October 31, 2011
Donald Berwick, M.D.
Administrator
Centers for Medicare & Medicaid Services
U.S. Department of Health and Human Services
200 Independence Avenue, SW
Washington, DC 20201
Douglas Shulman, M.P.A, J.D.
Commissioner
Internal Revenue Service
U.S. Department of the Treasury
1111 Constitution Avenue, NW
Washington, DC 20224
RE: CMS–9974–P; CMS–2349–P; REG–131491–10
Dear Administrator Berwick and Commissioner Shulman,
The National Partnership for Women & Families commends the Centers for Medicare &
Medicaid Services (CMS) and the Internal Revenue Services (IRS) for their continued hard work
and dedication to swiftly and effectively implement the Affordable Care Act (ACA). As a
national consumer organization with a long history of successfully advocating access to high
quality and affordable care for women and families, especially lower-income and minority
individuals, the National Partnership believes the ACA gives us the opportunity to move the
country significantly closer to this goal.
Under the ACA, millions of individuals and families will finally be able to access affordable
health coverage through insurance affordability programs, including premium tax credits, costsharing reductions, Medicaid, CHIP, and State-established Basic Health Programs. Yet the
different eligibility standards across these programs and the infinite variety of family situations
of potential enrollees open the door for unintended loopholes and barriers that could keep
vulnerable populations from getting the coverage or assistance to which they are entitled.
Identifying these millions of potential beneficiaries and enrolling them in the right programs is a
huge challenge and we commend the Departments’ efforts to date to simplify and coordinate the
eligibility and enrollment standards and processes across the insurance affordability programs.
We also appreciate your efforts to minimize the potential “churning” of enrollees between
programs as income and family circumstances change over relatively short periods of time. We
believe that continuity of care should be one of the goals in shaping the final regulations.
That said, we are concerned that many of the standards specifically related to the premium tax
credit fail to recognize the needs of women and families and could undermine the goals of the
ACA. Furthermore, more attention needs to be directed towards creating a strong appeals system
and providing robust consumer assistance on the ground. Both will be critical to smoothing out
the eligibility process to ensure it is as problem-free as possible.
In our comments below, we discuss elements of the three recently released proposed eligibility
regulations that are most critical to achieving seamless and affordable coverage for low- and
moderate-income women and families. We have also included recommendations for changes to
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the rules we believe will strengthen these programs. We offer our comments on all three
proposed regulations collectively because these programs are so closely intertwined, as well as to
emphasize the need for the Departments to work together throughout implementation to align
their standards and processes to the greatest extent possible under law.
Coordination and Uniformity for Seamless Coverage
There are two main areas to consider when building a seamless eligibility and enrollment system.
The first is coordinated eligibility standards to prevent vulnerable populations from falling
through the cracks. The second is a simple and uniform process for determining eligibility and
enrolling in coverage so that people can easily get into the right program. Overall, we believe
the Departments did a good job on both fronts in the proposed regulations and we commend your
efforts. Below we highlight some of the provisions we believe are particularly critical and offer
a few suggestions for further refinements.
Closing Gaps in Eligibility Standards
There are a number of important provisions throughout the set of proposed regulations that
proactively close gaps in eligibility, protecting vulnerable populations. We encourage the
Departments to maintain these important protections and be alert during implementation for
other gaps that need attention.
Individuals with Household Income Below 100 Percent of Poverty
The National Partnership supports the provisions in §1.36B-2(b) of the proposed premium tax
credit regulations which ensure that all individuals with household incomes below 400 percent of
poverty can receive premium assistance if otherwise eligible. In particular, we support the
provision which allows lawfully present immigrants who have household incomes under 100
percent of poverty but are not yet eligible for Medicaid to access premium assistance. Similarly,
we support the provisions in §155.305(g) of the proposed Exchange eligibility regulations which
ensure that these individuals and families can also qualify for the cost-sharing subsidies.
However, the proposed Exchange eligibility regulations do not include a provision for
determining the amount of the cost-sharing subsidy for individuals and families with household
incomes below 100 percent of poverty. It is important that the amount of the cost-sharing
subsidy reflect a family’s actual household income. Accordingly, the Departments should
establish a fourth eligibility category for cost-sharing reductions for individuals and families who
have household income below 100 percent of poverty.
Pregnant Women
Section 435.603(b) of the proposed Medicaid regulations require a state to count a pregnant
woman as two persons in determining her household size for purposes of her own Medicaid
eligibility, but allow the state the option of counting her as one or two persons when determining
Medicaid eligibility for the rest of her household. For families with incomes hovering around the
Medicaid income ceiling, if the state elects the “count as one” option, the pregnant woman would
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be determined Medicaid eligible and the rest of the household would go into a qualified health
plan. Once the child is born, the whole family would become Medicaid eligible, forcing the rest
of the household to leave the qualified health plan. We recommend this option be removed, and
states be required to count the pregnant woman as two in determining eligibility for her
household as well as herself.
The proposed Exchange eligibility regulations, following tax policy, would count a woman as
one person in determining her eligibility for premium assistance, but are unclear as to whether
she could continue to receive premium tax credits should she become pregnant and thus eligible
for Medicaid coverage under the “two person” rule. We assume there will be a number of lower
income women who find themselves in this situation, and, it would be preferable to avoid forcing
a woman to change providers because the source of her insurance coverage changed. We urge
the Departments to clarify that women in these circumstances – as well as their families – have
the option to remain in the subsidized qualified health plan through the delivery and post-partum
period. We believe this is a reasonable extension of the provisions in the proposed premium tax
credit regulations that protect from reconciliation any individuals and families who are
determined by the Exchange to be ineligible for Medicaid, CHIP, or a similar program at the
time of enrollment but who end up with household income for the taxable year within the
eligibility criteria for these programs.
