CHAPTER4:ELIGIBILITYFORADVANCEPREMIUMTAXCREDIT
&COSTSHARINGREDUCTIONS
TABLE OF CONTENTS
A.
OverviewofAdvancedPremiumTaxCreditsandCostSharingReductions............................................1
1)
AdvancePremiumTaxCredits................................................................................................................1
2)
CostSharingReductions.........................................................................................................................1
B.
APTCEligibility.............................................................................................................................................2
1)
OverviewofAPTCEligibility...................................................................................................................2
a)
EligibilityCriteria.................................................................................................................................2
b)
TreatmentofHouseholdsinWhichSomeIndividualsAreNotEligibleforanAPTC.....................2
c)
SpecialRuleforLawfullyPresentIndividualsBelow100%oftheFPL.............................................3
2)
HouseholdCompositionandSize...........................................................................................................3
a)
3)
SituationsinwhichMultipleTaxpayerHouseholdsEnrollinOneQHP...........................................4
HouseholdIncome..................................................................................................................................4
a)
WhoseIncomeisCounted..................................................................................................................4
b)
UseofProjectedIncome....................................................................................................................5
c)
WhatCountsasHouseholdIncome...................................................................................................5
d)
DeterminingModifiedAdjustedGrossIncome(MAGI)....................................................................6
i)
Useoftheprioryear’sfederaltaxreturn......................................................................................7
ii)
ConstructingMAGI.........................................................................................................................8
e)
4)
ComparingHouseholdIncometotheFederalPovertyLevel...........................................................9
IneligibilityBasedonAccesstoMinimumEssentialCoverage...........................................................10
a)
DefinitionofMECforPurposesofAPTCEligibility..........................................................................10
b)
Government---SponsoredMEC........................................................................................................11
i)
TimeofEligibility..........................................................................................................................11
ii)
Obligationtocompleteadministrativerequirementstoobtaincoverage................................12
iii)
Specialruleforveteranscoverageprograms..............................................................................12
iv)
Retroactiveeligibility....................................................................................................................12
v)
FailuretoReconcile…………………………………………………………………………………………………………………13
c)
Employer---sponsoredMEC..............................................................................................................13
i)
Affordablecoverage.....................................................................................................................14
ii)
MinimumvalueandmethodsfordeterminingMV..................................................................15
iii)
Treatmentofopenenrollmentperiods/specialenrollmentperiods.........................................17
iv)
Continuationcoverage(e.g.,COBRA)..........................................................................................18
v)
Enrollmentinaneligibleemployer---sponsoredplan.................................................................18
d)
C.
RelatedIndividualNotClaimedasaPersonalExemptionDeduction............................................18
CalculationofAPTC...................................................................................................................................19
1)
OverviewofAPTCCalculation..............................................................................................................19
2)
FormulaforCalculatingtheSizeofanAPTC........................................................................................19
a)
Costofthe“BenchmarkPlan”..........................................................................................................19
i)
b)
TreatmentoffamiliesthatneedmorethanoneQHPtocoverallmembers...........................20
Contributionamount........................................................................................................................20
c) Special expected contribution rules for households with members who are not lawfully
present.............................................................................................................................................……….20
d)
Actualpremiumcosts.......................................................................................................................21
i)
Premiumspaidbyanotherperson.......................................................................................................21
ii)
Allocation of actual premium costs when multiple tax households purchase a plan together...21
3)
TreatmentofNon-EssentialHealthBenefits.......................................................................................22
4)
TreatmentofPediatricDentalBenefits...............................................................................................22
D.
EligibilityforCostSharingReductions(CSRs)..........................................................................................23
1)
EligibilityforCostSharingReductions(CSR)........................................................................................23
2)
ChangesinEligibilityforCost-SharingReduction……………………………………………………………………………24
3)
SpecialRules..........................................................................................................................................25
a)
Non-CitizensLawfullyPresentWhoAreIneligibleforMedicaidDuetoImmigrationStatus.25
b)
SpecialRuleforFamiliesThatIncludeIndividualsQualifyingforDifferentCSRLevels...............25
4)
AmericanIndian/AlaskaNative(AI/AN)Population...........................................................................25
a)
NoCostSharingObligationforAI/AN<300%FPL..........................................................................25
b)
LimitedCostSharingObligationforAllOtherAI/AN......................................................................26
CHAPTER4:ELIGIBILITYFORADVANCEPREMIUMTAXCREDITS& COSTSHARINGREDUCTIONS
A.
Overview of Advance Premium Tax Credits and Cost Sharing Reductions
PremiumtaxcreditsandCostSharingReductions(CSRs)aresubsidesmadeavailablebythefederalgovernmenttohelp
individualsandfamiliespayforthecostofhealthinsurancecoveragepurchasedthroughHealthSourceRI.Tobe
eligibleforapremiumtaxcreditorCSR,anindividualmust:
•
Bepartofahouseholdthatfiles(orwillfile)taxesandmeetsfinancialeligibilitystandards;ifmarried,
householdmustfiletaxesjointly
•
EnrollinaQualifiedHealthPlan(QHP)throughHealthSourceRI;and
•
Bewithoutaccesstoanaffordablealternativesourceofcoveragethatmeetsbasicstandards,i.e.,“minimum
essentialcoverage”(MEC).
Apremiumtaxcreditbecomesavailableattheendofthetaxyear,whenahouseholdfilesitsannualtaxreturnand
reportsthecoveragethehouseholdpurchasedduringtheprecedingyear.
Apremiumtaxcreditalsomaybe paidinadvanceonamonthlybasistoprovideimmediatefinancialassistanceto
householdstohelpthempurchaseaQHP. Whenthetaxcreditispaidinadvance,itiscalledanAdvance
PremiumTax Credit(APTC).ForhouseholdseligibleforAPTCs,thisassistanceissenttotheinsurancecarrierontheir
behalftooffseteachmonthlybill.TheamountofAPTCsthatthehouseholdreceiveswillappearonmonthlybilling
invoicesentbyHealthSourceRI.
ThisChapterfocuseson initialeligibilityfor APTCs and CSRs.Information on the redetermination of eligibility
and enrollee obligationsto reportchangesthatoccurthroughouttheyearare notincludedin this Chapter,nor
isinformationregardingthereconciliationprocess.Forinformationonredeterminationsofeligibility,pleasesee
Chapter8.Formoreinformationaboutthereconciliationprocess,pleaseseeChapter5.
HealthSourceRIisobligatedtotransmitindividualmarketeligibilityandenrollmentinformationtotheFederal
governmentasnecessaryfortheFederalgovernmenttobegin,end,orchangeAPTCsorCSRs.1HealthSourceRI
willtransmitindividualeligibilityandenrollmentinformationtotheCarriersasnecessaryforthemtocalculatethe
amountstheyshouldcollectfromtheFederalgovernmentonbehalfofcoveredindividuals/householdswho
qualifyforAPTCsandCSRs,includinginitialdeterminations,mid-yearchanges,andannualchangesineligibility.
1)
Advance Premium Tax Credits
APTCsareavailabletohouseholdsbasedoneligibilitycriteria,includinghouseholdsizeandannualincome,they
areintendedtohelpoffsetsomeofthecostassociatedwithpurchasinghealthinsurance. Tocalculatea
household’sAPTCeligibility,HealthSourceRIwillfirstidentifythesecondlowestcostsilverplanthatisavailableinthat
policyyear,calledthe“benchmarkplan.”Theamountoftaxcreditthehouseholdiseligibleforisequaltothetotalcostof
thebenchmarkplan(orplans)thatwouldcoverthefamily,minusthehousehold’sexpectedcontributionforcoverage.
TheexpectedcontributionisbasedontheFederalPovertyLevel(FPL)andusesonaslidingscale;itvariesfrom2%of
incomeforhouseholdsat100%o fth eF P Lto9.5%ofincomeforthoseat400%o fth e FPL.2
1
asrequiredby45C.F.R.§155.340
1
APTCeligiblecustomerscanusetheirAPTCstobuyanycategoryofhealthplanofferedthroughHealthSourceRITheir
monthlypaymentmayincreaseordecreasebasedontheirplanselection.3Afteracustomerenrollsinaplanandpays
forthefirstmonthofcoverage,thecustomer’shealthinsurancecompanywillstarttodirectlyapplythecustomer’s
APTCstothecustomer’smonthlyhealthinsurancebill.Householdscan applytax creditstowardthepurchaseofany
availableQHPsoldthroughHealthSourceRIexceptacatastrophicplan.4
2)
Cost Sharing Reductions
Cost-sharingreductions(CSRs)areavailabletohouseholdswhoearnupto250%oftheFPLANDenrollinasilver-level
QHPplanthroughHealthSourceRI.CSRsarealsoavailabletoAmericanIndianandAlaskaNativehouseholdswhoenrollin
anylevelQHP(See“EligibilityforCostSharingReductions,AmericanIndian/AlaskaNativePopulation”).CSRsareusedto
reducetheout-of-pocketcostsofmedicalcaresuchasdeductibles,co-payments,andcoinsuranceforcoveredservices.
SimilartoAPTCs,thefederalgovernmentsendsCSRsubsidiesdirectlytohealthinsurancecompaniesonbehalfofCSReligiblehouseholds.TherearethreedifferentlevelsofCSRsavailable,eligibilityforeachdependingonahousehold’sFPL.
B.
APTC Eligibility
1)
Overview of APTC Eligibility
a)
Eligibility Criteria
HouseholdsareeligibleforanAPTCinagivencoveragemonthifthey:5
•
•
Anticipatehavinganannualhouseholdincomeof138%to400%oftheFPL6 (withanexception fornon-citizens
withincomebelow138%ofFPLwhoarelawfullypresentandineligible for Medicaid due to immigration
status7).
Plantofileafederaltaxreturnand,ifmarried,plantofileajointreturn8. Married same-sexcouplesmust
alsoplantofilejointly.
•
Cannotbeclaimedasadependentonsomeoneelse’staxreturn.9
•
MeetothereligibilityrequirementstoenrollinaQHP(SeeChapter1).
Inanygivenmonth,individualscanqualifyforanAPTConbehalfofthemselvesandany eligible household
members who:
•
EnrollinaQHP,10and
LackaccesstootherMEC,suchasemployer-basedcoverage,employer-basedcoveragethroughtheSHOP
Exchange,Medicare, Medicaid, or CHIP. (See “Minimum Essential Coverage” below.)
