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Implementing Health Reform: Federal SHOP Procedures And Other ACA Guidance


April 24th, 2014
by Timothy Jost

With open enrollment completed and regulations largely in place for 2014 and 2015, implementation efforts at the federal level have quieted down. The Centers for Medicare and Medicaid Services, however, continue to issue technical guidance both to clarify outstanding 2014 issues and to clear the way for 2015. Much of this guidance appears at the CMS REGTAP website.

On April 22, 2014, CMS updated at REGTAP a series of slides, published initially on April 1, 2014, describing their proposed enrollment and payment process for the 2015 federally facilitated SHOP (FF-SHOP), which will begin to offer employee choice and premium aggregation in 2015. These slides expand on information previously provided in the 2015 federal exchange letter to issuers regarding the federal SHOP. CMS states that it intends to update the procedures set out in the slides with formal guidance before QHP certification begins in May.

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Implementing Health Reform: The Latest Affordable Care Act Coverage Numbers (Updated)


April 18th, 2014
by Timothy Jost

On February 17, 2014, the White House announced that 8 million Americans have signed up for private health insurance coverage through the health insurance marketplaces, or exchanges. This significantly exceeds the White House’s original goal of 7 million enrollees. It is far more than the Congressional Budget Office’s recent projections of 6 million.

The number of actual enrollees will be smaller than this number. The CBO’s projections are for the average number of those actually enrolled in coverage over the course of a calendar year. To calculate the average number of enrollees, one must subtract from the 8 million the number of individuals who fail to pay their premiums and thus are never actually enrolled in coverage, as well as those who will drop coverage at some later point during the year. To that reduced number, then, must be added back the number who become newly covered through special enrollment periods during the remainder of the year. In the end, 6 to 7 million average enrollees is probably a reasonable estimate.

This does not, however, exhaust the number of Americans who are now covered under the Affordable Care Act. The fact sheet states that 3 million young adults are covered under their parents’ plans because of the ACA. This number is probably high, but it is clear that the ACA has dramatically increased coverage of Americans between the age of 19 and 25 — the age group most likely to lack health insurance prior to the ACA (and still).

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Implementing Health Reform: CBO Projects Lower ACA Costs, Greater Coverage


April 15th, 2014
by Timothy Jost

On April 14, 2014, the non-partisan Congressional Budget Office, together with the staff of the Joint Committee on Taxation, released an updated estimate on the Effects of the Insurance Coverage Provisions of the Affordable Care Act. The CBO report brings good news for the ACA. The CBO projects now that the ACA’s coverage provisions will cost $5 billion less for this year than it projected just two months ago. Over the 2015 to 2024 period, CBO projects that the ACA will cost $104 billion less than it projected in February. At the same time, the CBO projects that the number of uninsured Americans will in fact decrease by an additional one million over the next decade, by 26 rather than 25 million, as it estimated in February.

The CBO report estimates that the net cost of the ACA’s coverage provisions will be $36 billion in 2014, $1,383 billion over the 2015 to 2024 period. This estimate consists of $1,839 billion for premium tax credits and cost-sharing reduction payments, Medicaid, CHIP, and small employer tax credits, offset by $456 billion in receipts from penalty payments, the excise tax on high-premium insurance plans, and the effects on tax revenues of projected changes in employer coverage. The CBO report does not include an estimate of the total reduction in the federal deficit attributable to the ACA, as the CBO has concluded that it is no longer possible to estimate the net effect of ACA changes on existing federal programs, but the most recent CBO estimate from 2012 projected that the ACA would reduce the federal deficit over the 2013 to 2022 period by $109 billion. Given projected further reductions in Medicare spending projected in a CBO budget report also released on April 14, it is reasonable to believe that the ACA’s impact on the budget may be even greater than earlier estimated.

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Implementing Health Reform: Changing Focus, And Changing Leadership, At HHS (Updated)


April 11th, 2014
by Timothy Jost

With the March 31, 2014 deadline for applying for qualified health plan coverage through the health insurance exchanges behind us, and the April 15, 2014 deadline for completing those applications upon us, Affordable Care Act implementation has quieted considerably. The Centers for Medicare and Medicaid Services have been very active on the Medicare front, releasing in recent days their 2015 Medicare Advantage Rate Announcement and Call Letter and publishing data on Medicare payments to 880,000 Medicare providers. But on the exchange and insurance market reform side, CMS has only one major proposed rule pending at this time, the Exchange and Insurance Market Standards Rule proposed in March, and nothing pending for regulatory review at the Office of Management and Budget.