Continuous Eligibility
For years Medicaid policymakers have struggled with minimizing breaks in eligibility that occur
when family circumstances change. The Transitional Medical Assistance program helps, but
applies only to a narrow group of families who are currently enrolled and become ineligible
solely due to an increase in earnings. The continuous eligibility option available for children
under both Medicaid and CHIP has been a boon for continuity of coverage for children.
Unfortunately, there is no specific authority for allowing states to adopt continuous eligibility for
adults, and this issue looms large in importance in view of the forthcoming influx of newly
eligible adults, many of whom have chronic conditions like diabetes. We commend CMS for
proposing in §435.603(h)(2) and (3) of the proposed Medicaid regulations that states be allowed
to use either monthly income or projected annual income for the current calendar year, and
recommend that this or similar methodology that takes predictable changes in income into
account be used for both new applicants and for changes in circumstances of current enrollees.
Such a policy will help reduce the incidence of breaks in coverage and “bounce” between
programs.
Non-MAGI Medicaid Eligibility
We strongly support §435.907 of the proposed Medicaid regulations, requiring a single,
streamlined application form be used for all three programs. However, there will be many
applicants who are unfamiliar with Medicaid rules and will be unaware that while they might be
ineligible for Medicaid under the new Modified Adjusted Gross Income (MAGI) rules, they
might qualify under an existing, non-MAGI category. This is particularly true in the case of
persons with disabilities. It is also likely that some individuals who qualify under the new
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MAGI rules would also be eligible under an existing, non-MAGI category. This will remain an
important distinction if the benefit packages vary by category of eligibility.
It will be important to ensure that persons with disabilities and other vulnerable individuals can
access the coverage that best meets their needs. Therefore, we recommend that, at a minimum,
the application form include questions that will prompt the reviewing agency to assist the
applicant to pursue the non-MAGI eligibility pathway.
We also applaud the Departments for allowing individuals who are eligible for other insurance
affordability programs to immediately enroll in these programs while a Medicaid determination
on eligibility on the basis of being blind or disabled is pending.
Minimally Burdensome Process
Creating a smooth and minimally burdensome eligibility determination and enrollment process is
one of the greatest challenges under the ACA. Success will be critical to both ensuring that
people get into the right coverage and engendering public support for the ACA. Below we
discuss a number of factors that will come into play and should be addressed in the final
regulations.
One-Stop Shopping
A key tenet behind the establishment of Exchanges is the need for a one-stop shop where anyone
looking for health coverage can go. This shop can and should have multiple doorways, including
online, in-person, and phone, and, regardless of how consumers enter, it should be able to offer
them all the services they need to determine their eligibility for and enroll in any and all
insurance affordability programs available. This experience should be seamless to the consumer.
Implementing this concept is particularly complicated given that different insurance affordability
programs come under the authority of different entities. There is a very real risk in these
circumstances that women and families could be left without coverage as these entities dispute
each other’s eligibility determinations or do not smoothly hand off cases.
We encourage the Departments to make changes to the final regulations to prevent as many of
these negative outcomes as possible. In particular, we urge the Departments to require states to
accept an Exchange’s – including a federally-facilitated Exchange’s or regional Exchange’s –
eligibility determinations for Medicaid, CHIP, and (where appropriate) Basic Health, presuming
these determinations are made using the state-prescribed rules and methodologies. The
Departments should provide model agreements for this purpose. Furthermore, even with clearly
delineated authority to determine eligibility for the different programs, it is very likely that
disputes will arise as to which program should cover an individual or family. The Departments
should outline clear standards for resolving these cases without delaying benefits and without
harm to beneficiaries, including safe harbors providing for interim coverage if a final
determination cannot be made within 30 days.
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Information Reporting Requirements
Given the varying eligibility standards of the different insurance affordability programs,
Exchanges will require a significant amount of data to make eligibility determinations. We
applaud the Departments’ efforts to minimize the information reporting requirements for
consumers. As states have already demonstrated in their Medicaid and CHIP programs,
application and redetermination processes can be streamlined significantly – without any
reduction in eligibility integrity – compared to the old paper-based, in-person interview, and
detailed verification documentation procedures.
In particular, we strongly support §435.956(e) in the proposed Medicaid regulations, requiring
states and Exchanges to accept a woman’s attestation of pregnancy as basis for determining
eligibility. Requiring clinical confirmation of the condition could lead to undesirable delay in
her enrollment, with potential consequences for the successful outcome of the pregnancy for her
and her child.
Similarly, we support the general approach of §155.320(e) of the proposed Exchange eligibility
regulations, which would allow applicants to attest whether they are eligible for employersponsored coverage. The preamble suggests that Exchanges would be responsible for
determining whether such coverage is affordable and whether it meets minimum value standards
based on other information sources. We support standard templates for the information needed
to make this determination as suggested in the preamble. Employees should not be expected to
provide information regarding minimum value, for example, as this may not be readily
accessible to them.
More broadly, we endorse §155.315(g) and §155.310(a)(2) of the proposed Exchange eligibility
regulations. The former provision prohibits Exchanges from requiring that applicants provide
information beyond the minimum necessary to support eligibility and enrollment in any of the
insurance affordability programs. The latter provision limits the information that can be
collected from non-applicants. These provisions are consistent both with the statute and with the
public policy goal of increasing enrollment of eligible individuals in coverage. In the absence of
such protections, many people may find the process of applying for coverage unnecessarily
intrusive and be discouraged from enrolling.
To implement these policies in one single-streamlined application form, we support the use of
dynamic questioning; experience with Medicaid and CHIP applications demonstrates that this
form of questioning can be used to ensure that applicants are only asked questions that are
specifically relevant to their own eligibility determination (for example, a male applying only on
his own behalf need not be asked about pregnancy). To the extent that an application requests
optional information, these fields should be clearly marked as optional. The applicant must be
permitted to advance through an online application without completing optional fields. The final
regulations should also clarify that states may allow applicants to apply using a multi-benefit
application form, provided that consumers can easily and without penalty skip questions that do
not apply to them.
