Div A, title 3, part 5: Affordability Credits

One of the more contentious arguments boils down to: if we make low incomes have insurance, how do we ensure we don’t shove them into bankruptcy? Here’s the sections – 341-347.

Keeping it simple up front, the intent is that those who can’t afford it will get a supplement (basically what affordability credits boil down to) to cover part of the cost. People on Medicaid and Medicare aren’t eligible for the supplement. Illegal and what I’ll call “pass-through” aliens are not eligible. People who have an opportunity for an employer-provided plan are not eligible. Of course there are a lot of details in which the devil can hide. Let’s dig a bit.

The bill starts with applications. The commissioner can set up a direct application process. He’s also supposed to work with state medicaid agencies who can do it as a subcontract as well as the required auto-consideration if the applicant is not eligible for medicaid. Buried in the medicaid is something most people won’t recognize as amazing – medicaid eligibility is increased to 133% Federal Poverty Level. The reason they won’t recognize it as amazing is that presently most adults aren’t eligible at all UNLESS they have children, that if they have children the US average threshold is 41% of the FPL, and some states have a threshold as low as 10% of the FPL. Ponder it for a while but I’m going to keep moving.

Eligibility is only for citizens and legal aliens who are here for an extended period – immigrants, student/work visa holders, etc. One of the things this bill requires is ‘proof of citenship’, part of which comes by social security number. The application is supposed to be vetted by (as applicable) the social security administration and the immigration department of Homeland Security. Both can bring an investigation on the applicant if they come up as not eligible by way of being an illegal alien. Lots and lots of detail rules in here to lock out wiggle room here while allowing for stopping if ‘honest error’ is found. Hard core anti-immigrant folk will find it too lenient, the open borders folk should feel the opposite.

We’ve also got another bit of fun when we get to work-provided plans – two areas of exception. One is in cases of divorce or separation, the uncovered spouse (and dependents) can get the benefits if the covered spouse tries to use that as leveraqe (come back and obey or don’t get medicine). The other is where the employer buys into a plan that are “too expensive” for the employee. Specifically, if the employee’s premiums (or share of the premiums if the employer is covering part of the cost) are more than 12% of current modified adjusted gross income, the employee can get the credits (and apply them to the employer’s plan). Modified AGI is basically AGI minus some deductions and some credits. For those using a 1040A or 1040EZ it’s Taxable Income. Long form… it’s just going to depend.

The subsidies come in two forms – premium and cost-share – and never the twain shall meet. In Y1 and Y2 they can only be applied to basic plans, not enhanced or premium (and yes it’s confusing to use premium in two separate ways). Starting in Y2 the premium subsidies can be used for enhanced and premium plans in some cases, but the cost-share subsidies are for basics only. Oh – if unused there’s no cash refund.

So how much will they be, anyway? Well, it depends. The breaks are based on % relative to FPL: 133-150, 150-200, 200-250, 250-300, 300-350, and 350-400. Now keep in mind that over 400% the basic plan is that insured will pay 30% of the actuarial amount. So using the breaks already mentioned, instead of 30% the amount for premiums is: 3%, 7%, 15%, 22%, 28%, and 30%. (Yes, 350% pays as much as 400%.) The annual out of pocket individual cap (which if $5000 for ‘full’ coverage) is $500, $1000, $2000, $4000, $4500, and $5000.

Cost-sharing uses the same table. Oh – just to close a loophole, if someone makes less than 133% but is ineligible for medicaid or one of the other plans, they’re treated as having an income of 133% FPL.

There’s a somewhat large section dealing with income verification which boils down to “federal tax return, and rules are to be developed for when there’s no return OR if there’s been a significant change.” Since medicaid among others already have techniques in place and both medicaid and unemployment already feed into the system it’s not really a big deal. Let’s see, false reporting will be penalized by repayment of ill-gotten gains plus penalties to be determined. There’s a bit about transitioning from and to CHIP, and authorization to adjust the FPL for geographic reasons – again, if you’re in LA the needs will be different from those in Genoa, Kansas.

There are special rules for territories which I’m actually going to mostly skip. I just want to point out each territory has the right to be considered as a state or a protected territory for this purpose. There are differences in amounts paid, and provided and various burdens and obligations, and it appears to be a trade-off. A territory which doesn’t choose gets treated as a territory, which tends to make me suspect the better break is being “a state” for affordability credit and health care option reasons.

Finally, and the last section of title 3, we have a repeat statement. Section 347 says: “Nothing in this subtitle shall allow Federal payments for affordability credits on behalf of individuals who are not lawfully present in the United States.”

This takes us through page 267 of 1990 pages. Wheee.

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