On August 12, 2011, the Department of Health and Human Services issued two notices of proposed rulemaking (NPRMs) in its ongoing efforts to implement the Affordable Care Act (ACA). The first addresses eligibility for Medicaid and the Children’s Health Insurance Program (CHIP) after the 2014 implementation of the ACA Medicaid expansions. The second governs eligibility determinations by the exchanges for the ACA premium tax credits and cost-reduction subsidies. Both address coordination between the exchanges and the Medicaid and CHIP programs. The exchange rule also contains standards for evaluating eligibility for employers to participate in the SHOP exchange program.
These regulations are lengthy and detailed, and will only be summarized here. Fact sheets summarizing the rules are also available from HHS. A separate post, describing a third NPRM also released on August 12 by the Treasury Department regarding the premium tax credits, is discussed in an earlier post.
Determining Medicaid Eligiblity
Since its creation 45 years ago, the Medicaid program has expanded by accretion to the point that today many states cover 60 or more mandatory and optional eligibility categories. The ACA adds a new category of Medicaid eligibles: adults under 65 with modified adjusted gross household income (MAGI) at or below 133 percent of poverty. (Actually, since 5 percent of income is disregarded under the statute, the eligibility level is effectively 138 percent of poverty). State Medicaid programs will receive 100 percent federal funding for newly eligible enrollees in this category for 2014, 2015, and 2016, gradually phasing down to 90 percent for 2020 and thereafter. (States that already cover enrollees in this group will gradually receive increased federal funding beginning in 2014 that will reach the same level by 2019). States may also expand eligibility for adults beyond this limit with their regular federal Medicaid match.
Medicaid coverage is expected to expand for enrollees in traditional categories also after 2014, in part because the Affordable Care Act’s minimum coverage requirement (often known as the individual mandate) will require everyone with incomes above the tax filing limit (about 90 percent of the poverty level) to obtain health insurance coverage, which includes Medicaid. The Congressional Budget Office estimates that Medicaid and CHIP enrollment will grow by about 16 million by 2016, while the Office of the Actuary at the Centers for Medicare and Medicaid Services, using different assumptions, projects that Medicaid enrollment will grow by 24 million.
Eligibility for Medicaid will be determined for the expansion population based on MAGI without consideration of assets. The NPRM proposes collapsing a number of existing eligibility categories, so that beginning in 2014 there will be four primary categories of Medicaid coverage for which eligibility will be based on MAGI: parents and other caretaker relatives with incomes above 133 percent of poverty; pregnant women; children; and the adult expansion population. Current income counting rules and disregards will be converted to MAGI for purposes of determining eligibility for these programs.
A number of categories of Medicaid recipients will continue to have eligibility determined based on traditional rules including asset tests, including SSI eligibles; individuals whose eligibility depends on blindness or disability; individuals aged 65 and over; individuals receiving long-term care services; and the medically needy. Adults who are blind or disabled or who are medically needy may alternatively qualify under the expansion rules if their income is at or below 133 percent of poverty without having to establish eligibility as blind, disabled, or medically needy.
An Emphasis On Seamlessness And Coordination
MAGI is also used, of course, for calculating eligibility for the premium tax credits by the exchanges. Every effort is made by the NPRMs to align the two systems for calculating eligibility by the state Medicaid agencies and by the exchanges to facilitate the seamless and coordinated eligibility philosophy that underlies the ACA. An individual should be able to apply either to Medicaid or the exchange, be subject to the same income counting rules, and end up in the right program. MAGI is thus determined by the same rules for both programs (including tax code rules that do not treat some Social Security payments as income, an issue that has recently aroused controversy and as to which HHS seeks comments).
But some differences in eligiblity determinations. There are differences, however, between tax credit eligibility and Medicaid eligibility that cannot be ignored. First Medicaid eligibility is determined by current, point-in-time need, whereas premium tax credit eligibility is based on annual income. Medicaid eligibility can be determined for a 12 month period, and can take into account reasonably anticipated changes in income, but must be based on income at the time of application. Final tax credit eligibility is not determined until tax filing time. Certain income that would be countable income for calculating tax credits can also be disregarded for Medicaid eligibility, including certain lump sum payments (which are only counted in the month received), scholarships, and certain Native American and Alaskan Native payments.