•
3
IfahouseholdiseligibleforAPTCsinexcessofthecostoftheQHPinwhichtheyenroll,andachildorchildren undertheageof19inthathousehold
enrollsinastand-alonedentalplan,thenanyamountsoftheAPTCinexcess ofthecostoftheQHP,uptothecostoftheEHBportionofthepediatric
stand---alonedentalplan,maybeclaimedasapremiumtaxcreditattheendoftheyear,see 26CFR1.36B-3(k).HealthSourceRIcannotapply
advancesonpremiumtaxcreditstowardsstand-alonedentalcoveragein thesecircumstances.
4
45CFR 156.440
5
45CFR155.305(f);26CFR1.36B--2
6
TheFPLlevelisupdatedannuallybytheSecretaryofHealthandHumanServices. ForpurposesofAPTCeligibility, usethemostrecentlypublished
FPLonthefirstdayoftheannualopenenrollmentperiod.
7
45CFR155.305(f)(2);§1.36B-2(b)(5)
8
45CFR155.300(a),§1.36B-2(b)(2)
9
26CFR1.36B-2(b)(2)(3). EvenifthetaxpayerwhocouldclaimtheAPTCapplicantasadependentisexpectednot todoso,theapplicantstillis
ineligibleforanAPTC. AnAPTCcannotbeprovidedtoanindividualforwhoma dependentdeductionis“allowabletoanothertaxpayer.”
10
26CFR1.36B-2(c). Theenrollmentmustbeasofthefirstdayofthemonth;ifanindividualenrollsinaQHPinthemiddleofamonth,heorshecannot
receiveanAPTCforthatmonth.
2
b)
TreatmentofHouseholdsin Which Some IndividualsAre NotEligible foran APTC
AnindividualwhoisnoteligibletopurchaseaQHPcanstillreceiveanAPTCforother householdmembers.11
Forexample,afatherwhoisnotlawfullyresidingintheUnited Statesorwhoisincarcerated(andtherefore
ineligibletopurchaseaQHP)maystill receiveanAPTConbehalfofhiswifeandchildrenifthewifeandchildren
meeteligibilityrequirements. Ifanindividualisnotapplyingforcoverage for himorherself, h e o r s h e must
s t i l l provide the income and household information required to evaluate eligibility for other household
members.
c)
SpecialRule forLawfully PresentIndividualsBelow 100% ofthe FPL
Ingeneral,householdsmusthaveincomebetween138%and400%oftheFPLtobe eligibleforanAPTC.12 . However,lawfullypresentimmigrantswho areineligiblefor Medicaid based ontheir immigration status13 and whose
household income falls below 138% oftheFPLstillmaybeeligibleforanAPTC. Suchindividualsmustbelawfully
present andmustmeetalloftheotherAPTCeligibilitycriteriathatapplytoindividualswithincomeatorabove
138%oftheFPL.
2)
Household Composition and Size
Todeterminewhetheranapplicantmeetsthefinancialeligibilitycriteriaforan APTC, HealthSourceRImust“construct”
the applicant’s household, i.e., identifythemembersoftheapplicant’sfamilywhoareconsideredpartofthe
household forAPTC purposes.14Afterthe household is constructed,HealthSourceRIdeterminesthehousehold’s
incomeandcomparesittotheFPLforahouseholdof the appropriate size.
ForAPTCpurposes,anapplicant’shouseholdconsistsofthefamilymemberswhowill filetaxestogether.
Specifically, a household includes individuals for whom a taxpayermayclaimadeductionforapersonal
exemption,15includingtaxdependentseveniftheyliveoutsidethehomeforsomeperiodoftime.Forassessing
Medicaid eligibility,thesamehousehold isgenerallyused exceptwhenalternativerelationship-basedhousehold
rulesapply(seeChapter6).
Inthecaseofadisputebetweenparentsastowhoiseligibletoclaimachildorchildrenastaxdependents,
HealthSourceRIwillnotprovideanyassistancenormakeadetermination.HealthSourceRIwillonlyacceptacourt
orderasproofofwhichparentisauthorizedtoclaimachildorchildrenastaxdependentsforpurposesofdetermining
ahousehold’seligibilityforAPTCsorCSRs.
Example: Considertwoadultswhoaredivorcedw ith a ch ild .T hemotherandchildlivetogetherandthefather
livesseparately. Thefatherclaimsapersonalexemptiondeductionforthechild,sothechildisincludedinthe
father’staxpayerhouseholdforthepurposeofdetermining eligibilityforanAPTC.Thefather’staxpayerhousehold
sizeistwo:thefatherandthechild.The childisnotincluded inthe mother’staxpayerhouseholdfordetermining
eligibilityforan APTC, evenifthechildliveswiththemother.Themotherhasataxpayerhouseholdsizeofonefor
the purpose of assessing eligibility for an APTC.
11
45CFR155.305(f);26CFR1.36B-2
45CFR155.305(f)(2);26CFR1.36B-2(b)(5)
13
SeeDHSMedicalAssistancePolicyManual, TechnicalEligibilityRequirements:0304.05.15.05;
https://www.policy.dhs.ri.gov/0300.htm#_Toc359220686
14
26CFR1.36B-1(d)
15
45CFR155.305(f)(ii);26CFR1.36B-2
12
3
a)
Situations in which Multiple Taxpayer Households Enroll in One QHP
Multiple- taxpayer households receiving separate APTCs may enroll together in oneQHP.16Forexample,a25-year
oldexpectingtofiletaxesseparatelyfromher parentsmaychoosetoenrollinthesameQHPasherparents. In
thissituation,the APTC iscalculated separately foreach taxpayerhousehold, and both APTCs are applied tothe
sameplan.
3)
HouseholdIncome
InordertobeeligibleforanAPTC,anapplicant’sprojectedannualhouseholdincomemustbe between138%of
theFPLto400%o fth e FPL17 or,asexplainedbelow,lessthan138%o fth e FPLforlawfully-present
immigrants.18 Householdincomeisalsoincludedinthecalculationtodeterminethetotalamountofa
household’sAPTC (seesectionon“FormulaforCalculatingtheSizeofanAPTC”).
a)
Whose Income is Counted
Theincomeofallindividualsinthetaxpayer’shouseholdwhoarerequiredtofiletaxes mustbeincludedin
householdincome.19 Forexample,amarriedcouplewithateenage sonwhoworkspart-timemustincludehis
income,butonlyifheearnsenoughincometorequirehimtofiletaxes. Formoreinformationonwhoisrequired
tofiletaxes,andwhattheappropriatetaxfilingthresholdsare,seeIRSPublication 501.20
Example: ConsideramarriedcoupleexpectingtofileFederaltaxesjointlywhoclaima personalexemptiondeduction
fortheir16-yearolddaughter.TheQHPhousehold sizeisthree:themother,father,anddaughter. Bothparentsare
employedandtheir daughteralso earns $300 per year through babysitting jobs. When determining their household
income,the parents’income isincluded, but the daughter’s income is not includedbecauseherearnedincomeis
belowthetaxfilingthreshold.Sheisnot requiredtofileherowntaxreturn. If,however,sheanticipatestakingonan
additionaljobthatwouldpayenoughmoneytoputheroverthetax-filingthreshold,shewouldberequiredtofileher
owntaxformand her earnings would be included in the household’s income.21
b)
Use of Projected Income
HealthSourceRIapplies a household’s “projected” annual incometo assess i t s e l i g i b i l i t y f o r APTCs.22 Projected
annualincome is the applicant’sbestestimateforthehousehold’sincomeduringtheyeartheapplicanthopestoenroll
incoverage. Projectedincomemustbe based upon reasonable and verifiable expectations(see Chapter7),such as
pastyear’sincome and expected changesto income based on factors suchasaplannedjobchange,apromotion,
plannedretirement,orexpectedre-entryinto the work force.WhileHealthSourcemayassistcustomerswiththemath
portionofestimatingannualhouseholdincome,HSRIarenottaxprofessionalsandcustomersareultimatelyresponsible
fortheprojectedannualincomenumberthattheyreport.Customersshouldconsultwithataxprofessionaliftheyhave
questionsregardinghowtobestprojecttheirannualincome.
16
26CFR1.36B-3(h)
45CFR155.305(f)(i);26CFR1.36B-2(b)
45 CFR 155.305(f)(B)(2)
19
45CFR155.305(f);26CFR1.36B-1(e)
20
IRSPublication501isavailableat:http://www.irs.gov/publications/p501/ar02.html#en_US_2012_publink1000220851
21
26CFR1.36B-1(e)(ii)(B)
22
45CFR155.305(f)(i); 26CFR1.36B-2(b)
17
18
4
Householdsw h ich end up reporting a different amount ofincomefortheyearontheirfederaltaxformsthanthey
actuallyearnduringthatyearmayeitherberesponsibleforrepayingexcessAPTCsreceivedtotheIRS,or
maybeentitledtoarefundforunderpayments of APTCsforwhichthehouseholdwaseligible.See Chapter5for
additionalinformation.
Example: ARhodeIslandmanloseshisjobinJuneandappliesforcoveragethroughHealthSourceRIonJuly1.To
evaluatehiseligibilityforAPTCs,HealthSourceRIneedstocalculatehisexpectedincomefortheentireyear,because
APTCsarecalculatedbasedonanannualincome.Todothis,HealthSourceRIwillcombinehisearningsforthefirst
halfoftheyearwhileemployedwithanyunemploymentincomehemighthavebeginninginJunefortherestofthe
year.
Ifheearned$20,000duringthefirsthalfoftheyearandexpectstoreceive$10,000inunemploymentbenefits
throughDecember31,hisprojectedannualincomewouldbe$30,000($20,000forJanuarythroughJuneplus$10,000
forJulythroughDecember).HealthSourceRIdoesNOTsimplylookathisexpectedincomefortheremainderofthe
year.
c)
What Counts as Household Income
ForcalculatinghouseholdincomeasitrelatestoassessingAPTCeligibility,HealthSourceRIuses a measure of
income known as“ModifiedAdjustedGrossIncome”or“MAGI.”23MAGIisbasedonth eIRSdefinitionof what
counts as income after selected deductions are taken into account.MAGIconsistsofthefollowingtypesof
income,asdefinedbytheIRS:24
• Adjusted Gross Income
Adjustedgrossincomeisgrossincomeadjustedby“above-the-line”deductions.25 For mosttaxpayers,wagesand
salarieswillconstitute the majority oftheirgrossincome.However,asdiscussed inmoredetailbelow,gross
incomealsoincludesincomefrom a broad array of other sources, such as unemployment benefits, taxable interest,
andcapitalgains. “Above-the-line”deductionsrefertotheadjustmentsthatpeoplecan make to theirgross income.
These include alimony payments,intereston student loans, andotheritemsthatappearonpageoneofForm1040.
However,theydonotinclude charitablecontributions,mortgageinterestandother“below-the-line”deductions.