I am unaware of any major regulatory issuances expected in the immediate future from the Departments of Treasury or Labor, although Treasury does have a number of proposed rules on the table that have yet to be finalized dealing with issues such as minimum value of employer coverage or premium tax credit reporting requirements for exchanges.

On April 10, the media reported two major Health and Human Services developments. First, Secretary of Health and Human Services Kathleen Sebelius announced at a Senate Hearing that 7.5 million Americans have now signed up for health plans through the exchanges. Although opponents of the ACA continue to quibble about how many of these individuals have actually paid their premiums and how many were uninsured previously, the number far exceeds earlier estimates of how many would enroll in health insurance through the exchanges. A recently released Rand survey, which does not fully take into account the late surge that increased exchange enrollment by over 70 percent in the last month, indicates that in fact the ACA has made a significant dent in the number of uninsured in the United States.

The second announcement was of the resignation of Secretary Sebelius herself, and of the nomination of Sylvia Mathews Burwell as her replacement.

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Implementing Health Reform: Medicaid & CHIP February 2014 Report


April 5th, 2014
by Timothy Jost

On April 4, 2014, the Centers for Medicare and Medicaid Services released their Medicaid & CHIP February 2014 Monthly Applications, Eligibility Determinations, and Enrollment Report. (Blog post here.) For the first time, the February monthly report provides meaningful data on enrollment.

Like previous reports, the report gives the total number of applications received by all reporting state agencies (2,207,513) and total number of individuals determined eligible for Medicaid and CHIP by state agencies (2,249,120). For comparison, the numbers of applications is down from initial January reports (2,266,778), but the number of determinations is up (2,436,879).

As with previous reports, however, these numbers are subject to so many qualifications as to be little use for determining growth of the Medicaid program. The data do not include numbers from New York and Washington, while Tennessee only reported CHIP data. They are also very preliminary — the January determinations figure was revised upwards by about a fifth in February.

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Implementing Health Reform: First Marketplace Open Enrollment Ends With More Than Seven Million Enrollees


April 2nd, 2014
by Timothy Jost

The White House announced on Tuesday April 1, 2014 that as of the end of open enrollment, 11:59 p.m. on March 31, 2014, 7.1 million Americans had signed up for health plans under the Affordable Care Act. Tens of thousands more will be added from individuals who attempted to apply during the open enrollment period but were unable to complete their applications. And many more will be enrolled through special enrollment periods as they undergo life changes over the coming year.

Of course, arguments will continue as to how many of those who selected a plan will pay their premiums (which they must do before they are covered); how many were previously uninsured; and whether those who enrolled are young, healthy, and male enough to offer insurers a risk pool like that they anticipated when they set their rates. There is ample evidence that many have not yet paid, but it is reasonable to expect that the payment rate will pick up as enrollees figure out how to pay their insurers and insurers figure out who their enrollees are. There is also evidence that many of those who signed up were previously covered. Of course, one of the purposes of the ACA was to make insurance affordable, so if someone who was struggling to afford coverage (and might have had to drop it in the near future) can now afford it, that is also a success. Moreover, millions of the uninsured have also signed up for Medicaid and some have also obtained coverage in the individual market outside the exchange or from their employer. Finally, the size of the risk pool suggests that it is reasonably balanced demographically.

In any event, 7 million enrollees was the number that has constantly been held up as the unobtainable goal for the exchanges, and it has been reached–indeed surpassed. Pictures all over the web today of long lines and full waiting rooms of people eager to enroll in coverage demonstrate that in fact people want health care coverage and the ACA is allowing them to get covered.

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Implementing Health Reform: Additional Enrollment Opportunities And ACA Litigation (Updated)


March 26th, 2014
by Timothy Jost

On March 26, 2014, the Centers for Medicare and Medicaid Services drew the 2014 open enrollment period toward a close with a flourish, releasing a series of guidance documents regarding opportunities that remain to enroll in coverage after the open enrollment period. The Department of the Treasury also released a guidance, a fact sheet, and letter addressing the situation of domestic violence victims who apply for premium tax credits but are unable to file taxes jointly, as generally required by the ACA.