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Aligning Timelines
Additional attention is needed to ensure people do not face gaps in coverage or unnecessary costs
because of conflicting timelines for eligibility and enrollment across coverage options. For
instance, one question that does not appear to be addressed in any of the proposed regulations is
how to handle eligibility determinations in the initial open enrollment period in the fall of 2013.
During this period, the expanded Medicaid eligibility rules will not yet be in effect, however
women and families will need to be screened for Medicaid before they can be determined
eligible for premium assistance. And they will need to know whether or not they are eligible
before the end of the initial open enrollment period in mid-December. Further clarification is
needed regarding how Medicaid eligibility determinations will be made in this period.
Similarly, we believe the annual re-determination of eligibility discussed in the proposed
Exchange eligibility regulations should be conducted in concert with the annual open enrollment
period. Thus, re-determinations being made in the fall, which should occur in coordination with
the October to December open enrollment period, should be for eligibility for the following
calendar year. Accordingly, we recommend adopting the effective dates outlined for the annual
enrollment periods in §155.410(f) of the proposed regulations on Exchange standards and
functions. However, when an individual or family is found to be eligible for Medicaid in such
instances, Medicaid eligibility and coverage should become effective on the first day of the
month the eligibility determination is made rather than beginning the following calendar year.
Furthermore, the preamble of the proposed premium tax credit regulations solicits comments on
whether the proposed regulations under §1.36B-2 (c)(2)(iii) should provide additional flexibility
for individuals transitioning from a qualified health plan to coverage under a governmentsponsored program, in the situation that operational challenges prevent a timely transition.
Historically, states have faced such challenges in the initial implementation of substantial health
reform provisions, such as when Medicare Part D was first implemented. Operational
challenges, like problems with data exchange, may occur in the initial implementation of
Exchanges and Medicaid eligibility reform. Individuals should not face gaps in coverage due to
such setbacks. Thus, we recommend that in situations where operational challenges delay
coverage transitions, individuals should remain eligible for premium tax credits up until the first
full calendar month that they are actually able to receive benefits through government-sponsored
coverage.
The proposed premium tax credit regulations also do not clarify what is considered “reasonable
promptness” and does not allow for any good faith exemptions. The final regulations should
provide a minimum standard definition for reasonable promptness to which states must adhere.
This minimum standard should be of adequate length as to allow applicants to obtain necessary
documentation, such as a reissued official copy of a birth certificate. States should be given the
flexibility to expand this standard’s duration and make exemptions for individuals who can
demonstrate good faith towards completing enrollment requirements.
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Notice to enrollee
We support the requirements in §155.335(c) of the proposed Exchange eligibility regulations for
Exchanges to provide enrollees with an annual re-determination notice that includes updated
income and family size information obtained from a recent data match, the information used for
the most recent eligibility determination, and the projected eligibility determination for the
following calendar year after considering the updated information from the data match. It will be
important for individuals and families to know what their likely eligibility for insurance
affordability programs will be for the next calendar year, so that they can make informed
decisions during open enrollment. We recommend that these notices be automatically sent to
enrollees who are receiving advance premium tax credits, and that such individuals’ eligibility be
automatically reevaluated without requiring them to submit an application.
In §155.410(d) of the proposed regulations on Exchange standards and functions, Exchanges are
required to provide a notice about the annual open enrollment period. It is unclear whether this
is the same notice about the eligibility redetermination that is referenced in this section. We
recommend that these two notices be merged into one notice. As such, we recommend that the
following information related be included in the notice:
•
•
•
•
•
•
The date that open enrollment begins and ends;
An explanation that open enrollment is the only opportunity to enroll in new coverage or
change coverage, unless there is an event that triggers a special enrollment period;
The penalty for being uninsured;
The availability of Medicaid, CHIP, Basic Health, premium credits, and cost-sharing
reductions;
An explanation that open enrollment is the time for re-determining eligibility for
premium credits and cost-sharing reductions; and
Where to obtain additional information, including the website, toll free call center, and
through Navigator and other consumer assistance programs.
For individuals receiving premium credits and cost-sharing subsidies, the notice should also
include updated income and family size information as verified by the Exchange through the data
hub, the level of premium credits and cost-sharing subsidies that the individual is receiving, and
the projected level of premium credits and cost-sharing subsidies based on the updated
information.
The notices should also make clear that the individual may be subject to a tax liability if the
updated income and family size information is inaccurate and strongly urge them to notify the
Exchange of changes as appropriate. Individuals should also be allowed to report any such
changes using a variety of modes (e.g. telephone, online, in person, fax, mail, etc.).
In addition, such notices should be written to assure communication with persons with limited
English proficiency and to persons with disabilities, in accordance with the standards in
§155.230.
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Concerns Specifically Regarding the Premium Tax Credit
We are concerned by the Departments’ narrow reading of the law around premium tax credits
and cost-sharing subsidies. We strongly urge the Departments to rethink their interpretations and
revise the proposed regulations per our recommendations discussed below.
Employer-Sponsored Minimum Essential Coverage
Affordable coverage
We strongly oppose the Departments’ stance in the proposed premium tax credit regulations on
how affordability of employer-sponsored insurance would be determined, using the cost of an
employee’s self-only coverage – but not the cost of family coverage – to determine whether the
employee’s family members can receive premium tax credits to help pay for coverage. If the
final regulations maintain this approach, millions of adults and children who are the dependents
of workers with an offer of employer coverage would be barred from receiving subsidies in the
insurance Exchange. This policy would disproportionately impact women – in 2010, of adults
with employer sponsored insurance, women were nearly 2.5 times as likely as men to be insured
as a dependent1 – forcing many women to go without health insurance because of the high cost,
undermining the coverage goals of the ACA and running counter to the intent of the law, as we
discuss below.
Under the ACA, individuals eligible for “minimum essential coverage” are ineligible for
premium tax credits and cost-sharing subsidies in the new health insurance Exchanges, a
provision often referred to as the “firewall.” Minimum essential coverage includes “eligible
employer-sponsored plans.” However, employees will not be considered eligible for minimum
essential coverage if the employee’s contribution to the cost of the premium exceeds 9.5 percent
of household income.
