The U.S. Department of Health and Human Services (HHS) announced on May 1, 2014, that over 8 million people enrolled in health insurance through the Patient Protection and Affordable Care Act’s health insurance marketplaces during the open enrollment period from October 1, 2013, to March 31, 2014 (with a “special enrollment period,” extending the deadline for some applicants to April 15, 2014).1 These results exceeded initial Congressional Budget Office enrollment projections by 1 million.2 An additional 4.8 million people enrolled in Medicaid and the Children’s Health Insurance Program (CHIP) during the same period, compared to baseline figures from before the marketplaces opened.3 According to the RAND Corporation, these enrollments, plus an increase in the number of individuals covered by employer-sponsored insurance, have resulted in a 4.7 percent decrease in the number of people without health insurance—a net decrease of 9.3 million uninsured adults since the Affordable Care Act went into effect.4
This is undoubtedly good news. While the Affordable Care Act is an ambitious package of reforms with multifarious aims, including cutting costs and improving health outcomes, its central goal is “significantly reduc[ing] the number of the uninsured.”5 These enrollment numbers suggest that the Act is succeeding in this goal. Moreover, as people become more familiar with the law, as the tax penalties for not having health insurance increase, and as additional taxes on employers who do not offer insurance to their employees kick in, the number of uninsured should continue to decline.
Having given flexibility to the states, the Affordable Care Act is really like 51 different federal-state partnership programs, each with its own set of barriers.
People, however, continue to face barriers to obtaining affordable health care coverage under the Affordable Care Act. These barriers to coverage differ among states as a result of state governments’ different policy choices and implementation decisions. Some states demonstrate a strong and consistent commitment to implementing the law and expanding access to affordable coverage for their residents. Other states choose to play only a limited role in, or even to obstruct, implementation of the law, notably in the refusal of 24 states to expand Medicaid.6
Not all of the barriers to coverage, however, are the result of state recalcitrance. Policy choices and implementation problems at the federal level have also created barriers. Here I focus on the most significant federal barriers, some of which affect applicants for coverage in certain states only, such as those that have a federally facilitated marketplace or that have refused to expand Medicaid, and some of which affect applicants nationwide. Because these concern federal policy and administration, I can offer little practical advice for advocates assisting individual clients in trying to obtain coverage. For the most part, these problems have no “work-arounds.” Some may be fixed by the beginning of the next open enrollment period on November 15, 2014; others will persist. But my aim here is to give advocates the information they need to advise their clients on the full range of options and to educate and empower their clients to break down the remaining barriers to affordable health care coverage for all.
The Affordable Care Act’s Health Insurance Marketplaces
The Affordable Care Act requires in each state the creation of health insurance marketplaces (also called exchanges). There individuals can enroll in health care coverage and apply for insurance affordability programs such as Medicaid, CHIP, premium tax credits, and cost-sharing reductions. The Act gives states the option of establishing a fully state-based marketplace, entering into a state-federal partnership marketplace, or allowing the federal government to operate the marketplace for the state. The District of Columbia and 16 states have established state-based marketplaces, while 7 have entered into a federal partnership. The remaining 27 states defaulted to a federally facilitated marketplace.7 Due to problems with state-based marketplaces, however, some states are considering closing their state marketplaces and allowing the federal government to operate them.8
The Affordable Care Act envisions a streamlined, simplified, and coordinated application process. Individuals use a single form—which can be submitted to the marketplace online, by mail or telephone, or in person—to apply for all insurance affordability programs. Individuals submitting an application to a marketplace must first be screened for Medicaid and CHIP eligibility because individuals eligible for those programs are not eligible for premium tax credits. Where there is a federally facilitated marketplace, state Medicaid and CHIP, independent of each other’s decision, had the option to accept the marketplace’s Medicaid or CHIP eligibility decision as a final determination (determination states) or to enter into an agreement with the federal marketplace whereby the marketplace would conduct an initial assessment of an applicant’s eligibility for Medicaid or CHIP and then transfer those applications assessed as eligible to the state agency for a final determination (assessment states).9 Of the 34 states with a federally facilitated or partnership marketplace, 11 are determination states.10
Individuals not found eligible for Medicaid or CHIP may enroll in a qualified health plan that has been certified by the marketplace as meeting the Affordable Care Act’s minimum standards, including covering 10 specified “essential health benefits” and following established limits on cost sharing. Applicants in families who have incomes between 100 percent and 400 percent of the federal poverty level, and who do not have access to other “minimum essential coverage” (as discussed below), may receive premium tax credits to help defray the cost of premiums. Those with incomes between 100 percent and 250 percent of the federal poverty level may receive cost-sharing reductions of out-of-pocket costs.
