July 09, 2013
Only a few days after announcing that a penalty on employers for not providing employees health insurance would be delayed until 2015, the federal government has scaled back income verification requirements that would have been used to decide subsidy levels offered through new health insurance exchanges.
The announcement, which came late last week as part of a 606-page rule published by the U.S. Department of Health and Human Services (HHS), said that the requirement that exchanges verify consumers’ income and health insurance status would be delayed until 2015. As a result, consumers purchasing coverage through insurance exchanges, which are scheduled to go live in January 2014, will be responsible for self-attesting to both their income and the availability of employer-sponsored coverage until the delayed requirements go into effect.
HHS stated that a more comprehensive verification process is currently “not feasible” due to “operational barriers” and “a large amount of systems development on both the state and federal side, which cannot occur in time for October 1, 2013,” when pre-enrollment is set to begin. The agency did, however, pledge that “a more robust verification process” is in development and should be ready for the 2015 plan year.
Under the Affordable Care Act (ACA), consumers with income ranging from 138 percent to 400 percent of the federal poverty line will be eligible to purchase subsidized coverage through health insurance exchange purchasing pools. In addition to the income requirements, enrollees must also not have access to health insurance through their employer to receive subsidies for exchange coverage.
With the verification requirements now delayed until 2015, the system may be ripe for gaming, according to many observers. Such observers have cited figures like the 21 to 25 percent of those receiving the Earned Income Tax Credits who are not eligible. These and other enrollees, who may unintentionally misrepresent income, may also be in for an unpleasant surprise come tax filing for the 2014 tax year, as they will be asked to pay back any excess subsidies they received.
According to the rule, the federal government will be conducting random checks of coverage status and income levels in the states where they will be operating exchanges, but noted that the 17 state-based exchanges will have until 2015 to begin their random checks.
It remains to be seen how Covered California, one of the 17 state-based exchanges, will handle the new delay.