There are three provisions in the ACA relevant to interpreting this policy:
•
Section 36B(c)(2)(C) of the Internal Revenue Code (IRC) states that the employee’s
required contribution is determined “within the meaning of §5000A(e)(1)(B),” and that
the firewall applies “to an individual who is eligible to enroll in the plan by reason of a
relationship the individual bears to the employee,” such as a spouse or a child.
•
Section 5000A(e)(1)(B) is part of the ACA provision on individual responsibility; it
allows individuals who cannot afford coverage an exemption from the penalty for not
having health coverage. The provision states that in calculating whether coverage is
affordable, the required contribution for those eligible for an employer plan (which is
then compared to household income) is based on the employee’s contribution for selfonly coverage. This provision is qualified by the following section, §5000(e)(1)(C),
which states that “for purposes of subparagraph (B)(i), if an applicable individual is
1
http://mobile.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2011/May/1502_Robertson_wome
n_at_risk_reform_brief_v3.pdf
9
eligible for minimum essential coverage through an employer by reason of a relationship
to an employee, the determination under subparagraph (A) shall be made by reference to
required contribution of the employee.”
•
Subparagraph A of §5000A(e)(1) refers to the test for determining whether coverage is
unaffordable for the purpose of the exemption from the penalty. The test is whether the
individual must pay more than eight percent of household income.
When a family has an offer of employer coverage, the test of whether it is affordable depends on
the employee’s required contribution as a percentage of household income. The employee’s
required contribution is defined in the ACA provision on individual responsibility. In general, if
available coverage costs more than eight percent of household income, an individual does not
have to pay a penalty for failing to have coverage. For an employee with an offer of employer
coverage, the required contribution is defined as the amount the employee has to pay for selfonly coverage. For dependents of the employee, the statute includes a “special rule” stating that
the determination “shall be made by reference to the required contribution of the employee.”
The Joint Committee on Taxation (JCT) reads the “special rule” to mean that the cost of self-only
coverage is used to determine affordability for family coverage.2 Because it reads the special
rule this way, JCT also would use the cost of self-only coverage in determining whether the
employee and dependents are exempt from the penalty. In effect, JCT reads the “special rule”
for dependent coverage as requiring the same measure of affordability for families as for
employees. However, the rule for employees specifies that the employee’s contribution used to
determine affordability is the cost of self-only coverage. Had Congress intended the special rule
for dependents to use the same measure, it could have used similar language – or it could have
omitted the special rule altogether. The special rule states that the determination of affordability
should be made with reference to “the required contribution of the employee.” The better reading
is that the measure of affordability should be “the required contribution of the employee” for
coverage of his or her dependents.
This reading would be a plain language reading when considered along with how the employersponsored insurance system works. Employment-based health benefits are most often paid
jointly by the employer and the employee. Individuals eligible for employment-based coverage
due to a relationship to an employee do not pay for the coverage directly. These individuals are
added to the coverage by the employee and any cost of coverage above the amount paid by the
employer is paid for through a contribution by the employee. Accordingly, a plain language
reading would suggest the statute requires affordability to be based on “the required contribution
of the employee” for coverage of his or her dependents, rather than the amount the covered
individual pays just for him or herself.
The Departments appear to agree with this interpretation of the special rule – that it requires the
use of the cost of family coverage in assessing whether coverage is affordable. But the proposed
2
Joint Committee on Taxation, “General Explanation of Tax Legislation Enacted in the 111th Congress,” March
2011 at p. 281.
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premium tax credit regulations only apply this test to the individual responsibility requirement,
not the firewall. The preamble states:
“Although the affordability test for related individuals for purposes of the premium tax
credit is based on the cost of self-only coverage, future proposed regulations under
section 5000A are expected to provide that the affordability test for purposes of applying
the individual responsibility requirement to related individuals is based on the
employee’s contribution for employer-sponsored family coverage. Section 5000A
addresses affordability for employees in §5000A(e)(1)(B) and, separately, for related
individuals in §5000A(e)(1)(C)” (emphasis added).
The Departments thus read the special rule in §5000A(e)(1)(C) as using the cost of family
coverage to determine affordability of coverage for the employee and dependents. However, in
determining affordability for purposes of the firewall, the Departments would apply only
§5000A(e)(1)(B) and ignore the special rule that qualifies the application of the affordability test
to dependents in §5000(A)(e)(1)(C). The better reading is that, in requiring the use of the same
test for the firewall as for the individual responsibility requirement, Congress intended that the
entire rule be applied, including the special rule that qualifies the application of the affordability
test for employees. It is unlikely that Congress intended affordability to be determined one way
in determining whether a family is exempt from the application of the individual mandate and
another way for the firewall. It is far more likely that in directing the Departments to use the test
in §5000A(e)(1)(B), Congress intended that the special rule qualifying the treatment of
dependents should also apply.
As written, the proposed premium tax credit regulations would cause serious harm to families
already having a hard time making ends meet. Take, for example, a family of four earning 200
percent of poverty, or $44,700 a year. One parent works and has an offer of employer coverage
that costs $150 a month for the employee and $400 a month to cover the employee and spouse.
The children are enrolled in the state’s Children’s Health Insurance Program (CHIP). The family
cannot afford coverage for the spouse (a $400 monthly premium amounts to nearly 11 percent of
the household’s income), so only the employed parent is covered by the employer plan. As the
preamble to the proposed rule indicates, the spouse would be able to claim an exemption from
the penalty for not having coverage, but she does not qualify for premium assistance and is likely
to remain uninsured. (It is also important to note that in most states, the family would have to pay
a separate premium to cover the children enrolled in CHIP.)