Ongoing Problems at the Federally Facilitated Marketplace
The Affordable Care Act’s biggest challenge so far has been the disastrous rollout of the website for the federally facilitated marketplace at healthcare.gov. For the first few weeks of the open enrollment period, which began on October 1, 2013, millions of people attempting to enroll in coverage through the federal website were unable even to set up an account and log in, much less to choose a health plan and enroll.11 A separate set of technical problems caused insurers to receive incomplete or garbled information from the marketplace, making both insurers and the federal government unsure for weeks as to how many people had actually enrolled.12 For weeks, the “train wreck” predicted by the law’s critics appeared to have come to pass. But the administration fixed many of the major problems with the website through October and November 2013, and consumers began to report that they could navigate the website with “relative ease.”13
However, problems with the website, and with the federal marketplace’s telephone and paper application processes, remain. Until the next open enrollment period begins on November 15, 2014, these problems will affect two groups: (1) Medicaid and CHIP applicants, who may apply for coverage through the federal marketplace year-round, and (2) individuals who qualify for a “special enrollment period.” Generally consumers may enroll in a health plan through the marketplace only during the annual open enrollment period. Special enrollment periods allow individuals who experience certain qualifying life events (e.g., getting married, having a baby, or losing employer-based coverage) to enroll outside the open enrollment period.14 The marketplace may grant a special enrollment period to individuals with “complex cases,” that is, those who experienced computer or system errors while attempting to apply for coverage, who enrolled on the basis of misinformation from official enrollment assisters such as call center representatives, or who were referred to a state Medicaid or CHIP agency and were found ineligible but did not receive a denial from Medicaid or CHIP until after open enrollment ended.15
delays in income verification
One ongoing problem with the federal marketplace, and with some state marketplaces, concerns applicants who have submitted household income information that is inconsistent with federal data sources. Eligibility for nearly all of the Affordable Care Act’s insurance affordability programs (Medicaid, CHIP, premium tax credits, and cost-sharing reductions) is based, at least in part, on household income. Thus applicants for any insurance affordability program must give income and family-size information to the marketplace. The marketplace must then verify these data against tax return data from the Internal Revenue Service (IRS).16 If tax return data are unavailable (because, for instance, the applicant has never filed taxes) or if the applicant attests that a change in circumstances has occurred or is reasonably expected to occur such that the available tax return data do not represent an accurate projection of the applicant’s income for the year in which benefits are being sought, the applicant must “attest” to the applicant’s projected household income for the year.17 The applicant may then enroll in a qualified health plan and receive premium tax credits and cost-sharing reductions based on that attestation.18 However, if tax return data are unavailable or if the discrepancy between tax return data and the applicant’s attestation is greater than 10 percent, the applicant is required to submit additional information (pay stubs or other proof of income) to the marketplace within 90 days to verify household income. Such applicants will continue to receive tax credits and cost-sharing reductions based on their attested income during this “discrepancy period.”19
The problem is that at this time the federal marketplace does not have the capacity to process the additional information supplied by applicants to verify their income attestation. Indeed, the marketplace often cannot even verify that it has received the requested information, either by mail or through the website, causing some consumers to submit the same income verification information multiple times. As a result, as many as 1.5 million enrollees may be receiving incorrect advance premium tax credits.20
HHS has established the Office of Marketplace Eligibility Appeals to handle appeals of federal marketplace decisions, yet the office is not actually processing appeals.
