PPACA Exchange 2015 Auto-Enrollment and Premium Subsidies
Who: Individuals enrolled during 2014 in state or federal exchanges operated under the Patient Protection and Affordable Care Act (PPACA).
When: Effective January 1, 2015. On June 26, 2014 the Center for Consumer Information and Insurance Oversight (CCHIIO) released guidance for auto-enrollment and annual subsidy redeterminations for 2014 enrollees.
What: To promote continuous coverage in federal exchanges, Health and Human Services (HHS) has proposed a simplified auto-enrollment process where the 2015 premium subsidy would be equal to the 2014 subsidy. Approximately 87% of enrollees on federal exchanges receive a subsidy.
Executive Summary: Federal Exchange enrollees have two options for renewing their policies:
1. Reenroll through Auto-Enrollment. In 2015, unless policyholders choose otherwise, those receiving federal subsidies will be automatically reenrolled in the same plan they purchased in 2014. They will receive the same dollar subsidy provided in 2014. Until redetermination of the subsidy, the policyholder will need to pay any increase in the plan’s total premium from 2014 to 2015. Two separate notices will be sent to them:
a. The federal exchanges will send a notice of the federal dollar subsidy.
b. The insurer will send a notice of the total premium and the net premium payable by the policyholder (Total premium less the federal subsidy).
2. Reenroll through a Redetermination Process. The 2015 premium subsidy will be recalculated. Each specific premium subsidy will depend upon updating the household’s size, income, and the cost of the second-lowest-cost silver plan available to them. The subsidy calculation would be the same as for a new exchange enrollee.
State-run Exchanges. State run exchanges are not bound to the same reenrollment options. States have the choice to follow the federal exchange options, require active reenrollment each year, or provide an alternative approach to renewal enrollment.
Regardless of which reenrollment option is chosen, the level of premium subsidy provided during any year is subject to a “Redetermination” process. That is, the final subsidy amount will be reconciled with the policyholder’s tax returns submitted in the following year. If there is a difference between the estimated subsidy and the final subsidy calculation, the policyholder will either get a tax refund or will need to make an additional tax payment.
Actions Required: Individuals receiving subsidies need to become informed of the implications and options when reenrolling in federal exchanges. Insurance brokers, insurance navigators, and appropriate government agencies need to communicate and explain the available choices for reenrollment and the possible cost implications of each. Employers may want to assist with education and support where some or all of their employees are in exchanges receiving subsidies.
The information presented and contained within this article was submitted by Ronald E. Bachman, Chairman of the IHC Editorial Advisory Board and President & CEO of Healthcare Visions. This information is general information only, and does not, and is not intended to constitute legal advice. You should consult legal advisors to determine the laws and regulations in your state. Any opinions expressed within this document are solely the opinion of the individual author.