Extended Enrollment Opportunities

The first CMS Guidance addresses the situation of people waiting “in line” for enrollment in the federally facilitated marketplace or exchange (FFM) on the final day of the 2014 open enrollment period, March 31. CMS anticipates that application traffic will be very high during the last week of open enrollment—over a million individuals visited healthcare.gov on Monday, March 24. Individuals who applied by March 31, but did not complete their application, will be allowed to complete it—effectively given a special enrollment period to finish enrolling. CMS does not specify how long consumers may continue to do so beyond saying that they will have a “limited amount of additional time.” If applicants pay their first month’s premium by the time required by their insurer, they will be able to being coverage on May 1.

Paper applications that are received by April 7, or that were filed by March 31 but uncompleted because they were pending submission or review of documents, can also be approved for coverage beginning May 1 for consumers who choose a plan by April 30. Consumers who take advantage of this special enrollment period may also apply for a hardship exemption to avoid paying the individual responsibility tax for the additional month they are uninsured. The guidance applies only to the FFM, but it clarifies that state based marketplaces can apply similar policies.

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Implementing Health Reform: Exchange And Insurance Market Standards Proposed Rule


March 16th, 2014
by Timothy Jost

On March 14, 2014, the Department of Health and Human Services, Centers for Medicare and Medicaid Services, published a proposed rule titled “Patient Protection and Affordable Care Act: Exchange and Insurance Market Standards.” The rule was accompanied by a bulletin on product discontinuance, one of the issues addressed by the rule. The proposed rule was one of a number of March 14 ACA issuances, the rest of which were addressed in earlier posts.

The Exchange and Insurance Market Standards proposed rule addresses a grab bag of issues that all relate loosely to exchanges or to the ACA’s insurance market reforms. Some of these — like QHP quality reporting — are issues that HHS had failed to address earlier because these issues did not rise to the urgency of other issues that needed to be resolved immediately for health reform to proceed. Others — like regulation of navigators — are issues that had been addressed earlier, but where it has become apparent that mid-course corrections are necessary. Still others, like modifications in the premium stabilization programs, are issues that have arisen in the unfolding course of events as problems developed in implementation.

Most of the issues are largely unrelated to one another; thus this description of the rule will proceed like the rule itself, addressing seriatim a catalog of largely unrelated issues. (A list of topics addressed by the rule is included in a note at the end of this post.)

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Implementing Health Reform: Ryan White Third-Party Payments, 2015 Letter To Issuers, And Other ACA Developments


March 15th, 2014
by Timothy Jost

On March 14, 2014, the Department of Health and Human Services released a flood of regulations, proposed regulations, and guidance addressing a host of Affordable Care Act implementation issues. From all indications, HHS has cleared the decks of all the regulatory issuances it had under consideration– nothing involving ACA implementation remains pending at the Office of Management and Budget. Perhaps someone made a promise that all would be completed by the end of the winter (or by Saint Patrick’s Day). More likely the necessity of having the ground rules for 2015 in place so that insurers could proceed with their 2015 forms and rates, and states with approving them, drove the deluge. In any event, it will take several posts to cover it all.

Yesterday’s post covered a notice on extending the federal preexisting condition high risk pool and a frequently asked questions document on coverage of same-sex spouses. The Internal Revenue Service also released a set of general Tax Tips for Same-Sex Couples (which covers general tax information and will not be discussed here), while HHS issued a blog post summarizing its frequently asked questions document.

This post will cover several other issuances released late in the day on March 14, 2014. These include an interim final rule (with comment period) dealing with third party payments for qualified health plans (QHPs) and stand-alone dental plans (SADPs); the 2015 final annual letter to issuers in the federally facilitated marketplace; a set of frequently asked questions on retroactive coverage, and a set of frequently asked questions on the use of exchange grants and no-cost extensions.

A final post will examine a proposed rule on exchange and insurance standards for 2015 and beyond and an accompanying bulletin on product discontinuance.