This shortcoming is a problem not just for those families who should be getting more assistance in paying monthly premiums and some of whom could be getting better insurance. The shortcoming will also become a problem for those families who are receiving subsidies that are too high. When families receiving advance premium tax credits file taxes for 2014, any advance payments they received will be reconciled against the amount of tax credits for which the family was eligible, based on the actual household income for the year. If the family was eligible for a higher tax credit than it received, the additional credit amount for which the family was eligible will be included in the tax refund for that year. But if the family received more in advance credits than it was eligible for, the family is liable for the overpayment.21 This tax liability could come as an unwelcome shock to families who made innocent errors on their applications or even to those who simply underestimated their annual household income. And the longer the process of verifying inconsistencies takes, the more those families receiving overpayments will owe when their premium tax credits are reconciled.
The federal marketplace’s income-verification problems have a potentially more serious effect on applicants for Medicaid in some states. Even if someone is receiving too much or too little in premium tax credits, that person at least has health care coverage. In the 11 “determination states” that have delegated the authority to make Medicaid-eligibility determinations to the federal marketplace, however, applicants who are eligible for Medicaid cannot be enrolled until the income-verification process is completed.22 Federal regulations require Medicaid-eligibility determinations to be completed within 45 days, but some consumers are waiting for months for their eligibility determination to be transferred from the federal marketplace to the state Medicaid agency.23 Many face further delays after the information is transferred to the state Medicaid agency due to states’ own computer problems or inadequate staffing.24 An eventual determination of eligibility for Medicaid is retroactive at least to the date the individual applied (and often before); however, individuals waiting for a determination for eligibility from the federal marketplace or the state Medicaid agency will likely forgo needed care or not find providers to treat them without confirmation of insurance coverage.25 Some Medicaid applicants may be able to avoid such delays by going directly to their state Medicaid agency. Even this is not an option in Tennessee, which does not have any “door” for direct application to the state Medicaid agency but instead requires Medicaid applicants to go through the federal marketplace.26
application problems for victims of domestic violence
Other problems with the federal marketplace would appear to be relatively easy to fix but nonetheless persist. To take one urgent example, married couples generally must file a joint tax return to receive premium tax credits and cost-sharing reductions.27 This requirement poses an obvious problem for victims of domestic violence: getting in contact with an abusive spouse for purposes of filing a joint return could be traumatic, dangerous, or prohibited by a restraining order. Recognizing this problem, the IRS has clarified that certain married individuals who are victims of domestic violence and living apart from their spouse may be eligible for premium tax credits and cost-sharing reductions without filing a joint tax return with the spouse.28 The federal website and paper applications, however, ask only whether an applicant is married or not married, and if the applicant selects “married,” the application asks whether the applicant intends to file a joint tax return. If the applicant indicates that she is married but will not file a joint tax return, then the federal marketplace will find her ineligible for premium tax credits. Guidance from the Centers for Medicare and Medicaid Services directs individuals who qualify for this exemption to select on their applications that they are not married, regardless of their actual marital status, but this is not indicated on the application, which is signed under penalty of perjury.29
denial of due process in the federal marketplace
The federal marketplace delays processing income-verification information from applicants. Victims of domestic violence face practical difficulties when they attempt to apply for premium tax credits. Both circumstances point to another, more fundamental problem with the federal marketplace: the denial of due process rights to applicants. The due process clause of the Fourteenth Amendment guarantees individuals the right to a meaningful written notice and an opportunity for a fair hearing before being deprived of a public benefit.30 Applicants for Medicaid and CHIP are entitled to an adequate written notice and an opportunity to contest an action with which they disagree.31 These due process rights also apply to applicants for coverage in a qualified health plan, premium tax credits, and cost-sharing reductions; these applicants are entitled to a written notice of action and a timely hearing process when eligibility for coverage or subsidies is denied or terminated.32
A more fundamental problem with the federal marketplace: the denial of due process rights to applicants.