• Social Security Benefits Not Included in Adjusted Gross Income
Forfederal income taxpurposes, the federalgovernment only taxesSocial Security benefitsforpeoplewhomeet
certainincomecriteriaand,then,onlyashareoftheir benefitsare taxed.26 However,allSocialSecurity benefitsare
included inMAGI,regardlessofwhethertheyareconsideredtaxableornon-taxableincomeforfederaltax purposes.
23
26CFR1.36B-1(e)
26CFR1.36B-1(e)(2)
25
26USC§62
26
26CFR1.36B-1(e)
24
5
• Tax-Exempt Interest
Most o f t h e interest that taxpayers receive from bank accounts, money market accounts, certificates of deposit,
and deposited insurance dividends is considered taxable income. However,interestonsomebondsissuedby,and
usedtofinance,stateandlocal governmentoperationsisnottaxableatthefederallevel.Thistax-exemptinterest
is considered as partofMAGI.27
• Foreign Earned Income
Whileforeignearnedincomegenerallyisnotsubjecttotaxation,itisincludedinMAGI.28 Itistheincomereceived
fromsourceswithinaforeigncountryorcountriesthat constitute earned income attributable to services
performed by the individual whentheywere:
•
AU.S.citizenandabonafideresidentofaforeigncountryforan uninterruptedperiodoftime,which
includesanentiretaxableyear;or
•
AU.S.citizen orresidentandwho,duringanyperiodof12consecutivemonths,ispresentinaforeign
countryforatleast330fulldaysduringthatperiod.
d)
Determining Modified Adjusted Gross Income (MAGI)
MAGIisrootedinth eIRSdefinitionofincomedevelopedtohelptaxpayersfiletheirannualreturns. However,
APTCsare based on a household’sprojected annualincome duringthemonthinwhichitisapplyingforcoverage.
HealthSourceRI will assist households in generating their projected annual MAGIbasedontheircircumstancesat
thetimeofapplication. Inpractice,therearetwoways HealthSourceRIcan help applicants determine their
household’s projected annual MAGI:
•
Useaprioryear’sfederaltaxreturn
Thismethodrequirespulling“adjustedgross income”offtheappropriatelineofthetaxformandmakingafew
additions,if applicable,forforeignearnedincome,tax-exemptinterest,andanyuntaxedSocial Security benefits.
Thismethod worksif an a p p l i c a n t ’ s circumstances haven’tchanged notably sincetheapplicant’slasttaxfilling.
• “Construct” MAGI This method requires gathering detailed information on an applicant’sincomefrom varioussources,andadjusting
thatincometotakeintoaccountthe “above-the-line”deductions.Thisapproachcanbeusedifanapplicant’s
circumstanceshave changedsincetaxtimeoriftheapplicantanticipatessignificantchanges duringthecourseof
thecoverageyear.
Both methods, described in more detail below, rely on identicalIRS definitions ofwhatconstitutesincomeand
allowabledeductions. Usingaprior year’staxreturnallowsHealthSourceRItoestimatebasedonthework that
alreadyhasbeendonebytheapplicanttoreporthisorherdataanddeductionsin accordancewithIRSrules. Ifthe
prioryear’staxreturnisnolongerrelevant,HealthSourceRImusthelptoconstructthe projectedMAGIfortheyear
27
28
26CFR1.36B-1(e);IRS-IncomeReceived,availableat:http://www.irs.gov/taxtopics/tc403.html
26USC§9
6
inwhichthehouseholdisapplyingforanAPTCorCSRusingthe same IRS definitions and rules.
i)
Useoftheprioryear’sfederaltaxreturn.
If the household’s circumstances have not changed substantially, HealthSourceRI can use the adjusted gross income
amount on the household’s prior year’staxreturnastheprimarybasisforMAGI. Thisadjustedgrossincome
amountcanbefoundat:29
• IRSForm1040EZ:Line4 IRSForm 1040A:Line21
•
• IRSForm1040:Line37
Ifapplicable,HealthSourceRIwillthenaddthe followingsourcesofincomefrom thetaxform totransform the
household’s “adjusted gross income” into “modified adjusted gross income”:
• Any Social Security benefits not already included in adjusted gross income (Line20aofIRSForm1040).
• Foreignearnedincome excludedfrom grossincome (includeon Line7 of I R S Form1040basedonLine26ofIRS
Form2555orLine17ofIRSForm2555-EZ),and
• Tax-exemptinterestthetaxpayerexpectstoreceiveoraccrueduringthe year(Line8boflastyear’sFederaltax
returnIRSForm1040).
ii)
ConstructingMAGI.
Whenahouseholdhasexperiencedasubstantialchangeincircumstancessince filingitstaxreturn(oranticipates
suchachangewilloccurduringthecurrent calendar year), HealthSourceRI will help the household “construct” its
projected annual modified adjusted gross income.Asafirststep,HealthSourceRIwilldeterminethehousehold’s
grossincome. Thetypesof incomethatcountanddonotcountareidentifiedinTable1below.30
29
Forfederaltaxpurposes,“above-the-line”deductionscanonlybeusedbyindividualswhofileaForm1040or Form1040A. Theycannotbeclaimed
bysomeonewhoreliesontheForm1040EZbecausetheformisnot designedtocapturethem. InthecontextofAPTCeligibility,however,the
deductionsareavailabletoall householdswhoarenotrelyingontheirprioryearfederaltaxformasthesolebasisforestablishingtheir projected
annualhouseholdincome.
30
For additional information on adjusted gross income, see IRS Publication 17,available at:http://www.irs.gov/publications/p17/. ForIRSincometypes,
pleasevisit:http://www.irs.gov/taxtopics/tc400.html.
7
Table1. ExamplesofWhatIncomeCounts&DoesNotCountUnderMAGI31
IncomethatcountstowardsMAGI
Taxable wages/salary (before taxes are taken out)
Notethatpre-taxcontributionstodependentcareaccounts,healthinsurancepremiums, flexible spending
32
accounts, retirement accounts and commuter expenses are NOT included as income Self-employment(profitoncebusinessexpensesarepaid)33
Social Security benefits
Unemploymentbenefits
Alimony received
Most retirement benefits
Interest(includingtax-exemptinterest)
Net capital gains (profit after subtracting capital losses)
Most investment income, such as interest and dividends
Rental or royalty income (profit after subtracting costs)
Othertaxableincome,suchascanceleddebts,courtawards,jurydutypaynotgivento
an employer, cash support, and gambling, prizes, or awards
Foreign earned income
IncomethatdoesNOTcount
Child support received
Supplemental Security Income (SSI)
Worker’s compensation payments
Veteransbenefits
Gifts
a. Accounting for “Above-the-Line” Income Deductions
Asasecondstep,anapplicant’sgrossincomemustbeadjustedbytheabove-the-line deductionsdiscussed above.34
Someofthetaxdeductions include:
•
Certainself-employmentbusinessexpenses
•
Portion of interest on student loans • Alimony paid • Most contributions to retirement accounts35
• Tuitionandfees36
• Health savings account contributions37
• Penalties on the early withdrawal of savings38
31
Foradditionalinformation,pleasereferto26USC61. ThelistpresentedhereisbasedontheCentersforMedicareand MedicaidServices’
descriptionofthetypesofincomethatcounttoward“grossincome”forpurposesofMAGI.SeealsoCentersforMedicare&MedicaidServicesSingle
StreamlinedApplication, AttachmentA:ListofItemsinthe OnlineApplicationtoSupportEligibilityDeterminationsforEnrollmentthroughthe
HealthInsuranceMarketplace andforMedicaidandtheChildren’sHealthInsuranceProgram. 32
Czajka,John. May2013. TranslatingModifiedAdjustedGrossIncome(MAGI)toCurrentMonthlyIncome. StateHealthAccessReformEvaluation.
Availableat:http://www.shadac.org/files/shadac/publications/TranslatingMAGItoCurrenlyMonthlyIncome.pdf.
33
26USC1402
34
A comprehensive list of these deductions can be found at:http://www.law.cornell.edu/uscode/text/26/62 with additional information at the IRS
websiteathttp://www.irs.gov/Credits---&---Deductions.
35
26USC§219.
36
26USC§222.
37
26USC§223.
38
26USC§165.
8
•
•
Educatorexpenses39
Movingexpensesrelatedto a jobchange40
• Certainbusinessexpensesofperformingartists,reservists,andfee-basis government officials41
Theabove-the-linedeductionspotentiallymostcommonamonglow-andmoderate-incomehouseholdsincludecertain
self-employmentexpenses,mostcontributionsto retirement accounts, alimony paid, tuition and student fees, and
a portion of student loan interest.42
b. DeductionsforCertainSelf-EmploymentExpenses
Mostdeductionsforself-employedbusinessexpensesareincludedinnetincome(the profitoncebusinessexpenses
arepaid),butadditionaldeductionscanbetakenforthe deductiblepartofself-employmenttax,43 self-employed
SEP,SIMPLE,qualifiedplans,44 andself-employedhealthinsurancedeductions.45,46
c. AlimonyPayment
Alimonyisapaymenttoaspouseorformerspouseunderadivorceorseparation agreement.47
d. Portion of Student Loan Interest
Householdsmaybeabletodeductaportionoftheinteresttheyexpecttopayona qualifiedstudentloan.48Box1
ofthe1098-EFormshowstheinterestpaidfortheprior year,whichmaybehelpfulinprojectingstudentloan
interestthatwillbepaidduring the year.
e)
Comparing Household Income to the Federal Poverty Level
ToassessfinancialeligibilityforAPTCs,HealthSourceRIwillcomparea household’s projected annual income to the
FPL guidelines for the appropriate household size.49H ealth So u rceR Iwilluse the mostrecently published FPL
guidelinesavailableasofthefirstdayoftheannualopenenrollmentperiodfor coveragebyaQHPofferedthrough
HealthSourceRIforacalendaryear.50,51 TheFPLusedtodetermineAPTC eligibilitymaybedifferentthantheFPLusedforMedicaideligibility. Medicaid
usesFPLlevelsinaccordancewiththerulessetforthbytheiragency.52(see Chapter6).
39
26USC§162.
26USC§217.
41
26USC§162.
42
Czajka,John. May2013. TranslatingModifiedAdjustedGrossIncome(MAGI)toCurrentMonthlyIncome. StateHealthAccessReformEvaluation.
Availableat:http://www.shadac.org/files/shadac/publications/TranslatingMAGItoCurrenlyMonthlyIncome.pdf.
43
IRSSelf-EmploymentTax.http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employment-Tax-Social-Security-and-Medicare-Taxes
44
IRSSelf-EmploymentTax.http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employment-Tax-Social-Security-and-Medicare-Taxes
45
26USC§162.
46
Foradditionalinformation see IRS Publication 334, Tax Guide for Small Business.