Under the approach in the proposed rule, many families would face similar difficulties. Failing
to account for the affordability of employer-sponsored family coverage would render an
estimated 3.9 million non-working dependents ineligible for subsidies, according to an analysis
by the Kaiser Family Foundation. On average, these family members would have to pay 14
percent of their income to access the employer coverage.3
3
Larry Levitt and Gary Claxton, “Measuring the Affordability of Employer Health Coverage,” Kaiser Family
Foundation, August 24, 2011. The analysis relies on 2008 demographic and insurance data from the Medical
Expenditure Panel Survey and employee premium contribution information from the Kaiser/HRET Employer Health
Benefits Survey. It assumes no behavior changes by employers in response to the health reform law. See also, Peter
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An analysis by the Urban Institute shows that basing the determination of affordability on selfonly coverage would have a significant impact on coverage for children particularly if federal
funding for CHIP is not extended beyond 2015, which is when the current authorization expires.
The Urban Institute found that 6.3 million children are in families that have to pay more than 9.5
percent of their income for employer-based family coverage. Of these 6.3 million children, 1.7
million are currently uninsured and would likely remain uninsured even after premium credits
become available in 2014. If CHIP is not extended, the number of uninsured children would be
substantially higher.4
By failing to take the cost of family coverage into account in determining eligibility for premium
credits and cost-sharing subsidies, the proposed rule would fail to ensure that these family
members have access to affordable coverage as the ACA intends. They could instead try to
scrape together an outsized portion of their household income to buy coverage, but the high cost
would likely cause many people to forgo coverage and remain uninsured.
To ensure that the final rule is consistent with the statute and carries out the coverage goals of the
ACA, we strongly urge the Departments to base the determination of whether employersponsored coverage is unaffordable on the employee’s contribution for family coverage both for
the purposes of the firewall and the exemption from the penalty for not having coverage.
Employee safe harbor
We strongly support the “employee safe harbor” in the proposed premium tax credit regulations,
treating an employer-sponsored plan as unaffordable for the entire plan year once a
determination of unaffordability is made. Without a safe harbor, individuals and families would
be at risk of repaying large sums if the cost of employer coverage went below 9.5 percent of their
household income for any months during the taxable year. For example, if an employee’s spouse
received an unexpected bonus, the family’s income for the taxable year could be greater than
anticipated, and the cost of the employer-based coverage could end up being less than 9.5
percent of the household’s income. Without the protection of a safe harbor, a retroactive
determination of affordability at tax filing could result in a finding that the family was not
eligible for premium credits after all. A family in this situation would have a large repayment
obligation even though the Exchange correctly determined that the family was eligible for
premium credits at the time the family applied. The policy in the proposed premium tax credit
regulations will avoid this result, and it should be retained in the final rule.
The safe harbor is also important because employees are unable to enroll in employment-based
plans mid-year without a qualifying event under the HIPAA special enrollment provisions,
which does not allow an employee to enroll in employment-based coverage when there is a
change in income in the middle of the plan year. The proposed rule will enable women and
Gosselin, “New Rule Could Narrow Aid for Health-Plan Buyers and Shrink Insurers’ Sales,” Bloomberg
Government, September 27, 2011.
4
Matthew Buettgens, Genevieve M. Kenney, “Update of Implications of Relying on a Single-Only Affordability
Test for Families,” The Urban Institute, May 27, 2011. (unpublished memorandum)
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families to avoid situations where they are left without access to affordable coverage because
they could not foresee an income increase.
Minimum Value
We understand that the regulations implementing the minimum value requirements are still to be
issued. However, because of the important role this calculation will have in determining access
for the premium tax credits, we want to note that it is extremely important that a strong minimum
value calculation be put in place.
While we recognize that employer-sponsored health benefit plans and plans offered in the large
group market do not need to meet all the requirements of a qualified health plan offered on an
Exchange and there are some requirements which will apply to plans in the small group market
but not the large group market, we also believe the intent of Congress was to ensure consistency
between the actuarial determination. Section 1302(d)(2)(C) of the ACA requires the Secretary of
HHS to apply the same rules in determining the actuarial value of a qualified health plan offered
on an Exchange and the total allowed costs of benefits provided under a group health plan or
health insurance coverage. In order to meet the requirements of the statute, the calculation of
whether an employment-based plan is providing minimum value must be based on the cost of
coverage of the essential health benefits, whether or not the plan covers all the essential health
benefits.
Accordingly, we believe that any forthcoming rulemaking on the minimum value requirements
should 1) incorporate the costs of covering the essential health benefits in the calculation of
whether an employment based plan provides minimum value, and 2) ensure that the minimum
value is defined as at least equivalent to a bronze plan offered in an Exchange.
Employer Notification
We are concerned that §155.310(g) of the proposed Exchange eligibility proposed regulation is
dangerously broad and could expose workers to retaliatory action by employers who face
employer responsibility payments. In the final regulations, we recommend that the Departments
clarify that employers should be notified of an employee’s receipt of an advance payment of the
premium tax credit or cost-sharing reduction only if it has direct implications for the size of an
employer’s responsibility payment. Moreover, the employer should be provided only with the
minimal information required to evaluate its liability for employer responsibility payments. In
addition, the final regulations should require that the notice to the employer specify that
employers cannot retaliate against employees receiving subsidies.
Computing the premium assistance credit amount
Premium stacking
The proposed regulations will leave many families facing a “double premium” or even a “triple
premium” if they have one or more children eligible for CHIP or one parent eligible for
employment-based coverage. The issue, sometimes known as “premium stacking,” arises
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because each family is expected to contribute a specific dollar amount, depending on their
household income and family size, for coverage through a qualified health plan offered on an
Exchange. However, this calculation assumes that the family is only purchasing coverage
through qualified health plans in an Exchange, while in fact they could have multiple sources of
coverage and thus multiple premiums.
