HHS Delays Until 2015 Income and Health Insurance Reporting Requirements Tied to Insurance Subsidies

HHS is delaying until 2015 a requirement that new health insurance Exchanges created as part of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) verify the income and health insurance status of individuals looking to receive subsidies to help buy health insurance. The change, contained in a Final rule released on July 5, came three days after the Obama administration announced that it was delaying until 2015 implementation of the requirement that employers with 50 or more employees provide qualified health insurance for their employees, or pay a penalty.

The new Final rule, entitled “Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes, and Premiums and Cost Sharing; Exchanges: Eligibility and Enrollment” will be published in the Federal Register on July 15. It finalizes regulations proposed on January 22, 2013, and supplements and amends regulations originally published on March 27, 2012.

Insurance Subsidies

Under PPACA, 16 states and the District of Columbia have established health insurance Exchanges which will facilitate the purchase of insurance coverage by qualified individuals through qualified health plans. (Seven states are establishing Exchanges in partnership with the federal government; 27 states will have Exchanges run entirely by the federal government.) The Proposed rule included specific requirements for Exchanges to verify the employment status of individuals, whether they are qualified to purchase insurance through an Exchange, and whether they are qualified for premium assistance for that insurance. One commentator to the Proposed rule noted that “relying on employment data to support the verification of enrollment in an eligible employer-sponsored plan and eligibility for qualifying coverage in an eligible employer-sponsored plan may create a barrier to coverage and unduly delay enrollment of eligible applicants.”

The Proposed rule also indicated that HHS itself would be able to provide assistance to the Exchanges on the verification process.

In the Final rule, HHS in effect is making the verification process voluntary for 2014, i.e., individuals will provide information to Exchanges as part of the enrollment process regarding their income and whether they have access to health insurance from their employer, and the Exchange will not be required to verify that what any individual reports is accurate. HHS also noted that it would not be able to provide verification assistance to the Exchanges until 2015.

Other Highlights

The Final rule also finalizes new Medicaid eligibility provisions; finalizes changes related to electronic eligibility notices for Medicaid and the Children’s Health Insurance Program (CHIP); streamlines existing Medicaid eligibility rules; and amends regulations relating to benchmark and benchmark-equivalent benefit packages (now known as “alternative benefit plans”) to ensure that these plans include essential health benefits.

Delay in Some New Regulations

This new Final rule does not implement all parts of the January 2013 Proposed rule. HHS noted that it was “finalizing…only those provisions that we believe states are already in the process of implementing or must be finalized to meet statutory deadlines.” In particular, HHS is not finalizing regulations relating to the hearing and appeals process for individuals whose claims for assistance under Medicaid or the Children’s Health Insurance Program is denied.

The Final rule also indicates that the Obama administration is considering delaying the effective date past October 1, 2013, of certain regulations related to the initial open enrollment period for enrollment in a qualified health plan offered by an Exchange.