In general, household composition will be determined the same way for Medicaid as for premium tax credits –an individual and all tax dependents will be grouped together — but in a few situations Medicaid household composition will be determined differently. For example, for Medicaid eligibility purposes, children living with one parent but claimed as tax dependents by another would be considered to be part of the household of the custodial parent, pregnant women can be counted as families of two, and children and spouses who are not claimed as tax dependents because their parents do not file a return can be claimed as part of their parents household. These rules make sense from a Medicaid perspective, but will inevitably mean that premium tax credit and Medicaid eligibility determinations will not be absolutely seamless.
Both the Medicaid and exchange NPRMs refer to Medicaid, CHIP, the basic health care program where it exists, and the premium tax credits and cost-sharing reduction payments as “insurance affordability programs.” Applicants for all insurance affordability programs will basically go through the same application process. All categories can apply for assistance through the exchanges. All will use a single streamlined application form that can be filed either on-line or by paper. A supplemental or alternative form can be used for those who qualify for coverage on a basis other than MAGI.
Face-to-face interviews cannot be required. An applicant can be required to provide a Social Security number, but a person who applies for another person (e.g. a non-citizen parent for a citizen child) cannot be required to provide a Social Security number or information regarding citizenship or nationality status. If an applicant is determined to be ineligible for Medicaid, their eligibility for premium tax credits should be automatically determined.
Both the Medicaid and exchange NPRM provide for similar approaches to verifying eligibility information. States may rely on self-attestation for all Medicaid eligibility criteria except citizenship and immigration status information. States and exchanges may verify citizenship information with the Social Security Administration, immigration status through Homeland Security, and income information with the IRS through a process established by HHS. States and exchanges may also verify income with available electronic sources. States and exchanges must rely to the extent possible on electronic data matches with trusted third party sources, only requiring additional information, including paper documentation, when information provided by an applicant is not “reasonably compatible” with information obtained from electronic sources.
Eligibility for Medicaid will normally be redetermined every 12 months. Eligibility can be determined more often if the beneficiary reports a change in circumstances or the agency receives information (through a data match for example), indicating the eligibility has changed. When a Medicaid redetermination comes due, the state should try to make the determination based on available information and not require a signed application or request information already available to the state. When the state must request further information for redetermination, it should pre-populate the form with information that it has already available.
Applicants should be able to apply to Medicaid, CHIP, or the exchange (if the same entity does not handle both functions) and have eligibility determined seamlessly for the appropriate program, only having to apply once. If the exchange determines that an applicant is eligible for Medicaid based on MAGI, the state must enroll the individual without further eligibility determination. Apparently this is true even if the exchange is a federally-facilitated exchange. The state Medicaid agency may even arrange for the exchange to enroll the applicant in a Medicaid managed care program. If Medicaid eligibility is not based on MAGI, the exchange can screen the applicant for Medicaid eligibility and transmit the application to Medicaid for a final determination.
The NPRM notes that the ACA does not expressly permit Medicaid programs to make coverage determinations for the exchange, but does allow exchanges to contract with Medicaid for this purpose. Absent such an agreement, Medicaid should transfer to the exchange information it has available for determining information for a person determined to not be eligible for Medicaid, and the exchange must determine eligibility. The exchange can also enroll eligible individuals for premium tax credits pending a final Medicaid determination of eligibility based on blindness or disability.
Under federal law, Medicaid eligibility determinations are “inherently governmental” and must be made by public employees. Accordingly, Medicaid agencies may delegate eligibility determinations to exchanges that are public entities, but may have to co-locate Medicaid workers to exchanges that are not run by public agencies or find another way of coordinating services. Medicaid agencies may also not delegate authority to exercise administrative discretion in policy making to other entities.
States will only be eligible for enhanced federal matching funds for newly eligible individuals and families who are not eligible under pre-ACA rules. It would be senseless, however, to require states to determined eligibility for every applicant under both the pre-ACA and post-2014 eligibility rules to determine who was eligible for the enhanced federal match. The NPRM proposes three approaches to determining who is newly eligible for determining federal funding levels:
- Using thresholds across categorical groups to approximate, in aggregate, the December 2009 standards;
- Using statistical sampling techniques; or
- Using extrapolation from data sources such as the MEPS or MSIS data.
HHS requests comments on additional or alternative approaches to addressing this issue.
Determining Exchange Eligibility
As already noted, the exchange NPRM largely tracks the Medicaid regulations with respect to rules and procedures for determining eligibility for premium tax credits and cost-reduction payments. Although the ACA is not wholly clear as to whether HHS or the exchanges would determine premium tax credit eligibility, the NPRM assigns this role to the exchanges, with HHS serving mainly as a conduit of information between the exchanges and other federal agencies.