Unfortunately, the number of families subject to this type of “double premium” is likely to be
significant. Estimates from the Urban Institute indicate that three out of four parents who are
eligible for the Exchange will have one or more children who are eligible for CHIP or Medicaid
and must enroll in these programs. It is unknown how many of these families must pay
premiums to enroll their children in public coverage, but 30 states charge a premium or annual
enrollment fee to children in CHIP, so this is a serious concern. While the fundamental issue
arises from the statute, the proposed regulations do not acknowledge the problem, nor do they
provide states with any options or advice for addressing it.
We urge the Departments to look into potential solutions to this problem to lessen the burden of
multiple premium costs on families and thus ensure the intent of the law, to provide affordable
access to health coverage, is fulfilled. Solutions could include counting CHIP premiums in the
tax credit calculation or using a benchmark plan for the entire family rather than for the family
members enrolling in coverage. Additionally, the Departments should consider modifying CHIP
rules in some way to not penalize families with children in CHIP.
Changes to Household Income and Family Size
We are very concerned that the proposed Exchange eligibility regulations would only require
Exchanges to consider substantial decreases in income in determining the amount of the advance
credit and the level of cost-sharing reductions. The ACA recognizes the need to accommodate
changes in income and circumstances and directs the Secretary of HHS to establish procedures
for making advance determinations of premium credit eligibility and amounts using other
information: “in cases where information included with an application form demonstrates
substantial changes in income, changes in family size or other household circumstances, change
in filing status, the filing of an application for unemployment benefits, or other significant
changes affecting eligibility.”5
In providing examples of what types of income changes can trigger the use of more recent
information to determine eligibility, the statute provides an example of a decrease in income of
more than 20 percent. The statutory language makes it clear, however, that the Secretary is not
limited by the examples and can take into account “other significant changes in eligibility.” We
recommend that the Departments use this flexibility to adopt a lower threshold, since a 20
percent change in income is not sensitive enough to respond to the needs of low- and moderateincome families.
For example, for a family of four with income of just over 200 percent of poverty ($44,700 in
2011), a 20 percent change in income amounts to $8,940 – quite a substantial sum. If this
family’s annual income drops by $8,000, but it is not allowed to use more recent income
5
Section 1412(b) of the Affordable Care Act.
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information during open enrollment because the decrease is less than 20 percent, then – based on
information from the most recent tax year – the family would have to pay 6.3 percent of its
income toward premiums and be enrolled in a plan with a 73 percent actuarial value. If more
recent income information were used, the family would instead pay 4.6 percent of income toward
premiums and be enrolled in a plan with an 87 percent actuarial value, which means the family’s
deductibles and cost-sharing would be considerably less.
In this case, the use of a lower threshold would result in a much more accurate determination of
premium credit eligibility and amount. As illustrated by this example, if people cannot have
their eligibility determined on the basis of more recent information unless they experience a
decrease in income of at least 20 percent, then a family whose income falls significantly may fail
to receive the cost-sharing assistance for which it should qualify. And since there is no year-end
reconciliation for the cost-sharing reductions, there would be no way for the family to recover
the additional money it spent on higher deductibles and co-payment amounts.
In general, we recommend that individuals and families be allowed to report more current
information on income without a percentage or dollar limit being placed on what they may
report, but the Exchanges only be required to use the newer information in determining
eligibility and the amount of the credit when there has been a change that either exceeds a
specified threshold or would make a family eligible or ineligible for the credit. One example is
when a decrease in income would make a family ineligible for the premium credit and eligible
for Medicaid instead or put the family over 400 percent of poverty. While we are not making a
specific recommendation here on the exact level at which to set the threshold, we note that it
should be sufficiently low so that it is sensitive to people’s needs – i.e., it should be set well
below 20 percent. At the same time, it should not be so low that it would apply to almost
everyone and be overly burdensome to administer. The threshold could be set just as a modest
percentage of income, or as the higher of a modest percentage of income or a flat dollar amount.
Reconciliation
General Concerns
Throughout any given year, many factors affecting a family’s household income and
composition may change. Family members may gain or lose jobs, get raises, or face reduced
hours. Some families may gain or lose dependents, as couples marry and divorce and children
enter or leave the household. Some of these changes are predictable; others are not.
To ensure that the ACA delivers on its promise to make health coverage affordable for all and
reduce the number of people who are uninsured, the premium tax credit reconciliation process
needs to better reflect the changing circumstances women and families face on a regular basis
and not punish households that play by the rules. It is unreasonable to consider health insurance
affordable if a family is subject to thousands of dollars in tax liability at the end of the year even
if they received the correct amount premium credit each month, or if they have to accept a lower
premium credit than their income warrants – and thus contribute more to a monthly premium
than the statute deems unaffordable – to avoid tax liability.
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As the proposed premium tax credit regulations are currently written, there are a number of
situations where women and families could find themselves in such circumstances. Take the
following scenarios for example:
•
The primary breadwinner in a moderate income family loses her job, as well as her offer
of employer-sponsored insurance, in the middle of the year. Her family’s household
income drops well below 400 percent of poverty, and the only way they can afford to
purchase health insurance is through the assistance of advance premium tax credits. But
at the end of the year, her family’s total household income for the year ultimately remains
above 400 percent of poverty because of the income it received before the job loss. Even
though the former primary breadwinner may remain unemployed, the family will still
face a tax liability when they file their annual tax return.
•
A low-income family begins the plan year with a household income below 400 percent of
poverty and receives premium assistance to help them pay for coverage. Near the end of
the year, a family member gets a new job, or perhaps receives an unexpected end-of-year
bonus, and their annual household income ends up modestly above 400 percent of
poverty. Even if they accurately reported their change in income when it occurred, the
family would have to repay the full amount of their premium assistance for the year.
•
Again, a low-income family begins the plan year with a household income below 400
percent of poverty and receives premium assistance to help them pay for coverage.
However, late in the year their household size drops and, consequently the federal
poverty level jumps up, if an ill family member passes away or a child finds employment
and leaves the household. If this change occurs later in the year, the family could be
liable for large premium repayments that it could not have reasonably predicted or
avoided.
