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Commonwealth brief addresses potential for abrupt changes in financial responsibility and gaps in health insurance coverage under ACA

Posted on May 31, 2011 | No Comments

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Implementation Briefs

The Affordable Care Act (ACA) builds on existing sources of public and private health insurance, while creating new health insurance Exchanges and subsidies.  A potential disadvantage of maintaining multiple sources of health insurance is the likelihood of abrupt changes in coverage or financial responsibility when individual circumstances change.  The Commonwealth Fund brief, “Realizing Health Reform’s Potential: Maintaining Coverage, Affordability, and Shared Responsibility When Income and Employment Change,” describes four policy challenges related to such abrupt changes: 1) adjusting premium and cost-sharing subsidies when incomes change; 2) coordinating eligibility for premium credits, Medicaid and the Children’s Health Insurance Program (CHIP); 3) encouraging and facilitating continuous coverage; and 4) minimizing transitions between individual and small-business exchanges. The brief outlines several policy recommendations to reduce uncertainty, simplify coverage decisions, and minimize insurance transitions.  These policy change suggestions include extending coverage to the open enrollment period at the end of the year, generous treatment of income gains in correcting premium tax credits, and unifying the small-business and individual exchanges.

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The Internal Revenue Service (IRS) issued a proposed rule, simultaneously released by the Department of Labor (DOL) and the U.S. Department of Health and Human Services (HHS), amending the conditions under which wraparound coverage can be considered an excepted benefit. The proposed regulation sets forth five requirements under which limited benefits provided through a group health plan that wrap around either eligible individual insurance or coverage under a Multi-State Plan constitute excepted benefits. These conditions include coverage of additional benefits, quantity limits, nondiscrimination, and plan eligibility and reporting requirements. The proposed rule also includes a pilot program that would allow limited wraparound coverage to be offered as excepted benefits to coverage for a limited time.
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UC Berkeley, funded by grants from the Robert Wood Johnson Foundation and The California Endowment, recently released the brief, "The Promise of the Affordable Care Act, the Practical Realities of Implementation: Maintaining Health Coverage During Life Transitions," which discusses seamless health coverage under the Affordable Care Act for individuals and families who lose health insurance because of a work or life transition. While outreach and education are essential for enrollment, such efforts are not sufficient to assure that those eligible will enroll in programs during these transition periods. This policy paper addresses the question, "How can implementation of the Affordable Care Act build on institutional connections and develop widespread cultural knowledge of the availability of coverage during life transitions that precipitate the loss of private coverage?"
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A new article released in the February 2011 issue of Health Affairs, co-authored by Professor Benjamin Sommers, MD, PhD, of the Harvard School of Public Health, and Professor Sara Rosenbaum, JD, Chair of the Department of Health Policy at the George Washington University School of Public Health and Health Services, examines the potential for gaps in health coverage for some Americans under the Affordable Care Act (ACA).
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This brief provides an in-depth look at the outreach and enrollment provisions in the Patient Protection and Affordable Care Act affecting Medicaid and CHIP.