Post-Shutdown Bill Leaves ACA Intact

Two weeks ago, our federal government shutdown on the promise by House Republicans that they would continue to fund the government only if the ACA was repealed. However, the final, bipartisan agreement reached yesterday that brought the federal government shutdown to a close left the ACA fully intact.  Infact, the bill that the President signed into law included just one, relatively small, ACA provision: The legislation calls for new procedures by which HHS must strengthen income verification for individuals applying for federal tax subsidies to help pay for premiums of health plans purchased on the insurance exchanges. 

                                                       

Under the rule, HHS still would require applicants' income be verified against their IRS and Social Security records, and when that cannot be achieved, checked against employer records submitted to Equifax. The rule also allows state exchanges to check a statistically valid sample of applicants in cases where an applicant claims income more than 10% below what IRS and Social Security records show, and where there is no Equifax data ("The Economy Hub," Los Angeles Times, 10/16). 

Despite two weeks of intensive, 24/7 repairs, healthcare.gov remains badly broken.  This is especially problematic for states whose have chosen to let the federal government run their exchanges.  Many media outlets have also reported that the technical glitches associated with open enrollment for state health exchanges may have received more attention if not for the shutdown.  Perhaps now that the government has re-opened for business, the ACA will see the triumphant roll-out many supporters predicted.

How Will Health Insurance Marketplaces Verify Income for Premium Subsidies?

Many individuals and small businesses will be eligible for premium subsidies for health insurance purchased through Obamacare's online Marketplaces, starting October 1.  As part of the eligibility process, Marketplaces must verify the income of consumers by using tax filing and Social Security data  to verify household income.

Here's how it will work. When an individual applies for health insurance through an online Marketplace, she will be asked to verify her projected household income.  That inputted data will then be verified with information available through the Internal Revenue Service (IRS) and Social Security Administration (SSA).  If the data submitted by the individual cannot be verified through these avenues, additional wage information will be compared from employers via Equifax, if available.  

State-based Marketplaces, meaning states that have set up and will independently administer their own health insurance Marketplace, “may choose to request additional documentation from a statistically-significant sample of the group of individuals in only one specific situation: when the Marketplace has IRS data, the application filer inputs projected annual household income that is more than ten percent below IRS and SSA data, Equifax data is unavailable, and the individual does not provide a reasonable explanation for the inconsistency between the attestation and IRS and SSA data.” (CMS FAQs.)  

Federally-facilitated Marketplaces however, (that is, Marketplaces that will be run by the federal government because the state either refused to do it themselves, or elected to have a federally-run Marketplace) will require 100% of applicants applying for premium subsidies to provide additional documentation "with no exceptions."

The New Insurance Market (from the AHLA Annual Meeting)

Here's a peek at what panelists had to say about the future of the impending health insurance exchanges and what the marketplace may look like in a post-2014 world.

The goal of the ACA was to address 3 different markets - individual, small business and large group coverage.  If everything works the way it should, the implications are all very positive: Insurers will have more customers, providers will have a greater likelihood of getting paid for their services due to a greater number of insured patients, and patients (depending on your view of this) will be much closer to universal health care.

Two big take-away points from this morning's session:

• (1) If an individual is eligible for premium assistance (lower premiums based on annual household income), there is a 3-month grace period that those individuals have to pay their health insurance premiums.

     -- Incomes between 100-400% of the federal poverty line: $11,490-$45,960 for a single individual or $23,550-$94,200 for a family of four.

  1. –  Days 1‐30 – claims are paid normally. No retroactive termination for claims paid in this “month”.

  2. –  Days 31‐90 – claims must generally be pended until premium payment or end of grace period.

     -- This can lead to great uncertainty for providers during the second and third months of the grace period as to whether they will be reimbursed for services after seeing a patient who has yet to pay their share of the premiums.  This may result in many providers requesting that patients pay their premiums in full before a provider sees that patient.

     -- The federal government, coincidentally, allows for a three month grace period for lapse in coverage before an individual must pay a penalty. This may result in annual "gambling" during the last three months of a 12-month insurance plan for healthy, subsidy-eligible individuals to avoid paying for an entire year of coverage.

  
  
  

• (2) Large employers (with 50+ full-time employees) will have to decide whether they want to "pay" (a penalty) or "play" (by providing adequate insurance to employees).

     -- An employer will face $2,000 per employee if they do not provide coverage (or $3,000 for not providing enough coverage to an employee who then seeks coverage on the state exchange). This applies only to employers with over 50 full-time employees.