•
Two individuals who each have incomes below 400 percent of poverty and have been
receiving premium tax credits marry each other and see their combined income bring
their new family unit above 400 percent of poverty. Even if they report this change
immediately and stop receiving premium assistance, they would still be subject to a
significant tax liability for the credits they received before marrying.
As these scenarios demonstrate, a number of people who “played by the rules” could be liable to
pay back thousands of dollars at the end of the tax year. Moreover, if this reconciliation amount
is part of their general tax liability, women and families who cannot immediately repay at the
end of a tax year may face interest and penalties.
While the proposed premium tax credit regulations contemplates an affordability safe harbor for
employers to protect them from assessments due to factors outside of their control (letting them
base their affordability calculations on their employees’ wages instead of employees’ household
income), equivalent protections are not granted to individuals and families. Instead, the
Departments recommend simply cautioning consumers seeking eligibility determinations and
receiving advance premium credits that they may be subject to a tax liability at the end of the
year and allow individuals and families to take a reduced advance credit. This is an unworkable
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solution for low-income women and families that will generate significant distrust of the
premium tax credit program and Exchanges, thus lowering enrollment and undermining the
ACA’s ability to get more people insured.
Although the statute does require the reconciliation of advance payments, the regulatory
authority provided to the Secretary of Treasury under §36B(g) to administer the credits is broad.
Paragraph (2) of §36B(g) anticipates changes in filing status that may occur during the year, such
as the marriage of a taxpayer receiving a premium credit in cases where combining the two
spouses’ incomes leads to ineligibility or eligibility for a lesser credit. Section 36B(g)
specifically directs the Secretary to prescribe “regulations which provide for… the application of
subsection (f) where the filing status for the taxable year is different from such status used for
determining the advance payment of the credit.” This implies that the Secretary has the
regulatory flexibility to avoid requiring people like a newly married couple to pay back all of the
subsidies of the couple (or one member of the couple) received before getting married.
A reasonable reading of the statute also leads to the conclusion that the Secretary’s regulatory
authority is not limited to situations where a change in filing status (such as from a marriage or
divorce) has occurred. Subsection (1) of §36B(g) is far more general than subsection (2),
directing the Secretary to issue such regulations as may be necessary for the coordination of the
credit determined under §36B with the advance payment of the credit. This implies a broad
range of regulatory discretion, which is needed given that coordination will require consideration
of many factors and circumstances. Congress appropriately recognized the need for flexibility in
leaving to the implementing Departments the details of how coordination should be carried out.
We hope to see an eligibility determination system that is based on income and family
circumstances that are as up-to-date and accurate as possible and that makes it easy for
individuals and families to report changes and have their premiums adjusted accordingly.
Nonetheless, as the scenarios described above clearly demonstrate, this will not be enough to
protect individuals from significant tax liability during reconciliation.
Thus, we strongly urge the Secretary to use regulatory authority to protect families who receive
appropriate advance credits from financial hardship as he has done to create a safe harbor for
employers. Specifically, we encourage the Secretary to consider making the following changes
to the proposed premium tax credit regulations:
•
Prorate the caps on liability by the portion of the year that the family or individual
received advance payments;
•
Adopt a “safe harbor” for individuals and families who can demonstrate that they
accurately reported any changes in income or household size and that their premium
assistance amounts were properly computed for the relevant coverage months;
•
Treat couples that marry during the year based on their status during the coverage
months;
•
Disregard de minimis changes in income for reconciliation purposes; and
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•
Exempt reconciliation obligations from interest or penalty payments.
Additional Protections for Married Couples Filing Separately
The tax code disadvantages the “married filing separately” tax status by disqualifying filers from
the Earned Income Tax Credit (EITC), education credits and other benefits. However, premium
tax credits will be different from those credits because they will be used directly to fulfill the
required purchase of a product. Therefore, it is important for the Departments to carve out some
common sense exceptions to the statutory requirement that married taxpayers must file jointly.
There are several reasons legitimate reasons that it may be inadvisable or even impossible for
married taxpayers to file jointly. One prominent reason is in cases of domestic violence, when a
woman may be living separately from her spouse and keeping her whereabouts a secret or
otherwise may wish to limit interaction. In these cases, it would be inappropriate to require a
woman to file a joint return. In fact, domestic violence was a condition discussed extensively
during the health care debate when it was discovered that women with a history of domestic
violence were often considered uninsurable by health plans. As a result, 42 U.S.C. 300gg was
amended by §1201 of the ACA to prohibit discrimination by insurers against conditions arising
out of acts of domestic violence. It is appropriate that the Departments make a similar
distinction for this class of individuals.
Abandoned spouses may also warrant special protection, in cases where a person (with no
dependents) cannot locate their spouse and is forced to file separately. Incarceration is another
possible barrier to joint filing, particularly if a tax filer has not obtained power of attorney for the
incarcerated spouse. In addition, there should be exceptions in the case of a spouse living out of
the country.
In such exceptional circumstances, the individual should be permitted to file separately and still
receive a premium tax credit. In cases where both spouses, at some point in the year, were
enrolled in the same insurance plan, the Departments could allocate the advance credit and the
benchmark premium according to household income (with the absent spouse’s income being
determined by their tax filing). This would help protect the lower-income spouse. If the absent
spouse did not file a tax return or if the filing spouse does not know their spouse’s social security
number, a reasonable allocation is 50 percent. In these cases, the repayment limits for single
individuals should apply, according to income.
The preamble to the proposed premium tax credit regulations requests comment on whether the
regulation should take into account whether a couple filing together in the previous year and
whether they attested their expectation to file jointly in order to obtain tax credits. It is important
that the Departments bear in mind the family changes that can occur during the year. For
example, a couple may indicate that they intend to file together when applying for credits in
November 2013 but face a completely different scenario in 17 or 18 months later when it is time
to reconcile the premium tax credit on their tax return. It is reasonable, though, to expect that
these exceptions would have limitations. Restricting the exception for one year may be too
restrictive. A complicated divorce involving custody or criminal charges may take a long time to
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resolve. Limiting the exception to three consecutive years would be helpful to accommodate
these types of situations.