47
26USC215;IRS-AlimonyPaid,availableat:http://www.irs.gov/taxtopics/tc452.html.
48
26USC§221;IRS---StudentLoanInterestDeduction,availableat:http://www.irs.gov/taxtopics/tc456.html.
49
TheFPLlevelisupdatedannuallybytheSecretaryofHealthandHumanServices.
50
45 CFR 155.300(a)
51
The initial open enrollment extended from October 1, 2013 through March 31, 2014, which meantthe 2013FPL levelswere usedfortheinitialopen
enrollmentperiod. Forthe 2015coverageyear, the annual open enrollment period e x t e n d e d f r o m N o v e m b e r 1 5 t o F e b r u a r y 1 5 , a n d 2 0 1 4 F P L l e v e l s w e r e u s e d . I n s u b s e q u e n t y e a r s , t h e o p e n e n r o l l m e n t p e r i o d will extend from October 1 through December15. 52
42CFR435.4
40
9
4)
Ineligibility Based on Access to Minimum Essential Coverage
Ingeneral,peopleareineligibleforanAPTCiftheyhavesufficientincometosecureadequatecoverage(i.e.,
“minimum essential coverage” or MEC) through a source other than H e a l t h S o u r c e R I .53 Thisfederal
requirementisdesignedtoreservetheavailabilityofAPTCstohouseholdswho do not have alternative
a f f o r d a b l e coverage options through their jobs, government programs, or other sources.
a)
Definition of MEC for Purposes of APTC Eligibility54
For purposes of APTC eligibility, the term “minimum essential coverage”(MEC) means coverage under any of the
following:
•
Mostgovernment-sponsoredinsurance,
•
•
Eligibleemployer-sponsoredinsurance,
Grandfathered health plans,55and
•
OthercoveragethatisrecognizedasMECbytheSecretaryofHealthandHuman Services,includingforeign
healthcoverageandself-fundedstudenthealthcoverage.
Some typesofvery limited coverage arenotconsidered “MEC”. These “excepted benefits” policies include the
following:56
• Accidental death and dismemberment coverage
•
Disability insurance
•
General liability insurance
•
Automobile liability insurance
•
Workers’compensation
•
Credit-onlyinsurance(e.g.mortgageinsurance)
•
Coverageforemployer-providedon-sitemedicalclinics
•
Limited-scopedentalorvisionbenefits
•
Long-term care benefits
•
Benefits provided under most health flexible spending arrangements
•
Policiesthatcoveronlyaspecifieddiseaseorillness(e.g.cancer-onlypolicies)
•
Supplemental coverage, such as Medicare supplemental policies, TRICARE supplemental policies, and
similar supplemental coverage to coverage under a group health plan.
53
45CFR155.305(f),26CFR1.36B---2(c)
26USC5000A(f);Proposed26CFR1.5000A-2;Proposed45CFR156.602. NotethattheconceptofMECalsois usedtodeterminewhomaybe
exemptfromasharedresponsibilitypayment. Forthispurpose,thelistof coveragethatconstitutesMECisslightlydifferentasdiscussedinChapter
X.
55
Agrandfatheredhealthplanisagrouphealthplanorgrouphealthinsurancecoveragethatwasalreadyin existenceonMarch23,2010,whenthe
AffordableCareActwassignedintolaw.Grandfatheredstatusexcludesplansfromcertainmandatesunderthelaw(ACASection1251;Proposed26CFR
1.5000A-2(e)).
56
26 USC 5000A(f)(3)
54
10
b)
Government-SponsoredMEC
Ahouseholdisconsideredeligibleforgovernment-sponsoredMEC-andtherefore ineligibleforanAPTC-ifitmeets
theeligibilitycriteriaforcoverageunderthe programslistedbelow.57Unlessotherwisenoted,itiseligibilityforthe
program–not actualenrollmentinit–thatmakesahouseholdm em berineligibleforanAPTC.GovernmentsponsoredMECincludesthefollowingcoverage:58
• Enrolled in Medicare PartAnotrequiring p ayingaPartApremium59 (mostMedicare beneficiariesdo not need
to pay PartA premiums and are automatically considered eligible for MEC)
•
Medicare Advantage plans (Medicare Part C),
•
Medicaid, other than for:
•
•
•
o Optional coverage of family planning services
o Optionalcoverageoftuberculosis-relatedservices
o Coverageofpregnancy-relatedservices
o Coverage of emergency medical services
CHIP60
Enrolled in TRICARE
Enrolled in veterans’ health coverage61
•
Peace Corps volunteer program
•
Refugee medical assistance supported by the Administration for Children and Families
•
•
Enrolledinastudenthealthplan62
EnrolledinStatehighriskpoolcoverage63
Time of Eligibility
i)
Anindividualistreatedaseligibleforagovernment-sponsoredprogramonthe firstdayofthefirstfullmonthin
whichheorshemayactuallybeginreceiving benefitsundertheprogram.64 Thismeansthatanindividualisnot
treatedas eligibleforagovernment-sponsoredprogram(andthereforeiseligibleto receive APTCs) during: •
•
Thetimerequiredforapplicationprocessing(i.e.,theperiodoftimebetweenapplicationsubmissionand
approval),and
Anyinterimperiodbetweenwhenapersonisfoundeligibleforagovernment-sponsoredprogramandthedate
whenheorshecanbeginreceivingbenefits(i.e.,theperiodoftimebetweenapplicationapprovalandtheeffective
dateofcoverage).
57
26CFR1.36B-2(c)(2)(i)
26CFR5000A(f)(1);26CFR1.36B-2(c)(2)(i);Proposed26CFR1.5000A-2(b);Proposed45CFR156.602
59
ProposedIRSNotice2013-41,issuedonJune26,2013.Availableat:http://op.bna.com/dt.nsf/id/sdoe--992kz2/$File/Notice%202013-41.pdf.
60
Children age one and above who lose CHIP coverage due to a failureto paypremiumsandwhomaynotre-enrollinCHIPforfourmonthsaretreatedas
eligibleforCHIPand donotqualifyforan APTC duringthattime period.
61
Theveterans’healthcoverageprogramsthatrepresentMECforthosewhoareenrolledincludethemedical benefitspackageauthorizedfor
eligibleveteransunder38U.S.C.1710and38U.S.C.1705;theCivilianHealthand MedicalProgramoftheDepartmentofVeteransAffairs(CHAMPVA)
authorizedunder38U.S.C.1781; comprehensivehealthcareprogramauthorizedunder38U.S.C.1803and38U.S.C.1821forcertainchildrenof
VietnamVeteransandVeteransofcoveredserviceinKoreawhoaresufferingfromspinalbifida;andtheNon-appropriatedFundHealthBenefits
ProgramoftheDepartmentofDefense (Proposed26U.S.C.1.5000A---2(b)(5) and (7)).
62
ProposedIRSNotice2013-41,issuedonJune26,2013.Availableat:http://www.irs.gov/pub/irs-drop/n-13-41.pdf
63
Theproposedruledesignatesstatehigh-riskpoolsasMECsubjecttofurtherreviewbytheSecretary(Proposed 45CFR156.602(e)). HHS
specificallynotesthatit“reservestherighttoreviewandmonitortheextentandqualityofcoverage,andinthefuturetoreassesswhetherthey
shouldbedesignatedminimumessentialcoverageor shouldberequiredtogothroughthesame[designation]processoutlinedin156.604”ofthe
proposedrule (Preamble7361).TheproposedIRSnotice2013-41issuedonJune26,2013statesthatindividualsareeligiblefor MECforpurposes
ofAPTCeligibilityiftheyareenrolledinhigh-riskpoolcoverage. Availableat:http://www.irs.gov/pub/irs---drop/n-13-41.pdf
64
26 CFR 1.36B-2(c)(2)(i)
58
11
Example:Considerataxpayerwhoappliesforcoverageunderagovernment-sponsored health care program. The
individual’s application is approved onJuly12,buthercoverageisnotavailableuntilSeptember1.The individualis
consideredeligibleforgovernment-sponsoredMEConSeptember 165andifmeetingallotherapplicablecriteriafor
APTC,wouldbeconsideredAPTCeligiblethroughAugust31.
ii)
Obligation to complete administrative requirements to obtain coverage
Individualseligibleforagovernment-sponsoredprogram,butwhodonot applyforsuchcoverage,arestill
excludedfrom APTCeligibilityaftertheyhave exceededthedeadlineto apply forcoverage (with the exception
discussed below for people eligible for veterans health coverage programsorforcertainindividualseligiblebutnot
enrolledforMedicarePartA). Individuals whomeettheeligibilitycriteriaforagovernment-sponsoredprogramare
expectedtoapplybythelastdayofthethirdfullcalendarmonthfollowingthe eventthatestablishestheir
eligibility,suchaslossofajobthatmakestheindividualeligibleforMedicaid.66Iftheydonotapplybythatdate,
theyneverthelesswillbetreatedaseligibleforMEC(andtherebyineligibletoreceiveAPTCs) beginningon the
firstday ofthe fourth calendarmonth following the qualifying event.67
Example: Consideranindividualwhoturns65onJune3,andbecomes eligible for Medicare. In compliance with
requirements necessary to receive benefits,the individual enrolls in Medicare in September,the last month ofhis
initialenrollmentperiod,and isable to receive Medicare benefits beginning on December 1. Because he completed
necessary requirementsbythelastdayofthethirdfullcalendarmonthaftertheevent thatestablished hiseligibility
(i.e.,turning 65),the individualistreated as eligibleforgovernment-sponsoredMEConDecember1(thefirstfull
month he may receive benefitsunder the program).68
Example: Considerthesamescenario,exceptthattheindividualfailstoenrollintheMedicarecoverageduringhis
initialenrollmentperiod.Inthisinstance,theindividualistreatedaseligibleforgovernment-sponsoredMECasof
October1,2015(thefirstdayofthefourthcalendarmonthfollowingtheeventthatestablishedhiseligibility).69
iii)
Special rule for veterans coverage programs
AnindividualistreatedaseligibleforMECthroughaveteranshealthcare programunderChapter17or18
ofTitle38,U.S.C.onlyiftheindividualis actually enrolled in the program.70
iv)
Retroactiveeligibility
Retroactiveeligibilitymeanseligibilitycoveringaperiodoftimeinthepast.Ifanindividualisdeterminedtobeeligible
forgovernment-sponsoredMECona retroactivebasis(such asMedicaid),thisdoesnotaffecthisorhereligibility
for APTC during the retroactive period. Individuals found eligible for Medicaid are onlyexcludedfrom APTC
eligibilityonaprospectivebasis. Theywillbe treatedaseligibleforMECnoearlierthanthefirstdayofthefirst
65
26CFR1.36B-2(c)(2)(vi)
26CFR1.36B-2(c)(2)(ii)
67
26CFR1.36B-2(c)(2)(ii)
68
26CFR1.36B-2(c)(2)(vi)
69
26CFR1.36B-2(c)(2)(vi)
70
26CFR1.36B-2(c)(2)(iii)
66
12
calendarmonth beginning after the approval of the Medicaid application, as discussed above.71
Example: ConsideranindividualwhoinNovemberenrollsinaQHPfortheupcomingcoverageyearandreceivesAPTCs
tohelppayforthecostoftheplan.Subsequently,theindividuallosesherpart-timeemploymentandonApril10applies
forcoverageundertheMedicaidprogram.HerapplicationisapprovedonMay15,andherMedicaidcoverageis
effectiveasofApril1.Theindividualistreatedaseligibleforgovernment-sponsoredMEConJune1.72
v)
FailuretoReconcile
AnenrolleeshallnotbeeligibleforAPTCsif:73
(1) enrollee(andspouse,ifapplicable)didnotcomplywiththerequirementtofileanincometaxreturnfortheprior
year(s),asrequiredbySections6011and6012ofIRC(26USC§§6011,6012)andimplementingregulations;or
(2) TheAPTCwasnotreconciledforthatperiod.
