4) Premium Tax Credits/Cost Sharing

  • Question 1.a

    Do American Indians/Alaska Natives (AI/ANs) have premiums/cost sharing?

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    AI/ANs may be subject to premiums and cost-sharing when enrolled in health insurance coverage through a Marketplace.  But Indian-specific cost-sharing protections may fully eliminate any cost-sharing requirements and may have the effect of reducing the health insurance premium for an AI/AN.

    There are Indian-specific cost-sharing protections available through a Marketplace for persons who meet the eligibility criteria as an Indian (i.e., Member of an Indian tribe or shareholder in an Alaska Native regional or village corporation).  There are not Indian-specific premium tax credits.  AI/ANs are eligible for the premium tax credits available to the general population.

    AI/ANs (meeting the definition of Indian under the ACA) with income above 100% and below 300% of the federal poverty level (FPL), and eligible for premium tax credits:

    • Can enroll in a zero cost-sharing plan, which means no copayments, deductibles, or coinsurance when receiving essential health benefits (EHBs) from Indian health care providers or when receiving EHBs through non-Indian health care providers.
    • Do NOT need a referral from an Indian health care provider to receive cost-sharing protections when served by non-Indian health care providers.

    AI/ANs (meeting the definition of Indian under the ACA) who are not eligible for the zero cost-sharing variation (because of income under 100% FPL, income over 300% FPL, not declaring income level, and/or not being eligible for PTCs:

    • Can enroll in a limited cost-sharing plan, which means no copayments, deductibles, or coinsurance when receiving EHBs from Indian health care providers or when receiving EHBs from non-Indian health care providers.
    • Do need a referral from an Indian health care provider to avoid cost-sharing when receiving EHBs through a non-Indian health care provider.

    AI/ANs eligible for the Indian-specific cost-sharing protections can enroll in a bronze plan and still receive the Indian-specific cost-sharing protections.  For the general population, individuals need to enroll in a silver-level plan to receive cost-sharing assistance.  Because eligible AI/ANs can enroll in a lower-cost bronze plan and still receive full cost-sharing assistance, they are able to enroll in comprehensive coverage with a lower net premium than non-AI/ANs.  But, there is not Indian-specific premium assistance.  AI/ANs have access to the premium tax credits that are available to the general population.

  • Question 1.b

    Are cost-sharing costs covered when seeing out of network providers on limited cost plans?

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    The short answer is “Yes”.

    The zero and limited cost-sharing protections provide 100% coverage of OOP costs (deductibles, co-insurance, co-payments).  And this is true whether the provider is in-network or out-of-network.  Cost-sharing protections apply to “covered”, “essential health benefits”(EHBs) .

    As you know, for the limited cost-sharing version, a referral for cost-sharing is needed when receiving services from a non-Indian Health Care Provider.

    There are a couple of clarifications.

    1 – A health service has to be an “essential health benefit” for the federal cost-sharing protections to apply (zero or limited).  (But, a health plan could impose no cost-sharing for non-EHBs if it wants.)

     

    2- The service has to be a “covered service” by the health plan for the cost-sharing to be covered by the federal government.

    • a. In general, if the plan doesn’t pay any amount for a particular service, the service is likely not “covered”.  For example, some plans do not cover any EHBs (or any EHBs that are of a certain type, like certain classes of medicines) when provided by out-of-network providers, so the patient would be liable for 100% of the costs as these costs are not considered cost-sharing.  Or, the prior authorization requirement wasn’t met, so the service isn’t considered “covered”.
    • b. Conversely, if the plan pays any amount, it is a covered service (assuming it is an EHB).  So, if a plan lists a standard co-insurance amount (such as 20%) for a particular type of service when seen by an out-of-network (or non-network) provider, it is a covered service and the standard co-insurance amount is covered by the health plan for limited and zero cost-sharing plan enrollees.

     

    3- Balance billing charges are not covered as they are not considered “cost-sharing.

     

    To recap, the Indian-specific zero and limited cost-sharing protections (sometimes identified by “02” and “03”, respectively) provide full protections against cost-sharing (i.e., deductibles, co-insurance, and cost-payments) for covered EHBs when seen by in-network and out-of-network providers.  Balance billing charges are not considered “cost-sharing”.  And, the Indian-specific cost-sharing protections only apply to covered EHBs.