HHS has established the Office of Marketplace Eligibility Appeals to handle appeals of federal marketplace decisions, yet the office is not actually processing appeals. Indeed, applicants are unable even to request appeals online or by phone. Instead individuals appealing a marketplace decision are required to download and fill out a written form and send it to the same backlogged office that is handling income-verification documents. Applicants have reported receiving neither an acknowledgment of their appeal request nor any contact from the marketplace to schedule a hearing or to request additional information. Even if the federal marketplace develops the capacity to process appeals and conduct hearings before the next open enrollment period, it will likely take months to deal with the backlog of appeals. Meanwhile people will have to live with incorrect eligibility decisions. Individuals who believe that the federal marketplace has made a mistake should still file appeals. Filing an appeal protects the initial date of application, and the individual may be able to receive coverage or subsidies retroactive to that date.
The Effect of the “Family Glitch”
Because of an IRS rule in January 2013, families who are unable to afford employer-sponsored insurance are nonetheless ineligible for premium tax credits. This so-called family glitch results from the IRS’s narrow interpretation of the Affordable Care Act’s definition of “affordable” employer-sponsored coverage. Under the Act, premium tax credits are available to U.S. citizens and lawfully present immigrants with household incomes between 100 percent and 400 percent of the federal poverty level. Those credits are available as long as those individuals do not have access to other “minimum essential coverage,” that is, most other types of health insurance such as Medicaid and Medicare and “adequate” and “affordable” employer-sponsored insurance. Such insurance is considered “adequate” if it covers at least 60 percent of allowable medical costs, and “affordable” if the employee’s required contribution to the premium is less than 9.5 percent of the employee’s household income.
Under the IRS rule, the affordability of employer-sponsored coverage offered to the spouse or child of an employee is based only on the cost of “self-only coverage” for the employee. In other words, if an employer offers coverage to the spouse or child of an employee, that coverage is considered affordable for the spouse or child if the amount the employee would pay for “self-only coverage” does not exceed 9.5 percent of the employee’s household income, regardless of the actual cost of the family coverage. Even if such family members do not enroll, they are not eligible for premium tax credits because, under the rule, they have an offer of “affordable” coverage. According to an annual survey by the Kaiser Family Foundation, in 2013 the average annual required contribution from an employee to the cost of employer-sponsored health insurance was $999 for self-only coverage and $4,565 for family coverage.33 For a family making $35,000 per year, coverage at these prices would be considered affordable for the whole family. Enrolling in family coverage would cost the family more than 13 percent of its household income. Even so, coverage at those prices would disqualify the employee’s spouse and children from eligibility for premium tax credits.
The IRS claims that its interpretation is required by the language of the Affordable Care Act.34 Democratic lawmakers who wrote the law and enabled its passage disagree. The IRS interpretation is not what Congress intended, they say. “The notion that Congress wrote the law in a manner that would exclude many families from access to more affordable coverage … is simply incongruent,” said Rep. Sander M. Levin (D-Mich.) and Rep. Henry A. Waxman (D-Cal.) in a letter to the U.S. Department of the Treasury in 2011, when the IRS released its proposed rule.35 Nevertheless the rule was finalized without change. Congress and the White House being at an impasse, the “family glitch” likely will not be corrected any time soon. That makes it all the more important that advocates make affected families aware of other coverage, such as the Medicaid medically needy spend-down, that may be available in their states.