TheHealthSourceRIapplicationincludesataxfilingrelatedquestion.Thisquestionwilldisplayonallapplicationsand
allowenrolleeswhoreceivedAPTCsfortheprioryeartoattest,underthepenaltyofperjury,tohavingfiledtheirtax
returnfortheapplicableprioryearandreconcilingtheirAPTCs.
Afterfilingandreconcilingtheapplicableprioryear’sAPTCs,attestingtohavingfiledataxreturnontheapplicationwill
allowtheenrolleetomaintaineligibilityforAPTCevenifIRS’datahasnotyetbeenupdated.Enrollee’swhoseIRSdata
hasnotbeenupdatedbuthavefiledataxreturnandreconciledAPTCsfortheprioryearmustattesttohavingfiledand
reconciledontheapplicationandselectaplanbyDecember15inordertomaintainAPTCeligibilityforcoverageeffective
January1.
c)
Employer-sponsoredMEC
Anindividualwhomayenrollinaneligibleemployer-sponsoredplan,eitherasan employeeorasanindividualwho
mayenrollintheplanbecauseofarelationshipto an employee(i.e.,a“relatedindividual”),istreatedaseligible
foremployer-sponsoredMECif theplanis:
• “Affordable”74and
• Provides“minimumvalue”(MV).75 Employer-sponsored coverage includes coverage offered by a small business through the SHOP.
Asdescribedinmoredetailbelow,aneligibleemployer-sponsoredplanisconsidered affordableforan individualif
theannualpremium shemustpayto purchasecoverage forherselfdoesnotexceedaspecifiedpercentageof
householdincome.76Aplanis consideredtoprovideminimum value(MV)onlyiftheplan’sshareofthetotal
allowed costsofbenefitsprovidedtotheemployeeandrelatedindividualsisatleast60%of such costs.77
71
72
26CFR1.36B-2(c)(2)(iv)
26CFR1.36B-2(c)(2)(vi)
73
74
45CFR155.305(f)(4);26U.S.C.6011,6012.
26CFR1.36B-2(c)(3)(i)
75
26CFR1.36B-2(c)(3)(i)
76
26CFR1.36B-2(c)(3)(v)(A)
77
26CFR1.36B-2(c)(3)(vi)
13
i)
Affordablecoverage
Aneligibleemployer-sponsoredplanisconsidered“affordable”foranemployee iftheportionoftheannualpremium
heorshemustpayforself-onlycoverageis lessthanacertainpercentageoftheirhouseholdincome. Eachyear,the
required contribution percentage will be adjusted by the federal government toreflectgrowth in health carecosts
relative to othermeasuresofeconomic growth and inflation.78,79Thecalculationofaffordabilityforanemployee’s
household membersdoesnottake into accountthe costofproviding household-basedinsurance.The“affordability”
ofemployer-basedinsurancefor relatedindividualsisbasedsolelyon thecostofcoverageforthe employeeonly.
Example: Considerawomanwhoin2016hasahouseholdincomeof$47,000. Heremployeroffers a health
insurance plan thatrequires a contribution of$3,450forself-onlycoveragefor2016(whichrepresents7.3%ofher
householdincome).Becauseherrequiredcontributionforself-onlycoverage doesnot exceed 9.66% of household
income, the plan isconsidered affordable andtheindividualistreatedaseligibleforemployer-sponsoredMECforall
months in 201674
Example:Considerthesamescenario,exceptthatinthiscasesheismarried and her employer offers dependent
coverage. Her required contribution to purchase coverage for her household (which includes herself, her husband
and their child) was $8,250 (representing 17.5% of her household income). Because thecostofpurchasing
coverageforherfamilyisnottakenintoaccountinthe affordabilitytestandherrequiredcontributionforself-only
coveragedoesnot exceed9.66% ofhousehold income,the plan isstillconsidered affordable. Accordingly,the
individualis determinedtohaveasourceofaffordableemployer-sponsoredcoverage,and thusineligibletoreceive
APTCsonbehalfofherselfand/ormembersofher household.
• TreatmentofWellnessIncentivesandEmployerContributionstoHealthReimbursementArrangement(HRA)in
DeterminingAffordability
With the exception of wellness programs designed to prevent or reduce tobacco use, non-discriminatory wellness
program incentives offered by an eligible employer-sponsoredplanthataffectpremiumswillnotbetreatedas
increasing the affordability of coverage (i.e., affordability will be determined assuming that theemployeefailsto
satisfytherequirementsofthewellnessprogram). In circumstances involving tobacco cessation wellness
programs, the affordabilityofplansfortobaccouserswillbedeterminedbasedonthepremiumschargedto those
userswho complete a tobacco program (i.e.,affordability willbedetermined assuming that the employee satisfies
the requirements of the wellnessprogram).80 SeeTable2below.
78
26CFR1.36B-2(c)(3)(v)(A)
In2014,theaffordabilitypercentagewas9.5%ofhouseholdincomeforindividualcoverageandin2015thepercentagewasincreasedto9.56%.
80
26CFR1.36B-2(c)(3)(v)(A)(4)
79
14
Example:Consideranemployerthatoffersaneligibleemployer-sponsored plan with a non-discriminatory wellness
program that reduces premiums by$300foremployeeswhodonotusetobaccoproductsorwhocompletea
smoking cessation course.Premiumsare reduced by $200 ifan employee completescholesterolscreeningwithin
thefirstsixmonths ofthe planyear. Oneemployee(EmployeeA)doesnotusetobaccoandthecostofhis
premiums is $3,700. Another employee (Employee B) uses tobacco and the costofherpremiumsis$4,000.Only
the incentivesrelated to tobacco use are counted toward the premium used to determine the affordability of the
employer’s plan. Accordingly, EmployeeBistreatedashavingearnedthe$300incentiveforattendinga smoking
cessation course. Thus, the employee’s required contribution to premium fordetermining affordability forboth
EmployeesA and B is $3,700. The $200 incentive for completing the cholesterol screening is disregarded.81
Amountsmadenewly availableunderanHRAthatisintegratedwithan employer-sponsoredplancanbetakeninto
accounttodetermineaffordability (i.e.,canbeconsideredasavailabletoincreasetheaffordabilityofemployee
coverage) provided that employees can use the amounts onlyforpremiums,orforeitherpremiumsorcostsharing.82
BecauseHealthSavingsAccount(HSA)fundstypicallycannotbeusedtopayinsurancepremiums,theseamountsdonot
affectthedeterminationofaffordability.SeeTable2below.
Table 2. Treatment of Wellness Incentives & Employer Contributions to HRA in Determining Affordability
Applicability of Incentive/Amount to Premiums In Order to Determine Affordability
WellnessProgram–Non-TobaccoCessation
No. Affordability determined assuming employee
fails to earn incentive/complete program.
Wellness Program – Tobacco Cessation
Yes. Affordability determined assuming employee
earnsincentive/completesprogram.
Employer HSA Contribution
No.HSAfundsgenerallycannotbeusedtopay
premiums.
HRAContribution
Yes,provided thatemployee can use HRA amounts
to(1)reducepremiumsor(2)foreitherreducing
premiums or cost-sharing.
ii)
Minimum value and methods for determining MV
Aneligibleemployer-sponsoredplanprovidesMVonlyiftheplan’sshareofthe totalallowedcostsofbenefitsprovided
totheemployeeundertheplan(as determinedbyHHS)isatleast60%.83 TheMVofaspecificeligibleemployersponsored plan is calculated by dividing the anticipated covered medical spendingforEHBcoverageforthepopulation
coveredbyatypicalself-insured grouphealthplan.Thisiscomputedinaccordancewiththespecificgrouphealth
plan’scostsharing by the totalanticipated allowed chargesforEHB coverage foratypicalself-insuredgrouphealth
planpopulation.84
81
26CFR1.36B-2(c)(3)(v)(D)
26CFR1.36B-2(c)(3)(v)(A)(5)
83
26CFR1.36B-2(c)(3)(vi)
84
Proposed26CFR1.36B-6(c)(1)
82
15
Table3.CalculationofMinimumValue(MV)
Anyoneofthefollowingmethodscanbeusedtodeterminewhetheraneligible employer-sponsoredplanprovides
MV,85includinguseof:
• TheMVCalculatormadeavailablebyHHSandIRSontheHHSwebsite;86
•
OneofthesafeharborplandesignsestablishedbyHHSandIRSand described below;or
•
Fornon-standardplans,actuarialcertificationfromamemberofthe American Academy of Actuaries.
PlansinthesmallgroupmarketalsomeetMVrequirementsiftheyprovidea bronze level plan.87
Individualsseekingadviceastowhethertheemployer-sponsoredinsuranceavailabletothemmeetstheMVstandard
shouldseekguidancefromtheiremployerand/orinsurancecarrier.
Safe Harbors for Determining MV88
AsanalternativetousingtheMVCalculator,anemployer-sponsoredplancould useoneofthreedesign-basedsafe
harborspublishedbyHHSandtheIRSinthe form ofcheckliststo determine whetherthe plan providesMV.These
include:
•
Aplanwitha$3,500integratedmedicalanddrugdeductible,80%plancost- sharinganda$6,000maximumout-ofpocketlimit;
•
Aplanwitha$4,500integratedmedicalanddrugdeductible,70%plan cost-sharing,a$6,400maximumout-ofpocketlimitanda$500employer contributiontoanHSA;or
•
Aplan with a $3,500medicaldeductible,$0 drug deductible,60% medical costsharing,75%drugcost-sharing,a
$6,400maximumout-of-pocketlimit,
$10/$20/$50 copay tiered drug plan, and a 75% coinsurance for specialty drugs.
