A project of the George Washington University's Hirsh Health Law and Policy Program and the Robert Wood Johnson Foundation

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

PDF Version
Details
Key Developments
Library
Implementation Briefs

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.

No Comments

Public comments are closed.

Guidance issued by the Center for Medicare and Medicaid Services (CMS) states that individuals who enrolled in health plans outside of the Affordable Care Act (ACA) insurance Marketplaces may retroactively receive premium subsidies. Under the ACA, advanced premium tax credits, or subsidies, are only available to individuals that purchased qualified health plans through the Marketplace. Many states have asked CMS to permit subsidies outside of the ACA Marketplace because IT issues prevented many eligible individuals from enrolling into QHPs before the deadline. Subsidies will retroactively be paid to insurers back to the effective date of plan enrollment.
On the last day of the year, US Department of Health and Human Services (HHS) Secretary Kathleen Sebelius submitted a report to Congress certifying that Marketplaces are verifying applicants receiving premium support and cost-sharing reductions for their insurance under the Affordable Care Act (ACA) are in fact eligible for that assistance. The report, Verification of Household Income and Other Qualifications for the Provision of Affordable Care Act Premium Tax Credits and Cost-Sharing Reductions, contains information on "statutory, regulatory, and policy requirements that both State-based Marketplaces and Federally-facilitated Marketplaces must follow" in regards to verification requirements and the associated procedures.
A new set of Frequently Asked Questions (FAQ) released by the Centers for Medicare and Medicaid Services (CMS) clarifies how health insurance Marketplaces will verify incomes of applicants that qualify for premium tax credits or cost-sharing reductions. In a previous rule released on July 5, 2013, CMS stated that for 2014 only, Marketplaces may use a statistically significant sample when requesting additional income documentation under scenarios where Marketplace applicant projects an annual household income is that at least 10% below available IRS and SSA data, Equifax data is unavailable, and the individual does not provide a reasonable explanation for the discrepancy between the attestation and available data.  In the new FAQ, CMS ultimately determined that for those enrolling in federally-facilitated Marketplaces, they have sufficient resources to request and process additional income documentation such that the sample size is 100%. However, CMS is still allowing state-based Marketplaces to determine their own sample size percentage for this group, as long as it is statistically significant.
The Affordable Care Act (ACA) established American Health Benefit Exchanges (the Exchange or Exchanges), a marketplace where consumers can choose a private health insurance plan to fit their health needs. The Exchanges will provide Americans with access to the same health insurance choices as members of Congress. Today, the Treasury Department issued final regulations implementing the premium tax credit that will give middle-class Americans unprecedented tax benefits to make the purchase of health insurance affordable. Premium tax credits will, first and foremost, make...
An analysis performed by the Kaiser Family Foundation found that nearly 6 in 10 Americans eligible to participate in the Affordable Care Act's (ACA) health insurance marketplaces, which equates to 17 million individuals, will qualify for insurance subsidies. To receive a subsidy through the ACA, individuals must earn between 100-400% of the federal poverty line. Most of the individuals qualifying for subsidies reside in Texas, California, and Florida. The analysis was based on population and economic data collected by the Census Bureau for 2012 and 3013, stated that.
A new report from the Congressional Research Service (CRS) describes the application of premium credits to help individuals subsidize their health insurance purchased through the Affordable Care Act's (ACA) Exchanges. The report, Health Insurance Premium Credits in the Patient Protection and Affordable Care Act (ACA), provides examples as to how premium tax credits would be allocated based upon age and income level, assuming the credits were operational and applicable to 2012. The memo states that premium tax credits are advanceable, refundable, and reconcilable. Additionally, cost-sharing subsidies, such as reduced co-payments, may be available for some individuals with lower incomes. Another CRS memo provides a basic overview of the individual mandate, the requirement of all Americans, with the exception of individuals qualifying for exemptions, to obtain minimum essential coverage. Those that are not exempt and remain non-compliant with the mandate will be assessed a penalty beginning in 2014. In addition to penalty assessment, the memo explains the reporting requirements associated with the ACA. Individual Mandate and Related Information Requirements under ACA was commissioned in response to HR 2668, the Fairness for American Families Act, which delays the implementation of the individual mandate to 2015. In response to the delay of the employer shared responsibility payment, or the employer mandate, CRS also released a report detailing impact the decision may have on health insurance coverage and eligibility. Some of the potential issues addressed in the CRS memo include: fewer than anticipated "large" employers offering insurance coverage, more than anticipated employees qualifying for premium tax credits, and concerns with verification of tax credit eligibility to prevent fraud and abuse. This report was released in regards to HR 2667, Delay in Implementation of Potential Employer Penalties Under ACA, the legislative delay of the ACA employer penalties.
The Congressional Research Service (CRS) issued a report on February 1 outlining the requirements taxpayers must meet in order to qualify for premium tax credits under the Affordable Care Act (ACA). The CRS report, entitled Health Insurance Exchanges Under the Patient Protection and Affordable Care Act (ACA), reviews exchange functioning at the state level and explains how to determine consumer eligibility for the tax credit and cost-sharing subsidies. According to the report, because the premium tax credits are advanceable, it is necessary to determine eligibility for credits at the time of application. Exchanges may determine applicant eligibility directly or may choose to implement a determination of eligibility made by the U.S. Department of Health and Human Services (HHS). The report also outlines how the exchanges interact with the individual mandate, employer requirements, and Medicaid.
Previous updates have summarized final IRS regulations implementing provisions of the Affordable Care Act that provide premium tax credits to help low- and moderate-income individuals and families buy affordable health insurance through State health insurance Exchanges. The IRS regulations provide that premium assistance tax credits are available to all eligible state residents, regardless of whether their state Exchange is state-operated or federally facilitated. This Update examines a dispute that that has arisen regarding the availability of premium assistance tax credits in federally facilitated state Exchanges.