Strong Backstop of Rights to Appeal and Consumer Assistance
Despite the best efforts by the Departments to coordinate and simplify the system, there will be
women and families who face confusion and other barriers along the way. In these cases, it will
be critical to have a strong backstop of appeal rights and consumer assistance to help consumers
access the coverage and assistance to which they are entitled.
Rights to Appeal
We support the requirement in the proposed Exchange eligibility regulations that the Exchange
include a description of the right to appeal and instructions on how to appeal in notifications
provided to consumers when any determinations regarding eligibility or the amount of advance
payments and cost-sharing subsidies are made. We note that this provision refers to three
separate sections regarding eligibility determinations – the eligibility determination process at
§155.310, eligibility redetermination during the benefit year at §155.330, and the annual
redetermination process at §155.335. The outcome of a determination under all three of these
rules could be a determination of eligibility for Medicaid, CHIP, or Basic Health, as well as
premium assistance and cost-sharing subsidies.
Moreover, because a determination of eligibility for advance payments of premium credits
presumes a finding of ineligibility for Medicaid, these decisions by the Exchange is effectively a
denial of Medicaid benefits. This means that the Exchange appeal process will have to be
coordinated with the Medicaid process and provide all due process protections that are required
under Medicaid. In particular, we believe that an appeals process must:
•
Ensure that appeals are considered by an impartial hearing officer;
•
Require that decisions be binding on the Medicaid Department when a Medicaid matter is
determined;
•
Ensure appeals when applications are not acted upon promptly or when there are denials
or disputes about the correct amount of premium payments; provide for continuation of
benefits during an appeal;
•
Provide for in-person hearings; and
•
Ensure appeals are completed within federally-set time standards.
The preamble states that the details of the individual eligibility appeals process and standards for
federal appeals will be in future rulemaking. We look forward to commenting on these
regulations, but note now that these regulations should recognize that appeals are inherently
governmental and should not be contracted out particularly because of the interaction with the
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Medicaid eligibility process discussed above. Future rule-making on appeals should also require
that Exchanges ensure that notices and information on the right to appeal be provided in an
accessible and readable manner and that it should meet the meaningful access standards for
persons with limited English proficiency and conform to rules ensuring equal access to persons
with disabilities.
Consumer Assistance
Robust consumer assistance will be absolutely essential to the success of the coverage expansion
pillars of the ACA. Especially in the early years, women and families will need help to
understand the coverage available to them and how to access and maintain the coverage.
We appreciate and commend the Departments for including in the proposed Medicaid
regulations an explicit requirement that Medicaid Departments provide assistance to individuals
seeking help with the application or redetermination process. Ensuring that Medicaid
Departments provide assistance to individuals will be critical to the effort to maintain high
coverage levels envisioned in the ACA. We further support the provision requiring Medicaid
Departments to make such assistance available to individuals in person, over the phone, and
online and to ensure individuals have assistance options that meet their schedules, capacity and
need. However, this provision needs to further specify standards for Medicaid Departments to
ensure that assistance is truly accessible, including performance measures looking at call
abandonment, call wait times, number of days to wait for an in-person assistance appointment,
waiting time for online assistance, and other measures. According to research, parents seeking to
enroll their children in Medicaid or CHIP often feel the process is too burdensome, for reasons
such as being put on hold for too long when trying to get questions answered and not being able
to obtain assistance outside normal business hours (during which most parents work and are
unable to take time off to go to an eligibility office or access a computer).6
Similar attention and standards are needed to ensure additional assistance and education are
available beyond the Medicaid Department. Given the complicated calculations necessary to
determine eligibility for the premium tax credits and the risk of reconciliation payments, it will
be particularly important to have Exchanges, Navigators, and consumer assistance programs take
an active role in reaching out to consumers before problems arise and helping them through the
process. In particular, Exchanges and Navigators should be required to provide information on
how the advance premium tax credit works, why people are obligated to attest to their future tax
status , how they can and should report changes, the nature of the reconciliation process, and the
pros and cons of taking less than a full credit. Considering these responsibilities now is critical
to ensuring that Exchanges and Navigators have the capacity to provide the assistance that
women and families will need leading into the initial open enrollment period.
We also strongly recommend that the final premium tax credit regulations include tangible
actions that the IRS must take to provide direct consumer assistance and education on premium
tax credit calculations to relevant consumer assistance and tax assistance agencies and programs.
6
“Consumer Voices: What Motivates Families to Enroll in Coverage?” (Washington: Robert Wood Johnson
Foundation, GMMB, and Lake Research Partners, September 14, 2010), available online at
http://www.insurekidsnow.gov/professionals/outreach/webinars/challenging_times_motivate_families_slides.pdf.
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The taxpayer assistance program within the IRS should be responsible for providing consumer
assistance on premium tax credit calculations and questions. In addition, the IRS website should
include links to the Exchange and Navigator websites for each state and the Taxpayer Assistance
line should have contact information state Exchanges and navigators. We recommend that IRS
also be responsible for educating consumer assistance programs and taxpayer assistance
programs on premium tax credit rules to enable these programs to best assist consumers.
Conclusion
The effective implementation of the coverage expansion provisions of the ACA presents a huge
task and we know we cannot expect state Medicaid Departments and Exchanges, even with the
help of Navigators, to do it alone. As with implementing CHIP and Medicare Part D, it will be
absolutely critical to enlist the help of state and community organizations if the outreach efforts
are to succeed. The National Partnership stands ready to assist in these efforts.
We greatly appreciate this opportunity to comment on the proposed regulations and look forward
to working with the Departments to continue to move implementation forward in a way that
meets the needs of women and families across the country. If you have any questions about our
comments, please contact Kirsten Sloan, Vice President, at [email protected] or
(202) 986-2600.
Sincerely,
Debra L. Ness, President