85
26CFR1.36B-6(d)
ThecalculatorisavailableatthefollowingwebsiteasofJuly2013:http://www.cms.gov/cciio/Resources/Regulations-and-Guidance/index.html.
87
26CFR1.36B-6(d)(4)
88
26CFR1.36B-6(d)
86
16
AsummaryofthisinformationisinthefollowingTable4.
Table4: Safe HarborsforDetermining Minimum Value
IndividualOut---
IndividualDeductible
Coinsurance
of-PocketLimit
Medical
Prescription
Drug
$6,000
$6,400
$6,400
$3,500integrated
medical and drug
$4,500integrated
medical and drug
$3,500
$0
80%ofall
services
70%ofall
services
60% medical
75% drug
Prescription
Drug
Copayments
N/A
Employer
Individual
Annual HSA
Contribution
N/A
N/A
$500
$10/$20/$50
Specialty
drugsat75%
N/A
Treatment of Wellness Incentives and Employer Contributions to HRAs and Health Savings Accounts (HSAs) in
Calculating MV
In some instances, wellness programs and employer contributions to HRAs and HSAsmaybetakenintoaccount
whendeterminingaplan’sMVpercentage.See Appendix A for details on related requirements.
iii)
Treatment of Open Enrollment PeriodsandSpecial Enrollment Periods
Aswith governmentprograms,people are excluded from APTC eligibility ifthey couldenrollinanemployersponsoredplanthatmeetsaffordabilityand minimumvaluecriteria,regardlessofwhetherornottheyactuallydo
so. Asa result,peoplemustbetreatedaseligibleforemployer-sponsoredMECforanymonthsinaplanyear
duringwhichtheycouldhaveenrolledviaanopenor special enrollment period89 (See Chapter 3 for information
on special enrollment periods.) Itisimportanttonotethatpeoplewillnotbetreatedaseligiblefor employersponsoredMECduringanyrequiredwaitingperiodbeforethe coverage becomes effective.90
Example: Consider an individual whose employer offers its employees a health insuranceplanthathasa
planyearfromOctober1throughSeptember30.Employeesmay enrollduringanopenseasonfrom
August1toSeptember15. Inthisscenario,theemployeechoosesnottoenrollintheemployer’splanfor
theOctober1,2014–September30,2015planyearand,inNovember2014, sheenrollsinaQHP
throughHealthSourceRIforcalendaryear 2015.Because she could have enrolled in heremployer’splan
during the August1toSeptember15openenrollmentperiod,unlesstheplanisnot affordable ordoes
notprovide minimum value,thisindividualistreated as eligibleforemployer-sponsoredMECforthose
monthsthatsheisenrolledintheQHPduringheremployer’splanyear(i.e.,from Januarythrough
September 2015).91
89
26CFR1.36B-2(c)(3)(iii)
26CFR1.36B-2(c)(3)(iii)
91
26CFR1.36B-2(c)(3)(iii)(C)
90
17
iv)
Continuation Coverage (e.g., COBRA)
An individual who may enroll in continuation coverage required under Federal (e.g., COBRA) or State law that
provides comparable continuation coverage is treatedaseligibleforemployer-sponsoredMEConlyformonthsthat
the individualisactuallyenrolledinthecoverage.92Ifsomeoneisprovidedwithan offertosignupforCOBRA
coverage,butoptsnottodoso,thisdoesnotadversely affecthisorherpotentialeligibility foran APTC.
v)
EnrollmentinanEligibleEmployer-SponsoredPlan
Ifapersonisenrolledinemployer-basedcoverage,itisdeemedtobeMEC regardless of whether it meets the
affordability and minimum value standards.93However,forinstancesin which an employee isautomaticallyenrolled
in an employer-sponsoredplan,theemployeewillbetreatedasnotenrolledinthe planifhe/sheterminates
coveragebeforethelaterofeither:(1)thesecondfull calendarmonthofthatplan yearorotherperiodof
automaticenrollment;or(2) thelastdayofanypermissibleopt-outperiodprovidedbytheemployer-sponsoredplan
orinregulationstobeissuedbytheDepartmentofLabor.94
Example: Consideranindividualwhoserequiredcontributionforself---only employer coverage exceeded 9.5% of
her 2014 projected annual household income.Theindividualenrollsinheremployer’scalendaryearplanfor
2014. TheindividualwastreatedaseligibleforMECfor2014becauseshewasenrolledin aneligibleemployersponsoredplanfor2014.95
Example:Consider the same scenario, except that now the individual’s employerautomaticallyenrolled herin theplan
forcalendaryear2015.The individual terminates this coverage on January 20, 2015. The i n d i v i d u a l istreatedasnot
eligibleforMECunderheremployer’splanforJanuary2015.96
d)
Related Individual Not Claimed as a Personal Exemption Deduction
IfanindividualwhomayenrollinMECduetoarelationshiptoanotherpersonwhois eligibleforcoverage(e.g.,a
childofaparentwhoseemployeroffersfamilycoverage)is claimedasadependentonthetaxformoftheperson
withprimaryaccesstothe coverage,therelatedindividualistreatedaseligibleforMECregardlessofwhetherhe
orsheisactuallyenrolledinthecoverage.However,iftherelatedindividualisnot claimedasadependentonthe
taxformofthepersonwithprimaryaccesstothe coverage,heorshewillbetreatedaseligibleforMECunder
suchcoverageonlyfor monthsin which the related individualisactually enrolled.
Example:Considerparentsofa25-yearolddaughter.Iftheparentsexpecttoclaima personalexemption
deductionforher,she istreated aseligible forMEC throughher parent’semployer-sponsoredcoverage(assuming
itisaffordableandmeetsminimum value).However,iftheparentsdonotexpecttoclaimapersonalexemption
forher, shewouldbetreatedaseligibleforemployer-sponsoredMEConlyforanymonths duringwhichsheis
actuallyenrolledinherparents’plan. Thus,ifshechoosesto purchase coverage on herown via HealthSourceRI,
she ispotentially eligibleforanAPTC(i.e.,sheisnotexcludedbasedonhavingminimumessential coverage
through herparents,butshe stillmustmeetthe othereligibility criteria for an APTC).
92
26CFR1.36B-2(c)(3)(iv)
26CFR1.36B-2(c)(3)(vii)(A)
94
26CFR1.36B-2(c)(3)(vii)(B)
95
26CFR1.36B-2(c)(3)(vii)(C)
96
26CFR1.36B-2(c)(3)(vii)(C)
93
18
C.
Calculation of APTC
1)
Overview of APTC Calculation
The conceptbehind the APTC calculation isthathouseholdsbelow 400% FPL are expected tocontributealimited
shareoftheirincometowardpurchasingaQHP. Thesharevariesfrom2% ofincomeforhouseholdsat100%FPL
to9.5%ofincomeforthoseat400%FPL.97 Aftertheycontributethisamount,theAPTC“fillsthegap”and
providesenoughofasubsidy thatthehouseholdcanaffordtopurchasethesecondlowestcostsilver-levelQHP
or “benchmark plan” (described below).
AhouseholdmayusetheAPTCtoabuyaQHPthatismoreorlessexpensivethanthebenchmark plan. If
someonebuysamoreexpensiveplan,thepersonmustcontributemoreofhisorherownfundstowardthecostof
coverage.Ifthepersonbuysalessexpensiveplan,theAPTC willcoveragreatershareofthecostoftheplan.
Undernocircumstances,however,maya householdreceiveanAPTCthatexceedstheactualcostofthecoverage
thatispurchased.
TheAPTCisbasedonthecostofpurchasingessentialhealthbenefitsanditisonlyforsuch benefits.Itcannotbe
usedtosubsidizeadditionalbenefits.(See“TreatmentofNon-Essential Health Benefits below.)
2)
FormulaforCalculatingtheSizeofanAPTC
Thesizeofataxpayer’sAPTCiscalculatedbytakingtheamountahouseholdmustspendto purchase thesilver-level
plan for eligible household members and subtracting the amount thatthe household is expected to contribute toward
its own health insurance (“contribution amount”).98Theremainingamount–orthegapbetweenthecostofthe
benchmarkplanandthe household’s contribution amount – determines the maximum APTC that a person may
receive.
Actual monthly premium costs paid for QHP(s)
When an individual files taxes, the Internal Revenue Service reconciles the amount of APTC thatthepersonreceived
withtheamountheiseligibletoreceivebasedonhistaxreturn information.99PleaseseeChapter5forafurther
discussionofthereconciliationprocess.
a)
Cost of the “Benchmark Plan”
Thecostofthe“adjustedpremium fortheapplicablebenchmarkplan”(referredtoin thisdocumentasthe
“benchmarkplan”)isbasedontheSecondLowestCostSilverPlan (SLCSP)offeredthroughHealthSourceRIthatcan
be usedtocoverthe householdmemberswhoareenrollinginaQHP.100 Insituations wheresome household
membersare enrollingin a QHPthroughHealthSourceRI andotherhousehold membersareeitherenrollingin
Medicaidorarenotenrollingin anycoverage,theSLCSPisbasedonlyonthehouseholdmemberswhoareAPTCeligible andenrollinginaQHP.
97
98
99
ACASec.1401/Sec.36B(b);26CFR1.36B-3(g)
26CFR1.36B-3(d)
26CFR1.36B-4
26CFR1.36B-3(e)
100
19
Example: Consider a household with two parents and two children with projected annualhouseholdincomeof
210%FPL. ThechildrenareeligibleforMedicaidandthe parentsareeligibleforaQHPandAPTCson
HealthSourceRI. TheeligibilityforAPTC’swouldbebasedonthecostofthesecondlowestcostsilverQHPthat
willcoveronlythe parents. ThecostofcoveringthechildrenisnotincludedincalculationofAPTCs
i)
TreatmentoffamiliesthatneedmorethanoneQHPtocoverall members101
Ifasingleplanisnotavailablethatcancoveranapplicant’sentirehousehold, thenthebenchmarkplanisbased
onthecostofthemultipleplansitwould require to cover all eligible household members.Thesemustbe
reviewedonacase-by-casebasisandbehandledbycallingthecontactcenter.
Example: Considerahouseholdconsistingofawomantakingcareofher disabledaunt. Ifsheexpectstoclaimher
auntasadependentonherFederal taxreturnthensheiseligibletoreceiveanAPTConheraunt'sbehalf. Ifthere
is noQHPavailablethatwillallowthewomantoenrollinasinglefamilyplanthatcoversbothherandheraunt,
HealthSourceRImust combine the cost ofthe benchmark planavailabletothewomanasasingleadult,andthe
benchmarkplanavailable toherauntasasingleadult,todeterminethecostofthebenchmarkplan.
b)
Contributionamount
The contribution amount isthe amount a household is expected to contribute toward thecostofthebenchmarkplan.
