Stop Giving Dead People ACA Premium Subsidy Estimates: CMS to Exchange Managers

HealthCare.gov's home page with a 2021 over it

The agency that oversees HealthCare.gov, and state-based Affordable Care Act (ACA) public exchange programs, has an idea for avoiding incorrect ACA premium tax subsidy payments: Stop telling dead consumers how much premium subsidy help they can get.

The Centers for Medicare and Medicaid Services (CMS) has included that recommendation in a draft "benefits and parameters" document and a draft letter to ACA exchange plan issuers.

The final versions of the documents is expected to shape how ACA rules and programs work in 2021.

Resources

A summary of the new 2022 ACA parameters document, and links to parameters-related documents, are available here.
An article about HealthCare.gov subsidy applicants who happened to be dead is available here.

One CMS goal is to hold down spending on the ACA premium tax credit subsidies.

The ACA public exchange program has created a family of online supermarkets that people can use to shop for commercial health coverage. Many exchange plan buyers with income from 100% to 400% of the federal poverty level use ACA credits to hold down the out-of-pocket cost of premiums.

Premium tax credit spending rose 40% in 2019, to $38 billion, or an average of about $7,800 per tax credit user, even though the number of people with exchange plan coverage fell 2%, according to an analysis of Internal Revenue Service data from the Treasury Inspector General for Tax Administration.

Many exchange plan users get the premium subsidies in advance, while the coverage year is under way, based on estimates of what they'll earn in the coming year. When "advance premium tax credit" (APTC) users file their income tax returns the following year, the IRS tries to deduct any excess APTC payment amount from the taxpayer's tax credit.

CMS has proposed a number of ideas for reducing the risk that the wrong people will get APTC help during the coverage.

One idea is to eliminate automatic re-enrollment for very low-income exchange plan users, who pay $0 out-of-pocket per year. Recovering any extra APTC payments from those people is often impossible, because the law blocks the IRS from recovering excess APTC payments from some very low-income recipients, according to a CMS fact sheet about the parameters document.

Another idea is to make more use of regular automated data matching, to see whether premium tax credit users appear to be enrolled in Medicare, Medicaid or commercial health group health plans.

APTC users are supposed to be people who have no other access to affordable coverage.

Exchange programs already look for double dippers, but, in the future, when an ACA exchange finds a double dipper and lets the double dipper end APTC use voluntarily, the exchange should stop determining whether those voluntarily terminated APTC users are eligible for APTC subsidies, according to the CMS fact sheet.

Similarly, if an exchange finds that an APTC recipient is dead, the exchange should refrain from determining whether the dead APTC user is eligible for APTC subsidies, officials say.

The exchange should also terminate the dead APTC user's exchange plan coverage back to the data of death, officials say.

CMS also has proposed:

Keeping the user fee HealthCare.gov charges health insurers at 3% of premiums in most states, and at 2.5% for insurers in states that handle some aspects of ACA public exchange marketing and administration themselves.
Keeping the open enrollment period starting date at Nov. 1 and the ending date at Dec. 15.

— Read HealthSherpa Handled 14% of HealthCare.gov 2020 Signups: HealthSherpa, on ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on Facebook, LinkedIn and Twitter.