  • Question 2

    Can all family members enroll in the same health plan if some family members are AI/AN and some are not AI/AN?

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    All family could enroll in the same plan, but the cost-sharing reductions provided to all families members would be the least generous cost-sharing protections any one family member was eligible to receive.

    For example, for a family consisting of two AI/ANs and two non-AI/ANs who have household income of 200% FPL, if all four enroll in the same “family plan” the cost-sharing protections for each family member would be the cost-sharing protections available to the non-AI/AN enrollees. (And, the family would need to enroll in a silver level plan to secure the cost-sharing protection.)

    If the family members wished to secure more comprehensive cost-sharing protections for the AI/AN family members, the two AI/ANs should enroll in one family plan (at the bronze level) and the two non-AI/AN family members should enroll in a silver level family plan.

  • Question 3

    How are premium tax credits handled for multi-plan families?

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    Through the Federally-Facilitated Marketplace (FFM), family members can decide to enroll in multiple health plans.  When applying, the FFM suggests how to group family members in separate plans, if this is advantageous to the family members.  Enrollees can accept the suggested grouping of family member or change which family members are grouped with other family members.  For example, each family member could enroll in separate health plans as individuals.

    When family members enroll in separate health plans, the tax credits are divided across the plans in proportion to the relative cost of each of the health plans.

    In non-FFM states, families can also enroll in separate plans, but the process for doing so may be different than in the FFM.

  • Question 4

    Why are people who have lower incomes (e.g., below $15,730 for household of two outside of Alaska and Hawaii; $19,660 in Alaska and Hawaii) unable to receive premium tax credits to pay for health insurance coverage through a Marketplace? These are some of the individuals who need the most help.

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    With limited exceptions, the Affordable Care Act (ACA) was written to provide premium tax credits only to individuals with household income at or above 100% FPL.  The ACA was designed to have the lowest-income individuals covered through Medicaid.  After a Supreme Court ruling on this issue, though, Medicaid coverage for low-income adults without dependent children is available in a state only if the state decided to expand their Medicaid programs to cover these individuals.  Individuals with household income below 100 percent of FPL are not eligible to receive premium tax credits.  Further, the general population with household income under 100% FPL is also not able to access cost-sharing assistance through a Marketplace.  (AI/ANs meeting the definition of Indian under the ACA are able eligible to receive cost-sharing assistance if enrolled in Marketplace coverage even if under 100% FPL, although not premium tax credits.)

  • Question 5

    If we sponsored an individual through the Marketplace who had modest projected income for 2014 (e.g., $15,000, or 129 percent of the federal poverty level), but the individual’s actual income for 2014 ended up below 100% of the federal poverty level ($11,670 in lower 48; $14,850 in Alaska), does the full Advanced Payment of the Premium Tax Credit (APTC) need to be repaid to the federal government?

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    No. The APTC does not need to be repaid because the enrollee is under 100% now but the Marketplace determined the individual was eligible for the subsidy when he or she applied. (This answer is found on page 5 of the IRS Instructions for Form 8962.)

    Specifically:

    Estimated household income at least 100% of the Federal poverty line. You may qualify for the PTC if your household income is less than 100% of the Federal poverty line and you meet all of the following requirements.

    • You or an individual in your tax family enrolled in a qualified health plan through a Marketplace.
    • The Marketplace estimated at the time of your enrollment that your household income would be between 100% and 400% of the Federal poverty line for your family size for 2014.
    • APTC is paid for the coverage for one or more months during 2014.
    • You otherwise qualify as an applicable taxpayer (without taking into account the Federal poverty line percentage).
  • Question 6

    We have come across some patients who are enrolled in an ACA plan but failed to check Native American/American Indian on their marketplace application. What is the easiest way to rectify that issue?

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    Contact a Marketplace Call Center representative to update the application.  At minimum, cost-sharing protections going forward will reflect the Indian status of the applicant/enrollee, but the Indian-specific cost-sharing protections might be applied retroactively.  The applicant/enrollee should consider whether a change in metal levels would be beneficial (e.g., changing to a bronze plan) or whether there is a need to transfer into an individual policy (from a family plan) if other family members do not meet the ACA’s definition of Indian.

  • Question 7

    I believe I remember a detailed document prepared by the Medicaid, Medicare, and Health Reform Policy Committee (MMPC) of the National Indian Health Board that presents a table on referral requirements in order for a provider to receive payment. Does such a document exist?