An applicant to the exchange for premium tax credits and cost-sharing reduction subsidies must attest to the basic statutory eligibility requirements that the applicant is lawfully in the United States; not incarcerated; a resident of the exchange service area; not eligible for other forms of government or employment-based coverage; and financially eligible based on household MAGI. Cost-sharing reduction subsidies are only available to non-Indian enrollees if the enrollee is enrolled in a silver plan.
Residency for both exchange and Medicaid purposes will be determined on an “intent to reside” basis that precludes eligibility of visitors but does allow seasonal workers or those seeking employment in a new location to apply, and does allow temporary absences from the area. If premium tax credits or cost-reduction subsidies are sought for a tax dependent who does not reside in the exchange area of the primary taxpayer (such as a student attending school in another state), the nonresident may be covered either through the exchange in the area where he or she resides or through the exchange of the primary taxpayer. State Medicaid programs can continue to have state-specific rules governing residency of students.
A person who is only seeking to purchase insurance through the exchange and not assistance through an insurance affordability program can decline an eligibility determination altogether. An applicant cannot apply only for a premium tax credit or only for Medicaid, but must submit an application and allow the exchange to determine the appropriate program. An applicant for premium tax credits can accept less than the full amount he or she is entitled to, however, an important potential protection against reconciliation liability.
An application for assistance need not be filed or attested by the primary taxpayer in a household, but the primary taxpayer must attest that he or she will file a tax return for the year (a joint return if married); will not be claimed as a dependent by another; and will claim as dependents all persons in his or her household. This is necessary so that they primary taxpayer will be aware that he or she will be liable in reconciliation for any overpayments. An applicant who has received premium tax credits in earlier years is eligible only if he or she filed a tax return for those years.
The exchange verification processes described in the NPRM are divided into two separate categories: those that relate to eligibility for enrollment in the exchange, and those that relate to eligibility for premium tax credits and cost-sharing reduction payments. The former requirements include citizenship or lawful presence; residency; and freedom from incarceration, while the latter include lack of other forms of minimum essential coverage; household size; and income.
As with Medicaid, the exchange must verify citizenship with the SSA and lawful presence with Homeland Security. It must also verify income through HHS with the IRS. The exchange may otherwise accept attestation or rely on electronic data sources. If an inconsistency is identified, the exchange may give the applicant up to 90 days to resolve the problem. The exchange may provide interim premium assistance during that period, but the applicant must repay the assistance if eligibility cannot be established.
The exchange can rely on financial information other than a primary taxpayer’s prior tax return where the taxpayer was not required to file a return earlier; income has decreased at least 20 percent; or the taxpayer has filed for unemployment compensation. An applicant must be provided a written determination of eligibility or ineligibility and be informed or a right to appeal. Future regulations will define the appeal procedure.
Taxpayers receiving premium tax credits and cost-sharing reduction payments must inform the exchange of changes in eligibility factors within 30 days. Eligibility will be redetermined annually. The exchange will send the enrollee a redetermination notice for the enrollee to sign and return, but if it is not returned, the exchange will proceed on the basis of available information. If a premium tax credit recipient is determined to be ineligible, the advance tax credits will cease but enrollment in a QHP will continue for another month to allow the enrollee to follow up with the exchange. An enrollee determined to be eligible at redetermination will remain with the same QHP unless the enrollee elects to change plans.
The NPRM contains a number of information-sharing requirements. The exchange must notify an enrollee’s QHP, for example, if premium tax credits or cost-sharing reduction subsidies are reduced or eliminated and must notify an enrollee’s employer if the exchange determines that the employer does not provide minimum essential coverage or that coverage is unaffordable. The exchange regulations mirror the Medicaid regulations in allowing exchanges to make Medicaid determinations. Finally, the regulation provides basic rules for determining employer eligibility to participate in the SHOP exchanges.
Consumers Will Welcome Streamlined Eligiblity, But Will Policymakers Concerned With Costs?
In sum, the Medicaid and exchange regulations go far toward assuring the streamlined, coordinated, real-time, hassle-free Medicaid, CHIP, premium tax credit and cost-reduction subsidy determination and redetermination process promised by the ACA. There is ample evidence that one reason why participation in current Medicaid and CHIP programs falls short of its potential is the difficulty that eligible families face in negotiating the bureaucracy.
The processes outlined in these regulations should maximize participation and will certainly be welcomed by persons who need assistance. They are less likely to be welcomed, however, by states and by members of Congress who worry about the cost of maximizing participation in insurance affordability programs.