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Friday, January 10, 2014

A CHIP off the old block in the ACA

Test-driving HealthCare.gov  in various locales, I was a bit surprised to learn that in New Jersey, the kids (under age 19) in a family of four with an income of  $75,000 would be eligible for the Children's Health Insurance Program (CHIP).

Probing for the break point, I found that if the same family earned $82,424, the kids would still be in CHIP. At $82,425 they would not.  The exchange would offer a subsidized plan for the whole family.

The cost difference for the family is negligible. Because families are subsidized so that premiums equal a fixed percentage of the family income, the subsidy for the family just over the CHIP line grows to cover the difference. The subsidy for the $82,235 family in Essex County is $616 per month, while for the CHIP-eligible family earning a dollar less, it's $297. Net result: their premiums for identical silver plans are within a couple of dollars of each other (in Essex County, $654--$655 for the benchmark second cheapest plan). 

CHIP eligibility is not tied to the ACA Medicaid expansion, and every state has its own eligibility break point. In New York, it's 400% of the Federal Poverty Level (FPL). In Texas, it's 200%. In New Jersey, oddly left blank on this otherwise useful map, it's 350% (the FPL for a family of four was $23,550 in 2013). Exchange shoppers in states that have opted out of the Medicaid expansion may nonetheless swell the CHIP rolls a bit -- though only if those shoppers had previously failed to take advantage of their kids' CHIP eligibility.

In New Mexico, where the CHIP cutoff is 235% FPL, the kids in our family of four go into CHIP with a family income of $56,519 or less.  That family (in Colfax County) will pay  $377/month for coverage of the adults under the second cheapest silver plan -- as will a family earning a dollar more, buying the same plan for the whole family.  In Missouri, the cutoff is 300% FPL, or $70,649.  In Butler County, the second-cheapest silver plan will cost a couple with two CHIP-eligible kids earning that income $561 -- while a family earning a dollar more will pay $562 to insure all four.

According to the Kaiser Family Foundation, a family with CHIP-eligible kids can enroll the whole family in an exchange plan, but the kids will be unsubsidized:
You can add your children to your Marketplace plan, but because they are eligible for your state’s Children’s Health Insurance Program (CHIP), they are not eligible for premium tax credits. The exception to that is if you live in a state that has a waiting period for enrolling in CHIP. During the waiting period, your children are eligible for a premium tax credit; when the waiting period has ended they can enroll in CHIP and will become ineligible for the tax credit.
In effect, that leaves middle class families buying on the exchange with no viable option other than insuring the kids through CHIP.  That's good news financially, as CHIP has no deductibles and very low out-of-pocket costs -- I believe zero in some states. Some families in the $80k range are bound to be a bit surprised, though.  And some won't be pleased.

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As a footnote, I've been on HealthCare.gov a good deal lately, and today for the first time since the New Year I found the shop-only feature a bit wobbly.  Sometimes the wrong county list would come up for a given state, sometimes the search results would (wrongly) turn up zero plans, and sometimes a search turned up the wrong prices. Almost all the errors were when I was searching Missouri -- I don't know whether malfunctions are ever state-specific.  Knowing more or less what the results should show, I could get an accurate result after a couple of malfunctions in each case (and I checked right-looking results against ValuePenguin) -- but if it had been a first-time shop, I might have been seriously confused or misinformed.

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