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    Yes.  Please find attached the document, titled “Tables on Referrals and Payment Rates for Services for American Indians and Alaska Natives Enrolled in Marketplace Plans,” prepared by the MMPC, National Indian Health Board on May 23, 2014.

  • Question 8

    At what point might the issuer request a referral? Will the patient be asked to provide the referral, or will the QHP request the referral from the THO?

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    It is advised that Indian Health Care Providers (IHCPs) work with Qualified Health Plan (QHP) issuers to establish procedures for providing a referral to the QHP and/or provider

    In general, though, a patient should always get a referral in order to avoid cost-sharing (whether in the form of a referral letter or card) when visiting the provider for a referred service.  A copy of the referral should be issued by the I/T/U and provided to the patient to give to the provider.

    Alternatively, some IHCPs might establish a process with a QHP issuer under which: (1) the IHCP would issue a comprehensive referral at the time of initial enrollment in the QHP; and, (2) the QHP issuer would record in the patient’s eligibility file that the patient is eligible for elimination of all cost-sharing requirements for essential health benefits, as a referral is on file with the QHP issuer.  Under this alternative, streamlined process, at the time a patient is accessing a health service, the provider would be able to determine that no cost-sharing is due either by viewing the information on the QHP-issued enrollment card, accessing an online data base, or calling/e-mailing the QHP issuer.

  • Question 9

    For a Tribe without a clinic, a closed panel plan might be the best option for the member. Our goal has to be to make sure all members receive the care they need.

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    A closed panel QHP could be the best option for a Marketplace enrollee (even for an enrollee who meets the definition of Indian).  However, before selecting a closed panel plan, the enrollee should first consider the limitations of electing this option.

    With limited exceptions, a closed panel plan only makes payment for services rendered by providers within the plan’s provider network.  And because the services provided by non-network providers are considered “non-covered services” by the QHP, cost-sharing protections do not apply to these services.  (An exception applies to emergency services, for which payment would be provided and cost-sharing protections would apply.)

    Although a Tribe might not own a clinic, if the patient wishes to see other IHCPs (or non-IHCPs) that are not in the QHP’s network, services rendered by these IHCPs are likely to be considered non-covered services.  As non-covered services, the QHP generally will not make payment for these services.  And again, cost-sharing protections do not apply to non-covered services.

    Under section 206 of the Indian Health Care Improvement Act (IHCIA), IHCPs can seek reimbursement for services provided to closed panel plan enrollees.  However, because the services are considered non-covered services by the QHP issuer and cost-sharing protections do not apply to non-covered services, any cost sharing that does apply will be deducted from any payments the QHP issuer makes to an IHCP.  Given that most Marketplace enrollees meeting the definition of Indian will enroll in bronze-level coverage, a sizeable deductible might be applied to the payment to the IHCP under IHCIA section 206, significantly reducing or completely eliminating any payment to the IHCP.

    For services provided by non-network, non-IHCPs, no payment at all would be made to the provider for services provided to a Marketplace enrollee.  The enrollee, or a Tribal health organization’s PRC program on behalf of the enrollee, would be liable for payment to the non-network, non-IHCP.

  • Question 10

    How can you get the cost-sharing protections, if the Marketplace would not allow you to enroll. This has been an issue as approximately 10-15 members’ identity could not be verified. Has anyone else had this issue, and how did you resolve it?

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    An individual must be enrolled in coverage through a Marketplace in order to secure the comprehensive Indian-specific cost-sharing protections.  If you have not already done so, it is recommended that you contact the Marketplace Call Center to complete the application.  If this is not successful, consider submitting a complaint through a Marketplace Call Center if this issue appears to be an error on the part of the Marketplace.  In addition, feel free to submit a request through the Self-Governance Communication and Education website at:  www. TribalSelfGov.org “Q&A” mechanism for TSGAC assistance in seeking resolution directly with CMS/CCIIO.

  • Question 11

    To secure the comprehensive Indian-specific cost-sharing protections, a family member who is not a member of a federally recognized Tribe should enroll in an individual plan separate from the family plan. In this case, does the family member still use the “household” income when applying for coverage?

