APTC & CSR Eligibility – Access to Other Coverage

 

A separate article describes the three basic eligibility rules to purchase a qualified health plan (QHP) from HealthSource RI (HSRI).  To be eligible for financial assistance in the form of advanced premium tax credits (APTCs) and cost-sharing reductions (CSRs), the applicant must meet two further criteria:

  1. The applicant must meet the income limits, described here. and
  2. The applicant must not be eligible for other affordable minimum essential coverage (MEC).  This article describes this second eligibility criterion.

Put another way, an HSRI applicant is not eligible for APTCs or CSRs for any month during which the applicant has access to other affordable MEC.  The MEC might be:

  • Government-sponsored (e.g. Medicare, Medicaid);
  • Employer-sponsored;
  • “Grandfathered” health plans (that existed before the ACA was signed and have not changed substantially since); or
  • Other coverage specifically recognized as MEC by the U.S. Department of Health and Human Services (e.g. some student health plans).

Government-Sponsored MEC

Mere eligibility for the following government-sponsored health coverage makes an applicant ineligible for APTCs and CSRs, even if the applicant is not enrolled in this government-sponsored health coverage:

  • Medicaid, except for limited-benefit Medicaid programs like extended family planning and “emergency Medicaid”;
  • Medicare with free Part A (generally available to individuals over 65 or collecting Social Security Disability (SSD) for more than two years, and with more than 40 “quarters” of work history);
    • Note that during the two-year waiting between determination of eligible for Social Security Disability (SSD) and eligibility for Medicare, the individual may be eligible for MAGI Medicaid or a QHP with APTCs and CSRs.
  • Peace Corps coverage;
    • AmeriCorps coverage may or may not be MEC, depending on employer placement.  AmeriCorps participants should check with human resources at their placement site to determine whether the coverage offered is MEC.

If a medical determination is needed to establish eligibility for the program (e.g. an ALS diagnosis for Medicare), the applicant is not considered “eligible” for the program until the medical determination is actually made by the responsible agency.

Enrollment (rather than simple eligibility) in the following government-sponsored health coverage makes an applicant ineligible for APTCs and CSRs:

  • Veterans Administration (VA) coverage;
  • Certain TRICARE programs;
    • Continued Health Care Benefit Program, Retired Reserve, Young Adult, and Reserve Select;
  • Student Health Plans;
  • Medicare requiring premium payment for Part A;
    • This is relatively rare, and most often happens for individuals without enough work history in the U.S.

This means that an individual covered by one of these programs has the option of dropping the other coverage and then potentially becoming eligible for APTCs & CSRs.  But it is not possible to make this transition at any time of the year.  Enrolling in a QHP with APTCs and CSRs also requires access to an Open Enrollment Period or a Special Enrollment Period (more details here).  The voluntary loss of other coverage does not trigger a Special Enrollment Period, so this type of transition will only be possible during Open Enrollment, or at a time when the applicant has a Special Enrollment Period for some other reason.

Example 1
Mark applies for coverage through HSRI.  He is determined eligible for Medicaid, but he does not want to enroll into Medicaid.  He prefers to purchase a QHP.
→ Mark can purchase a QHP, but he is not eligible for APTCs or CSRs.

Example 2
John is eligible for VA coverage, but never enrolled.  He meets all other eligibility requirements for APTCs and CSRs, but he isn’t sure whether his VA eligibility disqualifies him.
→ John is eligible for APTCs and CSRs because mere eligibility for VA coverage (rather than enrollment) does not disqualify an applicant from APTCs and CSRs.  But if he enrolled in VA coverage, then he would not be eligible for APTCs and CSRs.

Timing of Eligibility

An applicant is only considered “eligible” for government-sponsored MEC as of the first full month when the applicant can use the benefits.  This means that an applicant is not “eligible”:

  1. While waiting for their application to the government program to be processed; or
  2. While waiting for the government coverage to activate (e.g. the two-year waiting period for SSD recipients before they become eligible for Medicare, or the 3-month waiting period for Medicare to activate for an individual who enrolls two months after turning 65).

But there is a big catch:

Obligation to Apply

There is an obligation to apply for government programs where mere eligibility makes the applicant ineligible for APTCs/CSRs (e.g. Medicaid and Medicare with free Part A).

An application to the government program is expected by the last day of the third full month following the event that triggered their eligibility.  For eligibility based on medical criteria (e.g. disability establishing eligibility for certain forms of Medicaid), the triggering event is the receipt of the appropriate medical determination from the responsible agency (not, for example, the actual onset of the disability).

If the applicant fails to apply for the program before that deadline, then they are deemed “eligible” for that other coverage (and ineligible for APTCs/CSRs) as of the first day of the fourth month.

Example 3
Peter and Lucy are married with no children.  They have income at 200% of FPL and enrolled in a QHP through HSRI with APTCs and CSRs at the start of 2015.  Lucy became pregnant July 12, 2014, making her eligible for Medicaid, though she never applied.  Peter is a veteran and qualifies for VA coverage, but he never applied.
→ Lucy would be ineligible for APTCs/CSRs as of November 1.  That is the first day of the fourth month following the event establishing her eligibility (her pregnancy).
→ Peter remains eligible for APTCs/CSRs because mere eligibility for VA coverage does not disqualify him from those benefits.  But if he enrolled in VA coverage, then he would lose his APTCs/CSRs.