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Implementing Health Reform: The 2015 Health Insurance Marketplace Blueprints And More ACA News


March 14th, 2014
by Timothy Jost

In its final 2015 Notice of Benefit and Payment Parameters, the Centers for Medicare and Medicaid Services (CMS) noted that state applications to operate exchanges for 2015 would be due on June 30, 2014. On March 7, 2014, CMS released at its Paperwork Reduction Act (PRA) website the blueprints that states are to use to apply to operate an exchange (called a marketplace in the blueprint). The PRA listing also includes a helpful crosswalk between the proposed and final blueprint.

This post discusses these blueprints as well as other news related to Affordable Care Act implementation, such as an additional one-month extension of coverage in the federal Preexisting Condition High Risk Pool.

The biggest change in the 2015 blueprint is that plan management state partnership exchanges are no longer available. States that decide to assist in plan management functions will do so on an ad hoc basis and are not required to file a blueprint. This change apparently recognizes the reality that many of the states assisting in plan management are not able politically to identify themselves as partners, and thus there is little point in requiring some to do so and not others. States do also not need to file a blueprint regarding their decision on whether to use the federal exchange to assess or determine Medicaid eligibility.

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Implementing Health Reform: A February Exchange Enrollment Report


March 12th, 2014
by Timothy Jost

On March 11, 2014, the Department of Health and Human Services released its Health Insurance Marketplace March Enrollment Report covering the period of October 1, 2013 through March 1, 2014. The Report covers, that is to say, five of the six months of the 2014 open enrollment period, which ends on March 31, 2014.

As of March 1, 4,242,300 individuals had selected a health plan through the federal and state exchanges, including 1,621,239 who signed up through the state exchanges and 2,621,086 who signed up through the federal exchange. New plan selections were down somewhat in February, with 942,000 individuals selecting a plan as compared to 1,146,000 in January, but February was a short month and the January report included a few days from December, so this does not necessarily indicate a drop in momentum.

There is every reason to believe, moreover, that enrollment will climb sharply in March, the last month of open enrollment. Experience with programs with open enrollment periods, such as Medicare Part D, Massachusetts Commonwealth Care, the Children’s Health Insurance Program, and the Federal Employee Health Benefits Program indicates that people tend to put off signing up for coverage until the last moment. During the 2012 FEHBP open enrollment period, 22 percent of those who changed enrollment did so in the last two days. The administration and partner organizations are also continuing to ramp up enrollment efforts, while exchanges continue to expand capacity.

It is quite likely, therefore, that the exchanges will sign up 6 million individuals—the revised Congressional Budget Office estimate—by March 31, perhaps more. Moreover, even after March 31, millions of additional Americans will qualify for special enrollment periods, for example because they lose Medicaid or employer coverage; thus, the total number of enrollees could easily exceed CBO estimates by the end of 2014.

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Implementing Health Reform: Basic Health Program And More ACA Litigation Results


March 10th, 2014
by Timothy Jost

On March 7, 2014, the Centers for Medicare and Medicaid Services of the Department of Health and Human Services released its final rule on the Basic Health Program (BHP). This rule finalizes a rule proposed by CMS in September of 2013, which was covered here. CMS also released its methodology for funding the BHP for 2015. Finally, CMS published, along with the Departments of Labor and Treasury, a request for information regarding the implementation of a provision of the Affordable Care Act that prohibits insurers from discriminating against providers based on their licensure or certification status.

This post will discuss these issuances, as well as a decision by the United States Court of Appeals for the District of Columbia rejecting yet one more challenge to the ACA.

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Implementing Health Reform: Allowing Noncompliant Policies; Benefits And Payment Parameters Rule (Part 3, IRS Reporting Rules)


March 8th, 2014
by Timothy Jost

Editor’s note: Part 1 of this post discussed the Department of Health and Human Services March 5 bulletin extending until October 1, 2016 its transitional policy permitting the renewal of ACA non-compliant individual and small group health insurance policies. Part 1 also began examining the final 2015 Notice of Benefit and Payment Parameters rule, issued on the same date; that analysis was concluded in Part 2. Part 3 below discusses two final rules also issued March 5 by the Internal Revenue Service regarding reporting by insurers of minimum essential coverage and reporting by employers on coverage under employer-sponsored health plans.