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    Yes.  All Marketplace eligibility determinations that are based on income use “household” income.  This is true whether applying for enrollment in an individual or family plan, and whether or not other family members seek Marketplace coverage at all.

  • Question 12

    I want to know if my spouse is eligible for same tribal health insurance as myself . I get different answers when I speak with Marketplace representatives. Last year we were advised to apply separately, and my wife had high co-pays and deductibles. Representative we spoke with recently said she could be on my application and qualify for same co-pays and deductibles. This is really confusing. What is the true response?

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    I understand that you are an enrolled Tribal member and your spouse is not. Under the Affordable Care Act, enrolled Tribal members (“Indians”) are eligible for Indian-specific comprehensive cost-sharing protections when securing health insurance coverage through a Marketplace.  Non-Indians are NOT eligible for these comprehensive cost-sharing protections.  (There are lesser cost-sharing protections for Marketplace enrollees who are not Indians with household income less than 250% of the FPL.)

    Whether to “apply separately” or together, is an important issue.  You and your spouse can enroll at the same time / on the same application through healthcare.gov.  But, when selecting the health plans you are enrolling in, you and your spouse should enroll in different plans.  If you enroll together in the same plan, you would lose your comprehensive (Indian-specific) cost-sharing protections.

    • If your spouse wants low(er) out-of-pocket costs, a gold level plan might be more attractive (although the premium is higher) than a bronze plan.
    • If your and your spouses’ household income is at or below 250% of the federal poverty level (See table below for various household sizes), your spouse might be eligible for the cost-sharing protections for the general population BUT ONLY IF ENROLLED IN A SILVER PLAN.
    • For you (as an enrolled Tribal member), it is typically most beneficial to enroll in a bronze plan, where the premium is lowest and the federal government picks-up the greatest amount of cost-sharing.

    On other note:  As an Indian, you are eligible to enroll in a Monthly Special Enrollment Period (M-SEP), which means you can enroll all year in the Marketplace, and not just during the annual open enrollment period.  Your spouse can also enroll during a M-SEP, BUT ONLY IF ENROLLING WITH YOU as you are an enrolled Tribal member.

  • Question 13

    I receive SSDI and I know this full amount must be used when calculating MAGI for premium subsidy determination but I was wondering if the full amount or only the taxable amount must be used for tribal zero cost sharing.

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    In short, the income calculations made for purposes of the premium tax credits are the same calculations that are used for purposes of determining eligibility for the Indian-specific cost-sharing protections.  So, the treatment of SDDI income is the same for the PTC and cost-sharing reduction purposes.

    One point on the Indian-specific cost-sharing reductions: no matter your income, an enrolled Tribal member is eligible for the Indian-specific cost-sharing reductions (CSRs).

    • For an enrolled Tribal member with household income between 100% of the federal poverty level (FPL) and 300% FPL, and is eligible for premium tax credits, the individual is eligible for the “zero CSRs”.
    • For an enrolled Tribal member who is not eligible for the “zero CSRs”,  the individual is eligible for the “limited CSRs”.  (This includes individuals with no income or $1 million.)

    And, the CSRs are only available when enrolling in health insurance coverage through a Health Insurance Marketplace.

  • Question 14

    Q. Does withdrawing funds from a retirement account (e.g., IRA or 401K) affect eligibility for premium tax credits?

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    (NOTE: This Q&A is for informational purposes only and is not intended as legal advice.)

    A. Yes, if funds withdrawn from a retirement account are considered taxable.

    The Marketplace determines eligibility for premium tax credits (PTCs) based on the information that individuals applying for enrollment provide about their expected annual household income and family size.  If individuals who qualified for PTCs at the time of Marketplace enrollment experience a change in income during the year, their PTC eligibility might change.  Events that could result in a significant increase to income include:

    • Lump sum payments of Social Security benefits, including Social Security Disability Insurance;
    • Lump sum taxable distributions from an individual retirement account or other retirement arrangement; and
    • Debt forgiveness or cancellation, such as the cancellation of credit card debt.

    PTC-eligible individuals whose annual income increases to an amount exceeding 400% of the federal poverty level (FPL) might lose their PTC eligibility (and have to repay any advance payments of PTCs at the time they file their tax return).  As such, PTC-eligible individuals should consider carefully the financial implications of potentially losing their PTC eligibility before withdrawing funds from a retirement account.  It also is recommended that PTC-eligible individuals who opt to withdraw funds from a retirement account (or who experience another significant increase in income) immediately report the change in income to the Marketplace; by doing so, the Marketplace can make an adjustment to the amount of their advanced payments of PTCs for the remainder of the year, thereby reducing the amount of PTCs these individuals might have to repay at the time they file their tax return.