Retroactive Eligibility

Retroactive eligibility does not affect eligibility for APTCs/CSRs during the retroactive period.  An APTC/CSR recipient only becomes ineligible in the first full month after the other government program eligibility determination has been completed.

Medicaid coverage is often retroactive (back to the first day of the month in which the application was filed), so this protection is very important.  It means that consumers switching from APTCs to Medicaid in the middle of the month will not automatically be forced to pay back the APTCs in the month when the change was reported.

Example 4
Mark was enrolled in a QHP with APTCs at the beginning of the year.  On May 15, he lost his job and his income went down.  He told HSRI right away, and they determined that he was eligible for Medicaid.  He had already received his APTC for May, and his Medicaid eligibility went back retroactively to May 1.
→ Even though Mark was eligible for (and received) Medicaid in May, he is not disqualified from the APTC that he received for May.

Employer-Sponsored MEC

An applicant is ineligible for APTCs/CSRs during any month in which he has access to employer-sponsored MEC that both :

  1. Is “affordable”; and
  2. Offers “minimum value” (“MV”).

This applies to applicants who have access to this type of coverage through their own jobs, their spouse’s jobs, or those who have access to such coverage as dependents.

If someone is actually enrolled in an employer-sponsored plan, it is automatically considered to be affordable and to offer MV.  (An individual enrolled in a plan that is not affordable or does not offer MV may drop that plan and become eligible for APTCs and CSRs.  But it might not be possible to make this transition at any time of the year.  Enrolling in a QHP with APTCs and CSRs also requires access to an Open Enrollment Period or a Special Enrollment Period (more details here).  The voluntary loss of other coverage does not trigger a Special Enrollment Period, so this type of transition may only be possible during Open Enrollment, or at a time when the applicant has a Special Enrollment Period for some other reason.)

Minimum Value

A plan offers “minimum value” if it has an “actuarial value” of 60% or higher.  In practical terms, that means the plans must be as generous (in terms of deductibles and copays) as a bronze plan.

Actually calculating a plan’s minimum value is highly technical.  The federal government uses an “MV Calculator” (the Excel spreadsheet is available here), but it is designed to be used by actuaries and other experienced professionals.

The IRS is planning to require, beginning in 2016, that large employers provide information about their health plan to all full-time employees, including information about whether the plan offers minimum value.  Some applicants may already be receiving that type of information from their employers.

If an applicant needs help determining whether their employer plan offers minimum value, start by contacting their human resources contact at work.  If that fails, contact RIREACH for further assistance.

Affordability

For the 2015 plan year, an employer-sponsored plan is considered “affordable” if the employee share of the cost of the least expensive option for self-only coverage is less than 9.56% of the applicant’s household modified adjusted gross income (MAGI).  (For information on how to count MAGI, see this article.)

Note that we must look at the price of self-only coverage, not the cost of a family plan.  This is true even when we are determining the APTC/CSR eligibility of dependents in the household.

Also note that access to affordable employer-sponsored MEC is not a bar to Medicaid coverage.

Example 5
John is single with two kids.  His employer offers good individual coverage, but does not offer a plan covering dependents.  He wants coverage through HSRI for his family for 2015.  John’s projected 2015 MAGI is $60,000.  For him to sign up for coverage at work, his employer would take $200 per paycheck out of his check.  He is paid bi-weekly.  Who in John’s household can access APTCs/CSRs?
→ For John, the cost of his employer plan is $5,200 per year, which is less than 9.56% of his income.  So he has access to “affordable” MEC and cannot access APTCs.  But he can still buy a QHP at full price if wants to.
→ John’s kids do not have access to any employer-sponsored plan because his plan does not cover dependents.  So John’s kids are not disqualified from APTCs by virtue of John’s job-based coverage.

Example 6
Same as Example 5, but now John’s job does offer family coverage.  The cost of the self-only plan is still $200 per pay period.  But the family plan costs $400 per pay period.
→ John is still not eligible for APTCs because he has access to affordable employer-sponsored MEC.  See the calculations from Example 5.
→ John’s children are also now not eligible for APTCs.  The cost of the self-only plan is still what determines “affordability,” and that plan costs less than 9.56% of the household’s income.  The fact that the family plan will cost the family far more than 9.56% of their income does not matter.
(This is known as the “family glitch”)

Enrollment Periods

An applicant does not become eligible for APTCs/CSRs merely because the applicant does not have access to an open enrollment period at work.  If the applicant had a chance to enroll during the employer plan’s last open or special enrollment period (and that plan was affordable and offered minimum value), then the applicant is ineligible for APTCs/CSRs for the entire period that the enrollment would have covered.

But if an employer plan has a waiting period before a new employee can receive benefits under the plan, then applicants will be eligible to receive APTCs/CSRs while they are in that waiting period.

COBRA

An applicant is treated as having “access” to COBRA coverage if and only if the applicant is enrolled in the COBRA coverage for that month.

An applicant who was offered COBRA and declined, or who signed up for COBRA and then dropped it, is not treated as eligible for other affordable MEC during months when she did not have the COBRA coverage.

This means that an individual enrolled in COBRA may drop that plan and become eligible for APTCs and CSRs.  But it might not be possible to make this transition at any time of the year.  Enrolling in a QHP with APTCs and CSRs also requires access to an Open Enrollment Period or a Special Enrollment Period (more details here).  The voluntary loss of other coverage (even COBRA) does not trigger a Special Enrollment Period, so this type of transition is only possible during Open Enrollment, or at a time when the applicant has a Special Enrollment Period for some other reason.

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