On March 5, 2014, the Internal Revenue Service released two final rules governing two of the Affordable Care Act’s most important reporting rules. One rule implements section 6055 of the Internal Revenue Code, which requires health insurers, self-insured employers, and other entities that provide minimum essential insurance coverage to individuals to report to the IRS information about the type and period of coverage and to provide statements containing this information to covered individuals.

The other rule implements section 6056 of the IRC, which requires large employers (generally employers with at least 50 full-time or full-time equivalent employees) to report to the IRS information concerning the health care coverage that they provide their employees to demonstrate compliance with the employer responsibility provisions of the ACA, and to provide statements to their employees regarding available employer-sponsored coverage so that the employees may determine whether they may claim premium tax credits under the ACA.

These reporting requirements were supposed to be implemented for the 2014 reporting year, but the administration decided last summer to delay the reporting requirements, and with them the employer mandate, because of difficulties with implementing the reporting requirements. The rules are now final and are effective for reports to be filed in 2016 for reporting year 2015.

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Implementing Health Reform: Allowing Noncompliant Policies; Benefits And Payment Parameters Rule (Part 2)


March 7th, 2014
by Timothy Jost

Editor’s note: Part 1 of this post discussed the Department of Health and Human Services March 5 bulletin extending until October 1, 2016 its transitional policy permitting the renewal of ACA non-compliant individual and small group health insurance policies. Part 1 also began examining the final 2015 Notice of Benefit and Payment Parameters rule, issued on the same date. Subsequent installments will discuss two final rules also issued March 5 by the Internal Revenue Service regarding reporting by insurers of minimum essential coverage and reporting by employers on coverage under employer-sponsored health plans.

Reduced notice requirement for new state exchanges. The final 2015 Benefit and Payment Parameters rule requires states that would like to begin operating their own exchanges to notify HHS of this intention by June 15 of the preceding year. Earlier rules had required a year’s notice.

Consumer assistance and privacy. States may permit web brokers to assist individuals, employers, and employees with enrolling in qualified health plans (QHPs) through their exchanges. Agents and brokers must comply with privacy and security standards protecting personally identifiable information and may not use it for marketing. The SHOP exchange, and not the web broker, is responsible for aggregating premiums and forwarding them to insurers. Web brokers must display information on all available QHPs, although insurers may refuse to provide non-appointed brokers with certain information. Web brokers must also provide enrollees with a disclaimer noting that they are not the exchange and may not have full information on all plans.

State exchanges must comply with federal personally identifiable information requirements, but may seek the approval of HHS to use this information to ensure the efficient operation of the exchange if they secure the consent of the individual whose information is to be used. Exchanges that disclose personally identifiable information to non-exchange entities (such as certified application counselors, in-person assisters, brokers, QHP insurers or others) must enter into a contract with these entities ensuring protection of this information. Non-exchange entities that must independently comply with Health Insurance Portability and Accountability Act data privacy and security requirements (such as QHPs) may be deemed to be in compliance with exchange requirements by virtue of their compliance with HIPAA as long as the HIPAA requirements are at least as protective as the exchange requirement and if the entities also comply with additional ACA data protection requirements.

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Implementing Health Reform: Allowing Noncompliant Policies; Benefits And Payment Parameters Rule (Part 1)


March 7th, 2014
by Timothy Jost

March 5, 2014 was a banner day for Affordable Care Act implementation. The Department of Health and Human Services released its final 2015 Notice of Benefit and Payment Parameters rule (fact sheet here), as well as a bulletin extending until October 1, 2016 its transitional policy permitting the renewal of ACA non-compliant individual and small group health insurance policies. The Internal Revenue Service also issued two final rules regarding reporting by insurers of minimum essential coverage and reporting by employers on coverage under employer-sponsored health plans. (fact sheet here)

This post will discuss the HHS bulletin and begin consideration of the benefit and payment parameter rule. Subsequent posts will discuss the remainder of the benefit and payment parameters rule and the IRS rules.

