Friday, March 12, 2021

The American Rescue Plan Act makes free coverage available to many below 100% FPL in nonexpansion states

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An odd provision  the American Rescue Plan Act that President Biden signed yesterday provides that anyone who receives any unemployment insurance income this year will be deemed to have income of no more than 133% of the Federal Poverty Level (FPL), qualifying them for a free silver plan in the ACA marketplace. 

Silver plans at that income come with the highest Cost Sharing Reduction (CSR), raising the plan's actuarial value to 94%, which translates to an average deductible of about $200 and an average cap on annual out-of-pocket costs of about $1100. The plan is free because ARPA zeroes out premiums for a benchmark silver plan at incomes up to 150% FPL.

When I first read about this provision, I thought that maybe it was intended in part as one more way to chip away at the "coverage gap" in the twelve remaining states that have refused to enact the ACA Medicaid expansion (rendered optional to states by the Supreme Court in 2012). In those states, eligibility for ACA marketplace subsidies begins at 100% FPL, and families with incomes below that threshold get no help obtaining coverage. The Kaiser Family Foundation estimates that about 2.2 million people in nonexpansion states (chief among them Texas, Florida, Georgia and North Carolina) are in the coverage gap.

Last year, the supplemental unemployment income provided by the CARES Act ($600 per week, up to $10,200) appears to have pushed a significant number of people previously in this coverage gap over the 100% FPL threshold, as marketplace enrollment in nonexpansion states rose by 10%, while it was virtually flat in expansion states. Maybe rendering a week's unemployment income a ticket to free coverage would open the gate a bit further.

Then I read the (short, apparently simple) provision (Section 9663 of the Act), and thought, "Nah. You have to earn more than 133% FPL for this to kick in."  Here's the bill text:

(a) In General.—Section 36B of the Internal Revenue Code of 1986 is amended by redesignating subsection (g) as subsection (h) and by inserting after subsection (f) the following new subsection:

“(g) Special Rule For Individuals Who Receive Unemployment Compensation During 2021.—

“(1) IN GENERAL.—For purposes of this section, in the case of a taxpayer who has received, or has been approved to receive, unemployment compensation for any week beginning during 2021, for the taxable year in which such week begins—

“(A) such taxpayer shall be treated as an applicable taxpayer, and

“(B) there shall not be taken into account any household income of the taxpayer in excess of 133 percent of the poverty line for a family of the size involved.

But then I read Louise Norris and was reminded that every statute is a winding path through other statutes, and you gloss over language of less-than-obvious import at your peril. What is an "applicable taxpayer?"  Norris:

Under the ARP, a person who receives unemployment compensation in 2021 is considered an “applicable taxpayer” for purposes of ACA Section 36B, which determines premium subsidy eligibility.

Click on Section 36B of the IRS code above. An "applicable taxpayer" is eligible for premium tax credits to pay marketplace premiums, and an "applicable taxpayer" is defined thusly:

The term "applicable taxpayer" means, with respect to any taxable year, a taxpayer whose household income for the taxable year equals or exceeds 100 percent but does not exceed 400 percent of an amount equal to the poverty line for a family of the size involved.

The circuitousness of the provision has a certain elegance. A family income that includes unemployment income is deemed to be not more than 133% FPL. Oh, and said family income is also deemed, by referral, to be not less than 100% FPL. 

Since the new law extends the pandemic unemployment assistance provided in last year's CARES Act, the eligibility for free coverage is available not only to those traditionally eligible for unemployment insurance  but also to those who avail themselves of UI extended to any individual who "is self-employed, is seeking part-time employment, does not have sufficient work history, or otherwise would not qualify for regular unemployment or extended benefit." That's a pretty wide net.

ARPA also provides enticements to nonexpansion states to give up their dead-end resistance and enact the ACA expansion of eligibility for Medicaid to adults with incomes up to 138% FPL. Section 9814 provides states that enact the expansion with an extra five percentage points of federal contribution to costs (the federal match rate, or FMAP) in the state's existing Medicaid programs. That's on top a six-point FMAP boost provided by the Families First Act.

About 30 million people in America remain uninsured. ARPA chips away at that unacceptably high total from multiple angles.

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  1. Well, Andrew, exactly what goes on in the various states (Medicaid expansion and the separate case of non-expansion) puzzles me after seeing your post, and being of no mind to go through the "winding path through other statutes".

    Does income knocked to 133% of income, in the expansion states, mean people in those states who receive unemployment insurance get expanded Medicaid? (Not subsidized-to-0-premium on exchange, with heavy cost-sharing reductions?) Note that eligibility for expanded Medicaid blocks subsidized on-exchange coverage under ACA rules.

    Very tricky. I think the 138% FPL upper cutpoint for expanded Medicaid eligiblity is, in the precise text of the law, 133% with a 5% disregard of something. So it's very tricky. (An issue, as in elementary math, of the difference between < and <=, open and closed intervals, etc., may be involved!)

    So I wonder what the answer is, in the expansion states.

    (And you know what I'm going to say next:

    If the people getting unemployment get expanded Medicaid in those expansion states, then in the subset of roughly 12 expansion states that estate recover expanded Medicaid for people 55-64, possibly of all medical expenses paid out rather than a capitation, then some people, who likely don't know about it, have a hidden bomb of no insurance but rather a loan until death for medical expenses.

    And you know that I'm going to point out that some of those states are Democratic MA, NJ, and MD.

    And you know what references I'm going to supply for those unfamiliar with the issue:

    archived here: )

    Really, I do wonder what the Rube Goldberg contraption of our health insurance system gives to those unemployed people 55-64 in those 12 states. Real insurance, or just a loan until death for whatever medical expenses occur?

    If you happen to know, could you possibly let us know?

  2. I do not know if you used the aCA. As a Realtor I always paid for my health insurance-until it reach $600 a month-and the bubble had bust-before ACA. So, I could not afford any insurance and had to find a job after 20 yrs in R.E. that had it. When I left that ACA was in affect. I made very little as I had been on commission most of my career. The insurance I got for very little was not based on my age like before but my income. It was way less than medicare and better!-0 deductible, 600- 1000 out of pocket which took most of the year to get close to. Yes, I took one that was silver and no out of network but it offered that too if I was willing to pay more.
    When my Adult Son got deathly ill diagnosed with a auto immune illness there was no where to turn,Medicaid was so difficult to get. Clinics were a joke. But ACA helped me and it too 2 years to get him on Medicaid even getting turned down 3x with a terrible illness. So , it is easy to talk about something you know little about. (I don't care if you have been an Agent for 30 years-until it hits you-it means nothing.The Medicaid isn't as good as ACA but he has some good Dr's. As far as dr's there was few I good not live w/o and found better ones on my ACA healthcare.