Obtaining a Special Enrollment Period for Individuals off the Medicaid “Coverage Gap”
The 24 states that have refused to expand Medicaid have created a “coverage gap” for the nearly five million individuals, mostly childless adults, who do not qualify for these states’ traditional Medicaid programs but who do not earn enough to be eligible for marketplace premium tax credits.36 The Affordable Care Act provides premium tax credits to individuals with household incomes between 100 percent and 400 percent of the federal poverty level. The Act assumes that individuals with incomes below the poverty level would be covered by the law’s Medicaid expansion to nearly all individuals below 138 percent of the federal poverty level. The U.S. Supreme Court’s decision in National Federation of Independent Business v. Sebelius, however, allowed states to opt out of the Medicaid expansion.37 In states that opted not to expand Medicaid, individuals with incomes between 100 percent and 138 percent of the federal poverty level are still eligible for premium tax credits. However, individuals with incomes below 100 percent of the federal poverty level are eligible for neither premium tax credits nor Medicaid (unless they fall into one of the state’s traditional Medicaid eligibility categories such as children, pregnant women, or parents and caretaker relatives). People who fall into the coverage gap will likely not be able to afford marketplace coverage without premium tax credits.38
Individuals in the coverage gap may have an increase in income that would make them newly eligible for premium tax credits. However, federal regulations do not permit such individuals to enroll in coverage until the next open enrollment period unless they take specific steps to preserve their right to a “special enrollment period.” To receive a special enrollment period, an individual must (1) be a resident of a state that did not expand Medicaid, (2) have already applied for Medicaid when the individual’s household income was below 100 percent of the federal poverty level, and (3) have experienced an increase in income to above 100 percent of the federal poverty level, making the individual eligible for premium tax credits or cost-sharing reductions.39 The crucial requirement is that individuals must have applied for and been denied Medicaid before their income increased above 100 percent of the federal poverty level. Thus individuals who are in nonexpansion states and ineligible for Medicaid because they fall into the coverage gap should apply for Medicaid in case their income increases enough to make them eligible for premium tax credits and cost-sharing reductions. If they have not already applied for Medicaid when their income increases, they will not be eligible for a special enrollment period and will have to wait until the next open enrollment period to get coverage.
This summary of barriers to enrollment in health care coverage under the Affordable Care Act is inevitably incomplete. Indeed, having given flexibility to the states, the Act is really like 51 different federal-state partnership programs, each with its own set of barriers. Advocates in each state could likely list an entirely different set of barriers for consumers in their state. Here I identified some of the problems that likely affect multiple states and thus focused on implementation problems and problems rooted in federal policy choices. My intent, however, is not to disparage HHS or the other federal agencies involved. The practical and technical challenges they have faced in implementing the law, especially in such a highly polarized political environment, have been staggering. Despite these challenges, the law is proving a success, and millions of people now have access to affordable health care coverage. Rather, my intent is to point out some of the remaining barriers in the hope that these too will be overcome.
Christopher E. Coleman
Tennessee Justice Center
301 Charlotte Ave.
Nashville, TN 37201
1 Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services, Health Insurance Marketplace: Summary Enrollment Report for the Initial Annual Open Enrollment Period 1 (May 1, 2014). See Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010) (codified as amended in scattered sections of 42 U.S.C.).
2 Congressional Budget Office, Effects of the Affordable Care Act on Health Insurance Coverage—Baseline Projections (April 14, 2014) (Table 1. CBO’s May 2013 Estimate of the Effects of the Affordable Care Act on Health Insurance Coverage).
3 Centers for Medicare and Medicaid Services, Medicaid and CHIP: March 2014 Monthly Applications, Eligibility Determinations, and Enrollment Report 3 (May 1, 2014).
4 Katherine Grace Carman & Christine Eibner, RAND Corporation, Changes in Health Insurance Enrollment Since 2013: Evidence from the RAND Health Reform Opinion Study 1 (2014).
5 42 U.S.C. § 18091(2)(F).
6 Kaiser Commission on Medicaid and the Uninsured, The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid 1 (March 2014).
7 Henry J. Kaiser Family Foundation, State Decisions on Health Insurance Marketplaces and the Medicaid Expansion, 2014 (June 10, 2014). Seven states—Kansas, Maine, Montana, Nebraska, Ohio, South Dakota, and Virginia—have received approval from the U.S. Department of Health and Human Services (HHS) to conduct some plan management activities to support certification of qualified health plans in the federally facilitated marketplace (id.).
8 Stephanie Armour, Five States’ Health-Care Exchanges See Costly Fixes, Wall Street Journal, June 3, 2014.
9 Centers for Medicare and Medicaid Services, Medicaid and CHIP FAQs: Coordination Between Medicaid/CHIP & the Federally-Facilitated Marketplace (April 2013). Idaho is unique in that it is a determination state, but it has a supported state-based marketplace, not a federally facilitated or partnership marketplace.