HHS Bulletin On ACA Non-Compliant Policies

On November 14, 2013, the Center for Medicare and Medicaid Services issued a letter to state insurance commissioners informing them that CMS would permit state regulators to allow insurers to renew non-grandfathered health insurance policies in the individual and small group market that did not comply with the 2014 market reform rules for policy years beginning by October 1, 2014. Specifically, renewed 2013 plans did not need to comply with the guaranteed issue and guaranteed renewability requirements; limitations on health status underwriting and preexisting condition exclusions (for adults); the single risk-pool requirement; the prohibition against discrimination; the essential health benefit and clinical trial coverage requirements; and limitations on cost-sharing. (Group plans are not excluded from the preexisting condition and discrimination provisions.) Insurance departments in 27 states allowed insurers to renew 2013 policies, while 21 states and the District of Columbia prohibited renewals.

The March 5, 2014 bulletin permits states and insurers to extend this transitional relief for another two years, that is, for policies renewed prior to October 1, 2016. It also allows states to permit employers with 51 to 100 employees, which are currently considered large employers but will become small employers as of January 1, 2016, to renew their current policies through October 1, 2016. States that had not earlier decided to implement the transitional policy may still do so for 2013 policies renewing in 2014. States may also opt to implement the transitional policy for fewer than two years, or only in the individual or in the small-group market, or only for large employers that become small employers.

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Implementing Health Reform: Retroactive Premium Tax Credits And Cost-Sharing Reductions (Updated)


February 28th, 2014
by Timothy Jost

As we move into the last month of the 2014 open enrollment period, the Centers on Medicare and Medicaid Services continues to make mid-course corrections. On February 27, 2014, the CMS issued a “Bulletin to Marketplaces on the Availability of Retroactive Advance Payments of the PTCs and CSRs in 2014 Due to Exceptional Circumstances.” The Bulletin makes it possible for exchanges to allow individuals to obtain advance premium tax credits (PTCs) and cost-sharing reductions (CSRs) retroactively if they have been unable to obtain eligibility determinations and to enroll in qualified health plans (QHPs) through the exchange because the exchange experienced technical difficulties during the 2014 open enrollment period.

Presumably the Bulletin is intended to assist enrollees in states like Massachusetts, Oregon, Maryland, Nevada, and Hawaii, where technical problems have made it difficult or impossible for individuals to enroll in QHPs through the exchange on a timely basis. It could also, however, apply to the federal exchange. Each exchange must apparently decide whether or not to effectuate this policy.

Under the Affordable Care Act, PTCs and CSRs are only available to individuals who enroll in a QHP through an exchange. This Bulletin does not change that. CMS continues to require individuals to be determined eligible for PTC and CSR payments and to be enrolled in a QHP through an exchange. To qualify for assistance under the Bulletin, individuals must also have applied to the exchange using a federally approved application during the open enrollment period.

However the Bulletin allows exchanges to permit individuals who have experienced “exceptional circumstances” related to technical difficulties in enrollment, such that they have not been able to have their eligibility determined and to be enrolled in a QHP through the exchange, to qualify for retroactive PTC and CSR eligibility under two circumstances.

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Implementing Health Reform: Medicaid Asset Rules And The Affordable Care Act


February 24th, 2014
by Timothy Jost

On February 23, 2014, the Centers on Medicare and Medicaid Services released a State Medicaid Directors Letter analyzing the application of Medicaid liens, estate recoveries, transfer-of-asset rules, and post-eligibility income rules to individuals who become eligible for Medicaid because of their modified-adjusted gross income (MAGI).

Background

Contrary to the flat-earth concept of Medicaid espoused by Chief Justice Roberts in National Federation of Independent Business v. Sebelius, Medicaid has never been a single program but rather a cluster of programs with quite different purposes and rules. One of its more controversial and problematic roles has been to serve as our nation’s default program for financing long-term care services. Nursing home care, and even community-based long term care, is very costly, and long-term care can easily overwhelm the income and resources of people who are otherwise comfortably middle income. From its inception, Medicaid has been available to pay for long-term care for people who are unable to afford it after they have effectively become impoverished by “spending down” their own assets and income.

From very early in the Medicaid program’s history, however, there has been a concern that people who could otherwise afford to pay for at least some long-term care services would voluntarily impoverish themselves, transferring assets to their children or to others to make themselves eligible for Medicaid. Congress and the states have therefore adopted laws and regulations to limit asset transfers by Medicaid recipients. These prohibitions were initially evaded through the use of trusts and other financial devices, resulting in the enactment of additional laws to bar these evasions.

