldn’t talk to her without me on the line. That she didn’t know that shows just how deep the inexperience here goes. So we spoke with Fidelity with both of us on the line. Fidelity confirmed what I was saying, but with a financial explanation the supervisor couldn’t follow. I finally interjected that the investment account was like a savings account, to which Fidelity confirmed it was more like a checking account, which finally satisfied the DCHHS supervisor, and confirmed my income. She assured me my application should process through, and said, “Have a great day.”

CHAPTER 4

Experience is what you get when you don’t get what you want. I asked if she had a minute to discuss further. Because, as I suspected and she confirmed, they would  approve my Medicaid as of Dec. 1, 2024 (while still covered by ACA, see previous adventure for 2024) instead of January 1, since the application date was Dec. 4. To resolve that timing issue she suggested I cancel the December application we just worked through and approved, and reapply. Now in January, that application (if approved) would back date to January 1.

And there I had a problem. Because, as part of setting my income for 2024 to have an appropriate income for 2024 ACA coverage, I had performed a Roth IRA conversion in December. If I submitted an application based on my income for December (instead of November), I would be FAR above the income limits for eligibility for Medicaid in January. I explained the issue. We also discussed that should I should be eligible, yet  deemed not eligible, I’d appeal at the local DCHHS level, then State level, then post-state level and eventually someone would realize that I was eligible. We’d save a lot of work on all ours parts if we could just resolve this now, right? She left the call to go speak with her supervisor.

The next day she called back. They had decided that, since my income made me ineligible for the month of December, they’d just start my Medicaid January 1! Success.

CHAPTER 5

However, I held on to the dental insurance. The main problem was my dentist (who I’ve been happy with), doesn’t take Medicaid. The dental insurance was only about $35/month, and didn’t receive a subsidy anyway.

I’d had on my list of “To Do” to cancel the dental insurance once approved for Medicaid. When I started searching for a new dentist, I learned there aren’t many NC dentists that accept Medicaid, and those that do are mostly not taking new patients. First, because NC had dumped 600,000 people into Medicaid and those dentists who take Medicaid patients had been swamped. But secondly and more importantly, NC hasn’t updated its pay rates for dental services since 2008.

For now, I’m just leaving my dental alone. Should I end up needing dental services I suppose I’ll start yet another adventure.

EPILOGUE

 

In the end, the root cause was determined by NCDHHS to be their own system error. My Medicaid was erroneously approved as no monthly income was recognized by the system. The thing is, I really shouldn’t have to pay back the premium tax credit when Medicaid backdates my Medicaid. And everyone at the time generally agreed it probably didn’t work that way. But no one was certain, and no one could point me to associated documentation, including NC Legal Aid. I finally found what I think I wanted while working through my 2024 taxes – Pub 974 on page 10:

Retroactive coverage. If APTC [Advance Payment for the Premium Tax Credit for ACA Coverage] is being paid for coverage in a qualified health plan and you become eligible for government-sponsored coverage that is effective retroactively (such as Medicaid or CHIP), you will not retroactively lose the PTC [Premium Tax Credit for ACA Coverage] for your coverage. You can get the PTC for your coverage until the first day of the first calendar month after you are approved for the government coverage.

Things one should know:

• When you apply for ACA, your insurance will start at the beginning of the month following your application. But when you apply for Expanded Medicaid in NC, your insurance starts at the beginning of the month of your application.
• When you apply for ACA and provide your last month’s salary, ACA automatically files an application with NC’s Expanded Medicaid, extrapolating that month’s salary to an annual salary. This will not show up on the NCDHHS website.
• When you apply for Expanded Medicaid in NC, eligibility is determined by your last month’s income. But when you apply for ACA, eligibility is determined by your next year’s income.
• Your ACA subsidy payments will be based on an estimate of last year’s income, but will be balanced out based on your actual taxes for the year you received the subsidy.
• When Medicaid retroactively applies heath care, you’re not required to pay back previous month’s tax credits. At least, that’s the theory.

And now? If funding for Expanded Medicaid is canceled? NC’s Expanded Medicaid will terminate, and I’d right back where I started.