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By Sara Hansard
May 10 — ACA health insurance subsidies will be discontinued for people who don't file tax returns under guidance issued May 10 by the HHS.
“People who do not have a tax return on file and who do not return to the marketplace to update their application will be prospectively denied coverage for Jan. 1, 2017,” under the guidance, Timothy Jost, a consumer representative to the National Association of Insurance Commissioners, told Bloomberg BNA May 10.
The new provision for 2017 affecting advance premium tax credits (APTCs) and cost-sharing subsidies that most Affordable Care Act exchange enrollees receive “is necessary to ensure that people who do not file their taxes are not able to receive [APTCs] in future years,” Jost said.
The federally facilitated marketplace will be discontinuing APTCs and cost-sharing reductions for enrollees who were automatically enrolled in 2015 and 2016 but who have not updated their information, don't update their information for 2017 by Dec. 15 (the last day to take action for Jan. 1, 2017, coverage) and for whom there is no tax return information for 2014 or 2015, Georgetown University researcher Sandy Ahn told Bloomberg BNA in an e-mail May 10. The federally facilitated marketplace previously didn't do that, she said.
The ACA requires recipients of subsidies to file tax returns the year after they receive them to verify that their incomes make them eligible for the subsidies. If the recipients made more than was originally claimed, they are liable to pay back excess subsidies, and if they made less, they are eligible to receive more subsidies.
Roughly $1.7 billion in premium assistance payments were made in 2014 for 430,000 HealthCare.gov applicants who were approved despite problems verifying eligibility, leaving the Centers for Medicare & Medicaid Services vulnerable to potential fraud, according to a Government Accountability Office report released Feb. 24 (37 HCDR, 2/25/16).
On Jan. 8, IRS Commissioner John Koskinen wrote members of Congress saying that for the 2015 filing season about 1.5 million taxpayers who needed to file tax returns to reconcile their APTCs hadn't done so, and the taxpayers who had filed returns reported receiving $11.3 billion in APTCs of the approximately $15.5 billion the marketplaces paid out in 2014.
The guidance describes the process by which current enrollees are notified about the upcoming open enrollment period and how ongoing eligibility and enrollment are handled for current enrollees, “including those who choose not to return to the Marketplace by the deadline to select a plan for the upcoming year,” the HHS said. Open enrollment for 2017 will be held from Nov. 1 to Jan. 31, 2017.
Despite measures to ensure enrollees update their eligibility information, an HHS official who asked not to be identified told Bloomberg BNA in an e-mail May 10, “Consistent with procedures for benefit years 2015 and 2016, the procedures for 2017 maintain the commitment to preserve continuity of coverage while limiting the burden for enrollees.”
“Consumers who take no action will generally be re-enrolled in coverage” by the federally facilitated marketplace “using the most recent income information available,” the official said.
As in coverage years 2015 and 2016, prior to open enrollment, most current enrollees will receive a marketplace open enrollment notice under the 2017 guidance.
The most recent income information available to redetermine eligibility for financial assistance and recalculate advance payments of the premium tax credits and income-based cost-sharing reductions will be used, the guidance said.
In addition to the new requirement that eligibility information be updated in order to get coverage on Jan. 1, 2017, beginning in September the Internal Revenue Service will expand the data it provides to the federally facilitated marketplace to include people who didn't file tax returns or who filed tax returns but didn't reconcile their APTCs using Form 8962, the guidance said.
Another difference in the new guidance, Ahn said, is for 2017 coverage enrollees can contact the federally facilitated marketplace by Dec. 15 for coverage starting Jan. 1, 2017, to update their information, even if they didn't file a tax return.
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