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Implementing Health Reform: Waiting Periods For Employer-Sponsored Health Insurance


February 22nd, 2014
by Timothy Jost

On February 20, 2014, the Departments of Labor, Treasury, and Health and Human Services released a joint final rule to implement an Affordable Care Act provision prohibiting self-insured and insured group health plans from requiring employees to wait more than 90 days before health insurance becomes effective. The final regulation also contains amendments to pre-existing Health Insurance Affordability and Accountability Act regulations to bring them into ACA compliance.

The three agencies also released on February 20 a proposed rule addressing the relationship between orientation programs and the 90-day waiting period.

The Joint Final Rule On Waiting Periods

Waiting periods before health insurance becomes effective are quite common in employer-sponsored insurance. The agencies estimate based on information from the Kaiser Family Foundation/Health Research and Education Trust 2013 employee benefits report that nine percent of new employees, or about 459,000 in 2013, were subject to waiting periods of 4 months or more and may thus be affected by this rule; however, as discussed below, the rule does not necessarily mean that all employees hired will get coverage within 90 days.

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Implementing Health Reform: Another Court Upholds Federal Exchange Premium Tax Credits


February 20th, 2014
by Timothy Jost

On February 18, 2014, Judge James Spencer of the United States District Court for the Eastern District of Virginia became the second federal judge to reject the legal theory that was supposed to “drive a stake through the heart of Obamacare.” Several lawsuits have been brought by Affordable Care Act opponents claiming that the federal exchange, which now exists in 34 states, lacks legal authority to issue premium tax credits and that an Internal Revenue Service rule authorizing the federal exchange to do so is illegal.

In January, Judge Paul Friedman of the District Court for the District of Columbia threw out a lawsuit, Halbig v. Sebelius, arguing this theory. Judge Spencer, in dismissing King v. Sebelius, followed Judge Friedman’s lead, but found additional reasons for rejecting the challenger’s arguments.

The challenge is based on the wording of two phrases in a section of the ACA that addresses the calculation of the amount of premium tax credits. The section refers to calculating the amount of the tax credit taking into consideration the premium of a qualified health plan in which an individual is enrolled “through an Exchange established by the State under [section] 1311 of the” ACA. The plaintiffs in these cases claim that this means that premium tax credits are only available through state, and not federal, exchanges. Plaintiffs claim that Congress included this provision because it had a strong preference for state exchanges and wanted to force states to establish exchanges by denying premium tax credits to the residents of states that failed to do so.

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Implementing Health Reform: A January Exchange Enrollment Report


February 13th, 2014
by Timothy Jost

Editor’s note: From February 15 until March 5, Tim will be in Africa. We wish him well on his trip, even though limited internet connectivity and well-deserved time with family and friends will likely restrict his posts here during this period.

On February 12, 2014, the Department of Health and Human Services released an exchange enrollment report covering the period of October 1, 2013 to February 1, 2014. The headline is the 3.3 million people have now selected exchange plans, 1.4 million through state-based exchanges and 1.9 million through the federally administered exchanges. Exchanges have determined or assessed an additional 3.2 million individuals eligible for Medicaid or CHIP.

The 3.3 million individuals who have selected plans include 1.15 million who have done so in January, down from the 1.79 million who selected plans in December, but up considerably from the 365,000 who selected a plan during the troubled first two months of the program’s operation. It is not surprising that the number of new enrollees dropped in January, as December was the first month during which the exchanges were really functioning and the last month in which individuals could enroll and be eligible for coverage and premium tax credits when the exchanges opened. It is very likely that enrollment will climb sharply over the next two months before open enrollment ends on March 31.

The report contains exhaustively cross-referenced data on enrollees by age, gender, selected metal level, state, and type of exchange. The number of “young invincibles” (aged 18-34) who have selected plans in the exchanges increased somewhat in January, making up 27 percent of enrollees as compared to 24 percent in the first three months of enrollment (although the overall 18-34 enrollment for the first four months moved up only to 25 percent). Thirty-one percent of those who selected plans over the first four months were 55 to 64, compared to 33 percent for the first three months.

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