  • Question 15

    Q. “If you help a patient enroll in a zero cost share plan through Marketplace do they have to reconcile on their taxes? I was told that they can file 8965 exemption instead and not have to reconcile on taxes.”

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    There are two issues that are combined in the question.

     

    1. 1. IRS Form 8965 is a form that was used through calendar/tax year 2018 to claim an exemption from the requirement under the Affordable Care Act (sometimes referred to as the “individual mandate”) to secure health insurance coverage.  Enrolled Tribal members and other IHS eligible individuals are eligible for the exemption from the individual mandate. So, for claiming the exemption from the individual mandate, Form 8965 is used when filing federal income taxes.  The individual mandate was eliminated for all Americans for calendar/tax year 2019 and going forward. Therefore, beginning with calendar / tax year 2019, there is no longer a need to claim an exemption when filing taxes.

     

    1. 2. A separate issue is with respect “to reconcile on taxes”.   I am assuming that the individual who secured health insurance coverage through the Marketplace (and received the “zero” cost-sharing protections) received premium tax credits to reduce the net health insurance premium costs the individual had to pay.  It is necessary for the individual to file federal income taxes for the year the premium tax credits were received in order to “earn” the premium tax credits (otherwise, all the premium tax credits received over the year have to be paid back).  Through the federal income tax filing process, the amount of premium tax credits paid out over the year for the Marketplace enrollee (based on the enrollee’s estimated income for the year) is “reconciled” with the amount the individual was eligible to receive, based on the individual’s actual year-end income for the year.

     

    So, if enrolled in health insurance coverage during calendar/tax year 2018, the individual would need to file taxes for calendar/tax year 2018.  Based on the individual’s reported income (and household size), the amount of premium tax credits paid out over the year would be compared (“reconciled”) with the amount of premium tax credits calculated as “earned” when preparing the individual’s taxes.  (The federal government sends the enrollee a Form 1095-A by the end of January 2019 that indicates how much in premium tax credits were advanced to the health plan over 2018 on the individual’s behalf.)  When filing federal income taxes (for 2018 in 2019), the enrollee fills out Form 8962 to reconcile the premium tax credit amount “advanced” over 2018 (which is reported to the individual by the IRS on Form 1095-A) versus the amount “earned” for 2018 (based on actual income for 2018).

     

    Here is a section of the IRS website on this topic:

    “Claiming and Reconciling the Credit”

    If you get the benefit of advance credit payments in any amount – or if you plan to claim the premium tax credit – you must file a federal income tax return and attach Form 8962, Premium Tax Credit, to your return.  You claim the premium tax credit and reconcile the credit with the amount of your advance credit payments for the year on Form 8962. You must file a return even if you’re usually not required to do so. Failing to file your tax return will prevent you from receiving the benefit of advance credit payments in future years. For more information on filing a return to claim and reconcile the credit see Premium Tax Credit: Claiming the Credit and Reconciling Advance Credit Payments.

    Filing electronically is the easiest way to file a complete and accurate tax return. Electronic filing options include free volunteer assistanceIRS Free Filecommercial software and professional assistance.

    https://www.irs.gov/affordable-care-act/individuals-and-families/the-premium-tax-credit-the-basics

     

    And here is a separate section on the IRS website:

    The Marketplace will send you a Health Insurance Marketplace statement, Form 1095-A, by January 31 of the year following the year of coverage. This form shows the amount of the premiums for your and your family’s health care plans. This form also includes other information – such as advance credit payments made on your behalf – that you will need to compute your premium tax credit.

    https://www.irs.gov/affordable-care-act/individuals-and-families/premium-tax-credit-claiming-the-credit-and-reconciling-advance-credit-payments

     

    If an individual who received premium tax credits ends up having higher income than the amount of income reported to healthcare.gov (when applying or sometime later during the year), the individual might need to pay back a portion of the premium tax credits received.  Conversely, if the individual’s income was lower, they might receive a PTC payment from the IRS after filing federal income taxes.