10 Medicaid.gov, Medicaid and CHIP Marketplace Interactions (Oct. 1, 2013).
11 Robert Pear et al., From the Start, Signs of Trouble at Health Portal, New York Times, Oct. 12, 2013.
12 Amy Goldstein & Ariana Eunjung Cha, Federal Health Exchange Sending Confusing Enrollment Information to Insurers, Washington Post, Oct. 11, 2013.
13 Lizette Alvarez & Jennifer Preston, Health Care Exchange Is Vastly Improved, Users Say, New York Times, Dec. 9, 2013.
14 45 C.F.R. § 155.420 (2013).
15 Center for Consumer Information and Insurance Oversight & Centers for Medicare and Medicaid Services, Affordable Exchanges Guidance (March 26, 2014).
16 45 C.F.R. § 155.320(c).
17 Id. § 155.320(c)(3)(ii)(D).
19 Id. § 155.315(f)(4).
20 Amy Goldstein & Sandhya Somashekhar, Federal Health-Care Subsidies May Be Too High or Too Low for More Than 1 Million Americans, Washington Post, May 16, 2014.
21 Liability for overpayment is capped at $600 for families below 200 percent of the federal poverty level, $1,500 for families between 200 percent and 300 percent of the federal poverty level, and $2,500 for families between 300 percent and 400 percent of the federal poverty level (26 U.S.C. § 36B(f)(2)(B)).
22 Medicaid.gov, supra note 10.
23 See 42 C.F.R. § 435.912 (2013).
24 Phil Galewitz, More than 1.7 Million Consumers Still Wait for Medicaid Decisions, Kaiser Health News (June 9, 2014).
25 See 42 C.F.R. § 435.914.
26 Kate Harrison Belz, TennCare Applicants Describe Limbo Between Feds, State, TimesFreePress.com (March 14, 2014).
27 45 C.F.R. §§ 155.300, 155.310(d)(2)(ii)(B).
28 Letter from Mark J. Mazur, Assistant Secretary, U.S. Department of the Treasury, to Rep. Louise Slaughter, U.S. House of Representatives (March 26, 2014).
29 Health Insurance Marketplace, U.S. Department of Health and Human Services, Helping Consumers Who Are Victims of Domestic Abuse Access Advance Premium Tax Credits and Cost-Sharing Reductions for Marketplace Coverage—Special Enrollment Period (n.d.).
30 See Goldberg v. Kelly, 397 U.S. 254 (1970).
31 42 U.S.C. § 1396a(a)(3); 42 C.F.R. § 431.200–.250. See generally Board of Regents v. Roth, 408 U.S. 564, 577 (1972) (property interests subject to due process are created by “existing rules or understandings that stem from an independent source such as state law—rules or understandings that secure certain benefits and that support claims of entitlement to those benefits”).
32 42 U.S.C. § 18081(f) (requiring HHS secretary to establish eligibility appeals procedure for determinations made pursuant to § 18081(e); such determinations include eligibility for enrollment, premium tax credits, and cost-sharing reductions); 45 C.F.R. § 155.355.
33 Henry J. Kaiser Family Foundation, 2013 Employer Health Benefits Survey (Aug. 20, 2013).
34 Health Insurance Premium Tax Credit, 78 Fed. Reg. 7264 (Feb. 1, 2013) (to be codified at 26 C.F.R. pt. 1) (“The language of section 36B, through a cross-reference to section 5000A(e)(1)(B), specifies that the affordability test for related individuals is based on the cost of self-only coverage.”).
35 Alex Wayne & Richard Rubin, Plea for More Generous Health Credit Rejected by IRS, Bloomberg, Jan. 30, 2013 (“The effect of this wrong interpretation of the law will be that many families remain or potentially become uninsured,” Democrats wrote).
36 See Kaiser Commission on Medicaid and the Uninsured, The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid (March 2014).
37 National Federation of Independent Business v. Sebelius, 132 S. Ct. 2566 (2012).
38 Kaiser Commission on Medicaid and the Uninsured, supra note 36.
39 U.S. Department of Health and Human Services, Helping Consumers Enroll in Special Enrollment Periods for “Limited Circumstances” Through the Health Insurance Marketplace (Aug. 4, 2014).Download this article