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Verifying Income Eligibility for Premium Subsidies and Cost-Sharing Assistance under the ACA: Impact of the Continuing Appropriations Act of 2013

Posted on October 17, 2013 | No Comments

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By Sara Rosenbaum

H.R. 2775, passed by the Senate and House on October 16 and signed into law by President Obama on October 17, 2013, contains the following provision at Section 1001:

Notwithstanding any other provision of law, the Secretary of Health and Human Services . . .  shall ensure that American Health Benefit Exchanges verify that individuals applying for premium tax credits under section 36B of the Internal Revenue Code of 1986 and reductions in cost-sharing under section 1402 of the Patient Protection and Affordable Care Act (42 U.S.C. 18071) are eligible for such credits and cost sharing reductions consistent with the requirements of section 1411 of [the Act] (42 U.S.C. 18081), and, prior to making such credits and reductions available, the Secretary shall certify to the Congress that the Exchanges verify such eligibility consistent with the requirements of such Act.

This provision, fashioned by Senate negotiators, substituted for an earlier provision that passed the House of Representatives in September and that read as follows:

Notwithstanding any other provision of law, no premium tax credits shall be allowed under section 36B of the Internal Revenue Code of 1986 and no reductions in cost-sharing shall be allowed under section 1402 of the Patient Protection and Affordable Care Act (42 U.S.C. 18071) before the date that the Inspector General of the Department of Health and Human Services certifies to the Congress that there is in place a program that successfully and consistently verifies, consistent with section 1411 of such Act (42 U.S.C. 18081), the household income and coverage requirements of individuals applying for such credits and cost-sharing reductions prior to making the benefits available.

Although similar at first blush, the two provisions are quite different in their actual wording and their potential impact. The provision that ultimately became law requires that the Secretary take steps to assure that Exchanges comply with the ACA’s income verification requirements. The original House bill, by contrast, would have gone dramatically further, requiring that before any assistance could be made available, the Secretary certify to Congress that she had put into place “a program that successfully and consistently verifies. . . the  household income and coverage requirements [of applicants] “prior to making the benefits available.”  In other words, the original House bill would have barred all premium and cost-sharing assistance until a “program” (undefined and apparently in addition to the Exchange verification system already contemplated under the ACA) had been designed and put into place. In all likelihood, the subsidies could not have commenced under the original House scenario.  As Judy Solomon of the Center on Budget and Policy Priorities has pointed out, the OIG notified the House that it would not be possible to certify the existence of a program of “successful and consistent” verification of subsidy eligibility until the program were actually in operation, which effectively would mean that the program could never begin.

The final legislation, by modifying the House bill to simply require adherence to the original terms of the ACA rather than the creation of a new verification “program,” thus enables implementation to proceed forward.

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