ItisdeterminedbyaformuladelineatedintheACA.102
Table 6. Premium Contribution Applicable Percentage by Incomefor2016
%ofFederalPoverty
Premium
PremiumContribution
Line
Contribution
Final Percentage
InitialPercentage
Less than 133%
2.03%
2.03%
133-150%
3.05%
4.07%
150-200%
4.07%
6.41%
200-250%
6.41%
8.18%
250-300%
8.10%
9.56%
300-350%
9.66%
9.66%
350-400%
9.66%
9.66%
c)
Special expected contribution rules for households with members who are not lawfully present
The ACA adjuststhe expected contribution ofhouseholds with members who are not lawfullypresenttoreflect
thatsomemembersareineligibleforenrollmentinQHPs,as wellasforAPTCs.103 Ineffect,theadjustments
lowertheexpectedcontributionofsuch householdsbecausenotalloftheirmemberscanbeenrolledinaQHP.
101
26CFR1.36B-3(f)(ii)(2)
26CFR1.36B-3(g)
102
103
26CFR1.36B-2;26CFR1.36B-3
20
d)
Actual premium costs
TheamountofAPTCthatahouseholdiseligibleforinanygivenmonthcannotexceedthetotalmonthlypremium
priceofthecoverageinwhichtheeligiblehouseholdmembersareenrolled.104QHPsmayhaveanon-essentialhealth
benefit(EHB)portionofthepremiumthatisnoteligibleforapremiumtaxcredit.Inotherwords,theAPTCcannotbe
usedtocovercertainhealthbenefitsthatdonotfallwithintheACA’sdefinitionofEHB,howeversomeplanshavea$0
non-EHBbenefit.
Example:Considera household thatqualifiesfora $1,000 APTC,butelectsto purchase averyinexpensivebronze
planfor$800amonthwith$798coveringtheessentialhealthbenefits. GiventheactualcostofitsQHP,the
householdcanuseonly$798ofits$1,000APTCandpay$2amonthoutofpocket. Therefore,$202oftheAPTC
wouldgo unused(unless,asdiscussedbelow,itspendssomeoftheextraunusedAPTConaseparate pediatric
dental plan).
i)
Premiums paid by another person
Ifanindividualorentitypayspremiumsonbehalfofahousehold,those payments areoffsetagainst the
premium costs incurred by the household.Forexample,premiumspaidbyaTribeonbehalfofatribalmember
orbya non-custodialparentonbehalfofachildcounttowardtheactualpremiums paid.105
ii)
Allocation of actual premium costs when multiple tax households purchase a plan together
Insomeinstances,ahouseholdmaybuyaplantogetherevenifnotallofthe householdmembersare partofthe
same taxhousehold forAPTC purposes. Whenthisoccurs,aformulaisusedtoallocatethepremium costs
amongthetaxhouseholdstoensurethatnoneisreceivingapremium assistancecreditinexcessofactualcosts.
Thepremium costsareapportioned basedontherelativecostofthebenchmarkplansusedtodeterminethe
APTC ofeach tax household within the household.106
Example:Consideracouplewhose22-yearoldsonislivingwiththemeventhoughheisemployedandwillneedto
filehisown taxes. Assumethatthebenchmarkplanforthecouplecosts$12,000and$4,000 forthe son. When
assessing whetherthe couple would otherwise receiveanAPTCinexcessofitsactualpremiumcosts,
HealthSourceRImustassumethatitpaysforthree-quartersofthecostofanyplan thatthe family purchases
together($12,000 / ($12,000 + $4,000)= 3/4ths). Evenifthecouplepaysfortheentireplan,itsAPTCislimitedto
3/4ths ofthecostofthepurchasedQHP. Similarly,thesonistreatedaspayingfor 1/4thofthecostofanyQHP
($4,000/($12,000+$4,000)=1/4th)regardlessofhowmuchmoneyhecontributestowardthecostoftheQHP.
Ifthe familyboughta$10,000plan,thecouplewouldbetreatedasspending$7,500 ontheplan(limitingits
premium assistancecreditto$7,500)andtheson would be treated as spending $2,500 (limiting his premium
assistance credit to$2,500).
104
26CFR1.36B(3)
105
106
26CFR1.36B-3(c)(2)
26CFR1.36B-3(h)
21
3)
TreatmentofNon-EssentialHealthBenefits
AsmentionedearlierinthisChapter,APTCsareavailableonlytosupportthecostofpurchasingessentialhealth
benefits.107APTCsmaynot beusedtosubsidizethecostofoptionalbenefits,includingelectiveabortions.108Asa
result,whendeterminingthecostofthebenchmarkplanandactualpremiums paid,onlythe portion ofQHP
costsattributableto essentialhealth benefitsiscounted.
Example:AhouseholdselectsaQHPthatincludesseveraloptionalnon-essentialhealth benefits,suchas
adultdentalcoverage. Thecostofthehousehold’sQHPis$15,000,but$1,000isattributabletothecostof
theadultdentalcoverageandtheothernon-essential health benefits. When assessing whether the
household’s APTC exceeds actual premium costs,HealthSourceRI would treatthe household ashavingonly
$14,000 in actual premium costs. Similarly, when identifying the applicable benchmark plan, HealthSource
RIwould takeinto accountonlythe costofthe essentialhealthbenefitsofferedby silver-levelQHPs.
4)
Treatment of Pediatric Dental Benefits
Pediatric dental benefits are considered part of EHBs andtherefore theircostcanbeoffsetbyAPTCs.109However,
somespecialrulesapplytopediatricdentalbenefitsand theirroleintheAPTCcalculation. Specifically,IRS
regulationstreatdifferentlythecostof pediatricdentalcoveragewhenitisembeddedinaQHPversuswhenitis
providedthrougha separatedental-onlyplan.IfembeddedinaQHP,thecostofpediatricdentalcoverageis
countedtowardthecostoftheapplicablebenchmarkplanusedtodeterminethesizeofa family’sAPTC. This
hastheeffectofincreasingthesizeofthefamily’sAPTCandsubsidizingits purchaseofdentalcoverage. Onthe
otherhand,ifpediatricdentalcoverageisnotembedded inthesecond-lowest-costsilverplan(SLCSP)available
onHealthSourceRI,thenthecostofstand-alonedentalisnotaddedtothecostofthefamily’s applicable
benchmark plan.
ThesespecialrulesapplywhenHealthSourceRIisdeterminingthecostofafamily’sapplicablebenchmarkplan,
butnotwhenitisassessingwhetherafamily’sAPTCfalls belowitsactualpremiumcosts. Asaresult,ifafamily
electstopurchaseaQHPbutdoesnotneedtousetheentireAPTCtocoverthepurchaseoftheplan,itcanapply
someorallofthe“excess”APTCstowardthecostofthedental plan.
Example: ConsiderasinglemomwithtwokidswhopurchasesaQHPthatcosts$400amonth andastand-alone
dentalplanforbothofherchildrenthatcostsatotalof$50amonth.When evaluatingthecostoftheapplicable
benchmarkplanforherfamily(and,thus,thesizeofher taxcredit),HealthSourceRI cannottake into accountthe
costofherchildren’s dentalcoverage.If,however,shepurchasesaQHPfor$450thatincludespediatricdental
coverageembeddedinit,theapplicable benchmarkplanusedtocalculateherAPTCwillbebasedon thecostofthe
second lowestcostsilverplan thatincludespediatricdentalbenefits.
107
26CFR1.36B-3(j)
ACASection 1303;45 CFR 156.280.
109
26CFR1.36B-3(k)
108
22
D.
Eligibility for Cost Sharing Reductions (CSRs)
Householdswithaprojectedannualincomeofupto250%oftheFPL-withexceptionsforAmericanIndianand
AlaskaNativeapplicants(AI/AN)-areeligibleforcostsharingreductions(CSRs)thatreduceout-of-pocket
spending.110Householdswithlowerincomeswithinthisrangewillreceivemorefinancialassistancewithout-ofpocketspendingonhealthbenefitswhilethoseatthehigherendoftherangereceivelessassistance.Tobeeligible
forCSRs,applicantsmustenrollinasilver-levelQHP111(withexceptionsforAI/ANapplicants).CSRsallow
householdsandindividualstoenrollin“variations”ofsilver-levelQHPsthathaveahigher“actuarialvalue.”The
actuarialvalueofaplanistheshareofcoveredhealthcareexpensesthataQHPcanbeexpectedtocoverfora
standardpopulationgivenitsdeductible,maximumlimitonout-of-pocketcosts,andothercost-sharingpolices.As
showninTable5below,therearethreemajortiersofcost-sharingreductions.
Table5.TiersofCost-SharingReductionsAvailabletoHouseholdsEnrollinginaSilver-LevelPlan
Tier
Population
Silver-LevelPlan
Actuarial Value
Tier1
100%FPL–150%FPL(plusspecial
94%
populations below 100% FPL)
Tier2
150%FPL–200%FPL
87%
Tier3
200%FPL–250%FPL
73%
In addition, as discussed in more detail below, AI/AN applicants are eligible for special costsharing reductions.112
AI/AN applicantsunder300%oftheFPLreceive 1 0 0 % cost sharing reductionsfor any levelQHPinwhichthey
enroll.113
QHPissuersarerequiredtosubmittoHealthSourceRIannuallypriortoeachbenefityear the following plan
variations (as well as variations for AI/AN enrollees):
•
Silver-levelplanQHP<150%FPL
•
Silver-levelplanQHP150%-200%FPL
•
Silver-levelplanQHP200%-250%FPL
Thevariationsreflectdifferencesinthecost-sharingchargesassociatedwithaplan;issuers mustcoverthesame
benefitsandofferthesameprovidernetworktoindividualsenrolledintheCSR variationsastheyprovideto
individualsunderthestandardsilver-levelQHP.HealthSourceRIassignsapplicantstooneofthesilver-levelQHP
variationsbasedon income,subjecttothespecialruleonfamilypolicies114.
