Putting the "Affordable" in the Affordable Care Act: A role for the IRS

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 After the boost to ACA marketplace subsidies enacted as part of the American Rescue Plan Act (ARPA), the largest remaining bar to affordable coverage for all but undocumented Americans (who are barred from any government help for coverage) may be the affordability threshold for employer-sponsored insurance. It's ridiculously high. The IRS can provide some relief now, without portentous rulemaking.

The ACA defines employer-sponsored insurance (ESI) as affordable if a plan providing Minimum Essential Coverage (MEC) as defined by the ACA costs less than 9.5% of income. That baseline is adjusted annually to account for inflation in premiums in excess of inflation in the consumer price index and currently stands at 9.83% of income.  MEC is equivalent to bronze-level coverage in the ACA marketplace, which typically means a single-person deductible in the $7,000 range. Those for whom an employer's offer of insurance is deemed affordable are ineligible for ACA marketplace subsidies (though not ineligible for Medicaid). KFF estimates that 3.5 million uninsured people are in this category.

An American Rescue Plan benefit you'll have to wait for

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UPDATE: On April 9, the IRS solved the problem described, announcing that 2020 marketplace enrollees who received APTC do not have to file Form 8962. 

The Internal Revenue Service announced today that taxpayers with excess APTC for 2020 are not required to file Form 8962, Premium Tax Credit, or report an excess advance Premium Tax Credit repayment on their 2020 Form 1040 or Form 1040-SR, Schedule 2, Line 2, when they file.

Those who filed prior to the passage of the American Rescue Plan Act and paid back excess APTC do not have to file an amended return; the IRS will reimburse them.

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In addition to increasing premium subsidies for 2021 and 2022 in the ACA marketplace, the American Rescue Plan Act signed into law by President Biden on March 11 provides an important benefit to 2020 marketplace enrollees. Section 9662 of ARPA stipulates that those enrollees who underestimated their income and so would normally have to pay back some the Advanced Premium Tax Credits (APTC) received will not have to pay back the excess APTC. 

That includes people who estimated their incomes at below 400% of the Federal Poverty Level, the cap for APTC eligibility, but ended up with a declared income above that threshold. Normally, they would have to pay back all APTC received. This year, they owe nothing.

That is not a trivial benefit. According to IRS estimates,* in 2019 3.2 million tax filing households paid back a portion of the APTC they received in 2018, with paybacks totaling $4.4 billion, or about $1,375 per household.  Estimating 1.7 enrollees per filing household** suggests payback of about $800 per enrollee. Similarly, the CBO report*** on the costs of ARPA estimated that APTC forgiveness for 2020 (when total enrollment was nearly identical to that of 2018) would cost $4.7 billion in 2021. (See Charles Gaba's detailed analysis here.)

Nicholas Bagley parses the oral arguments in King v. Burwell

Over at healthinsurance.org, I have an interview up with Nicholas Bagley, post-morteming today's oral arguments in King v. Burwell, the lawsuit aiming to gut the ACA exchanges. Bagley,  a former appellate attorney at DOJ and currentl health law professor at the University of Michigan, is co-author of two amicus briefs in support of the government in King, both addressing issues that Anthony Kennedy probed in some depth in today's hearing.

Kennedy lifted the spirits of ACA supporters early on by questioning whether the plaintiffs' claim that the law aimed to essentially force states to form their own health exchanges by not authorizing premium subsidies to be credited through the backup exchange would render the law unconstitutionally coercive.That was the upshot of one Bagley brief. But he then turned around and suggested that the law might be, in effect, both unambiguous (in denying credits through the federal exchange) and (potentially) unconstitutional.

Much later, Kennedy explored a more obscure point. While the Supreme Court generally holds that if a law is ambiguous, the courts should defer to the interpretation of the agency charged with implementing it, that might not be the case here: