On the evening of Octo­ber 12, 2017, Pres­i­dent Trump announced that cost shar­ing reduc­tions for low income Amer­i­cans in rela­tion to the Patient Pro­tec­tion and Afford­able Care Act (ACA) would be stopped. The Depart­ment of Health and Human Ser­vices (HHS) has con­firmed that pay­ments will be stopped imme­di­ate­ly. While there is no direct impact to employ­ers at this time, UBA will con­tin­ue to edu­cate employ­ers about changes in the law and its Health Plan Sur­vey will con­tin­ue to track group health plan rates over time as insur­ance com­pa­nies poten­tial­ly seek to recoup lost rev­enue. It is antic­i­pat­ed at least some state attor­neys gen­er­al will file law­suits to block the end­ing of the sub­sidy pay­ments, with Cal­i­for­nia Attor­ney Gen­er­al Xavier Becer­ra stat­ing he is pre­pared to file a law­suit to pro­tect the subsidies.

Back­ground

Indi­vid­u­als with house­hold mod­i­fied adjust­ed gross incomes (AGI) in excess of 100 per­cent but not exceed­ing 400 per­cent of the fed­er­al pover­ty lev­el (FPL) may be eli­gi­ble for cost-shar­ing reduc­tions for cov­er­age pur­chased through health insur­ance exchanges if they meet a vari­ety of cri­te­ria. Cost-shar­ing reduc­tions are lim­it­ed to cov­er­age months for which the indi­vid­ual is allowed a pre­mi­um tax cred­it. Eli­gi­bil­i­ty for cost-shar­ing reduc­tions is based on the tax year for which advanced eli­gi­bil­i­ty deter­mi­na­tions are made by HHS, rather than the tax year for which pre­mi­um cred­its are allowed. In 2015, cost-shar­ing sub­sides reduced out-of-pock­et (OOP) limits:

  • Less than 100 per­cent but not exceed­ing 200 per­cent of FPL: OOP lim­its reduced by two-thirds
  • Greater than 200 per­cent but not exceed­ing 300 per­cent of FPL: OOP lim­its reduced by one-half
  • Greater than 300 per­cent but not exceed­ing 400 per­cent of FPL: OOP lim­its reduced by one-third

After 2015, the base per­cent­ages were shift­ed based on a per­cent­age of aver­age per capi­ta health insur­ance pre­mi­um increas­es. The cost-shar­ing reduc­tion is paid direct­ly to the insur­er, and is auto­mat­i­cal­ly applied when eli­gi­ble indi­vid­u­als enroll in a sil­ver plan on the Mar­ket­place or Exchange.

The cost-shar­ing reduc­tion is not the same as the “advance pre­mi­um tax cred­it” which is also avail­able to indi­vid­u­als with house­hold mod­i­fied AGIs of at least 100 per­cent and not exceed­ing 400 per­cent of the FPL.

By Danielle Capilla

Orig­i­nal­ly post­ed by www.UBABenefits.com