1)
Eligibility for Cost Sharing Reductions (CSR)
People who apply for financial assistance are automatically assessed for CSR eligibility and do nothaveto
completeaseparateapplication. IndividualsareeligibleforaCSRifthey:115
110
45 CFR 155.305(g)(C)
45 CFR 155.305(g)(C)(ii)
45CFR155.350
113
45 CFR 155.350(a)(2)
114
45 CFR 156.410(b)(1)
115
45CFR305(g)
111
112
23
•
•
Meetthe eligibilitycriteria foran APTC,includingQHP requirements116(See Chapter 2)
Anticipate having annual household income a t o r below 250% FPL117(with exceptions for AI/AN
applicants)
Enrollinasilver-levelQHP(withexceptionsforAI/ANapplicants).118 •
CSRsarenotavailableforcatastrophicplansorstand-alonepediatricdentalplans.119,120
Example:Considerahouseholdoftwo parentsandtwochildren withprojectedannual householdincomeof
210%FPL. ThechildrenareeligibleforMedicaidandtheparentsare eligibleforAPTCs. Theparentsreceivean
APTCandchooseto enrollinasilver-levelQHP. Theparentsmustbeassignedtothesilver-levelQHPvariationfor
familieswithincomes200%-250%FPLiftheywanttotakeadvantageoftheCSRbenefit.
Example: Considerthesameexample,exceptthattheparentschoosetoenrollinagold-level QHP.Asaresult,
they’renoteligibleforaCSRbecausethey’renotinasilver-levelQHP.
2)
ChangesinEligibilityforCost-SharingReductions
IfHealthSourceRInotifiesaCarrierofachangeinanEnrollee’seligibilityforCSRs,theCarriermustchangetheEnrollee’s
assignmentsuchthattheEnrolleeisassignedtotheapplicablestandardplanorplanvariationasrequiredunder45C.F.R.
§156.410(b)asoftheeffectivedateofeligibilityrequiredbyHealthSourceRI.121
Inthecaseofassignmenttoanewsilverplan(orstandardplanwithoutcost-sharingreductions)ofthesameQHPduring
thecourseofacoverageyear,theCarriermustensurethatanycostsharingpaidbythecoveredindividualorhousehold
underpreviousplanvariations(orstandardplanwithoutcost-sharingreductions)applicabletothatcoverageyearistaken
intoaccountinthenewplan(orstandardplanwithoutcost-sharingreductions)forthepurposesofcalculatingcost
sharingbasedonaggregatespendingbythecoveredindividual/household,suchasfordeductiblesandannualout-ofpocketlimitationsoncostsharing.122Meaning,ifeligibilityforcostsharingreductionplansshiftsfromonetiertoanother
mid-year,anyoutofpocketcontributionsalreadypaidtowardshealthcostssuchasthedeductiblewillcarryover
betweenplans.
Inthecaseofassignmenttoanewsilverplanvariation(orstandardplanwithoutcost-sharing),theCarriershallwithin10
(ten)businessdayssendthecoveredindividual/householdwrittennoticeexplainingthenewcost-sharingnowapplicable
fortheEnrollee.
TheCarriershallnotberequiredtosendanewmemberIDcardtothecoveredindividual/householdtoreflectnewcostsharing,exceptuponanannualrenewalduringwhichanyelementsofcostsharingdisplayedonthememberIDcardwill
bedifferentthanitwasintheprioryear
116
45 CFR 155.305(g)(A)
45CFR305(g)(C)
118
45 CFR 155.305(g)(C)(ii)
119
45CFR156.440
120
45CFR156.440
121
45C.F.R.§156.425(a)
122
45C.F.R.156.425(b)
117
24
3)
Special Rules
TherearespecialCSRrulesfornon-citizenswhoarelawfullypresentandineligibleforMedicaid due to immigration
status and for families that include individuals qualifying for different CSR levels.
a) Non-CitizensLawfullyPresentWhoAreIneligibleforMedicaidDueto Immigration Status
Lawfullypresentnon-citizenswithanticipatedannualhouseholdincomeoflessthan 100%FPLwhoareineligible
forMedicaidduetoimmigrationstatusareeligibleforCSRs.123 Forpurposesofassigningthemtoasilver-levelQHP
variation,theyaretreatedasiftheirincomesarewithinthe100-150%FPLincomerangeandareassignedtothe
silver-levelQHPvariationforfamiliesinthisrange.
b)
Special Rule for Families That Include Individuals Qualifying for Different CSR Levels
In some instances, families purchasing a plan together will include individual members whoqualifyfordifferent
levelsofCSR.Forexample,afamilymightincludebothaNative memberandanon-Nativemember.Inthese
instances,a“leastcommondenominator” ruleappliesunderwhichthefamilycanonlyenrollintheCSRvariation
availabletothe memberwhoqualifiesfortheleastgenerousCSR. Whenatleastonefamilymemberis entirely
ineligibleforaCSR,thefamilymustforegoaCSRifitwantstopurchasecoveragetogether.124
Example:Considera couple with projected annualhousehold income of260% FPL in whichthewomanisatribal
memberwhileherhusbandisnot. Ifthecouplepurchases aQHPtogether,theywouldnotbeeligibleforanyCSRs
becausehedoesnotqualifyforaCSR.
4)
American Indian/Alaska Native (AI/AN) Population
TherearespecialCSRrulesforAmericanIndiansandAlaskaNatives.125AnAmericanIndianisa personwhoisa
memberofanIndiantribe,band,nation,orotherorganizedgroupor community,including Alaska Natives,which
is recognized as eligible for specialprograms and servicesprovidedtoIndians.126 Informationaboutverifying
IndianstatuscanbefoundinChapter 7.
a)
NoCostSharingObligationforAI/AN<300% FPL
AI/ANapplicantswhoenrollinaQHP,areeligibleforanAPTC,andhaveprojected annualhouseholdincome
below300%FPLmayenrollinaQHPwithnocostsharing obligations(knownasa“zerocostsharingplan”).127
UnlikeotherCSR-eligible individuals,AI/ANarenotrequiredtoenrollinasilver-levelQHPtoqualifyforaCSR.
TheyarepermittedtoenrollinanylevelQHPandhavenocostsharingobligations.128
123
26CFR1.36B-(c)(1)(B)
45 CFR 155.305(g)(3))
125
45 CFR 155.155.350; 45 CFR 156.410(b)(2)&(3))
126
25USC§450(b).
127
45 CFR 155.350(a)(ii)
128
45 CFR 155.350(a)(ii)(2)
124
25
b)
Limited CostSharing Obligation forAllOtherAI/AN
AllotherAI/ANQHPapplicants(i.e.,thoseabove300percentoftheFPLandthosewho electnotto applyfor
an insurance affordabilityprogram)are automaticallyenrolled in the“limitedcostsharingplan”variation
(unlesstheyarepartofafamilywithnon-Indiansasexplainedaboveunderthespecialfamilypolicyrule)ofany
QHPlevelthat theyselect.129Underalimitedcost-sharingplan,householdshavenocost-sharingobligationfor
itemsorservicesfurnisheddirectlybytheIndianHealthService,anIndianTribe, TribalOrganization, or Urban
Indian Organization orthrough referral under contract health services.130
Example:AnAI/ANhouseholdwithprojectedannualhouseholdincomeof200% FPLis foundeligibleforanAPTC
andeligibleforCSRs.Thehouseholdenrollsinagold-level QHP. Thehouseholdisassignedtothezerocostsharing
bronzeQHPvariationandhas no cost sharing obligations.
Example: An American Indian household hasprojected incomeof500% FPL and enrollsinagold-levelQHP.The
householdisassignedalimitedcostsharinggoldQHP variationunderwhichitcannotbechargedcost-sharingfor
usingservicesprovidedby the Indian Health Service and selected other AI/AN providers.
E.
Appendix
1)
Appendix A. Treatment of Wellness Incentives and Employer Contributions to HRAs and Health
Savings Accounts (HSAs) in Calculating MV
With the exception of wellness programs designed to prevent or reduce tobacco use, nondiscriminatory wellness
programincentivesofferedbyaneligibleemployer---sponsoredplanthatreducecost---sharingarenotconsidered to
counttoward determining the plan’sMVpercentage (i.e.,MV willbe determined assumingthat all employees fail
to satisfy the requirementsof the wellness program). In circumstances involving tobacco cessation programs,
incentives are considered to count toward determining the plan’s MV percentage (i.e., MV will be determined
assuming that each employee satisfiesthe requirements of the wellness program).131
Example: Consideranemployerthatoffersaneligibleemployer-sponsoredplanwitha nondiscriminatory wellness
program that reduces premiums by $300 for employees who do not use tobaccoproductsorwho complete a
smoking cessation course.Premiumsarereduced by $200 ifan employee completes cholesterolscreening within
the firstsixmonths ofthe plan year.One employee (EmployeeA)doesnotusetobaccoandthecostofhis
premiumsis$3,700.Anotheremployee (EmployeeB)usestobaccoandthecostofherpremiumsis$4,000.
Onlytheincentivesrelatedtotobaccouseareconsideredindeterminingtheplan’sactuarialvalue percentage.
Accordingly,Employee B istreated as having earned the $300 incentive forattending a smoking cessation course.
Thus, the deductible for determining the MV percentage for both EmployeesAandBis$3,700.The$200incentive
forcompletingthecholesterolscreeningis disregarded.132
AllemployercontributionsforthecurrentplanyeartoanHSAwillbetakenintoaccountinthatplan yeartowardsthe
plan’sMV percentage (i.e.,employercontributionsare taken into accountin determiningtheplan’sshareofcostsfor
129
45 CFR 156.410(b)(3)
45 CFR 155.350(b); 45 CFR 156.410(b)(2)
131
26CFR1.36B-6(c)(2)(i)
132
26CFR1.36B-6(c)(2)(ii)
130
26
MVandtreatedlikeamountsavailableforfirstdollar coverage).133Similarly,amountsmadenewlyavailableunderan
HRAthatisintegratedwithaneligible employer-sponsoredaretakenintoaccountforthatplanyeartowardsthe
plan’sMVpercentage providedthatemployeescanonlyusetheamountstoreducecost-sharing(notpaypremiums).134
TableA-1.Applicability of Incentive/Amount to Premiums In Order to Determine MV
WellnessProgram–Non-TobaccoCessation
No. MV determined assuming employee fails to
earnincentive/completeprogram.
Wellness Program – Tobacco Cessation
Yes. MV is determined assuming employee earns
incentive/completesprogram.
Employer HSA Contribution
Yes.
HRAContribution
Yes,butonlyifHRAamountscabbeusedonlyfor
reduced cost sharing.
2)
Appendix B: Expected Premium Contribution by Family Size
Theexpectedpremiumcontributionforhouseholdsissubjecttochangeeachyear.Applicablepercentagesfor2015
coverageareavailableat:www.irs.gov/pub/irs-drop/rp-14-37.pdf.PleasevisittheIRSwebsiteforthemostcurrentlistings
ofapplicablepercentages.
133
134
26CFR1.36B-6(c)(3)
Proposed26CFR1.36B-6(c)(4)
27