Making sense of premium tax credits

Put on your thinking cap!We all know that this health reform business is complicated.  Even for policy wonks and advocates like me who live and breathe this stuff, it can still be really confusing at times.

With the launch of the health insurance exchange set for October 1, the advocacy community is buzzing with questions on how to quickly and effectively improve the public’s understanding around what are currently considered to be very mysterious topics for most: “insurance exchanges,” “premium tax credits,” and let us not forget the big one, “Obamacare.”

The good folk’s at Consumer’s Union recently decided to tackle one of the big ones – premium tax credits.  They have released a report with findings from three rounds of consumer testing in three states (Maryland, Oklahoma, and Utah) on how to help consumers understand this topic.

The report is great at pinpointing the information that regular folks respond to and explaining how to break down what is essentially complicated IRS information in a way that is understandable to most.  Best of all, they have created some really great templates for brochures, a worksheet, and a timeline graphic that folks can tweak and distribute themselves.  Very cool.

To read the Consumer’s Union report, titled “Helping Consumers Understand the New Premium Tax Credit,” and accompanying materials, click here.

Coverage choices

Thanks to the Affordable Care Act (ACA), more than 1 million uninsured  New Yorkers will newly have access to affordable health insurance options starting this fall.  That’s a lot of folks who will need to wade through a lot of new information in the coming months.

HCFANY will be holding a briefing in New York City on Thursday, March 7th at the Interchurch Center from 9:00 am – 11:30 am to go over the necessary public outreach and enrollment efforts that will need to happen in order to ensure that the greatest number of New Yorkers benefit from the ACA.  Specifically, we will be going over the following questions:

  • How will New Yorkers learn about new health coverage options?
  • How is New York State going to reach out to and sign up the uninsured?
  • What will individuals, families, and small employers in New York l need to know?
  • What’s to be gained if we do it all right  (…and at risk if we don’t)?
  • What can our elected officials do to help make it go smoothly?
  • How can groups across New York contribute and participate?

This meeting is open to all New York members, allies, colleagues and new friends in the NYC area.

For more information, or to RSVP, click here!

Baby, it's cold outside!

The Governor’s proposed 2013-2014 Executive Budget aims to get rid of New York’s Family Health Plus (FHP) program by closing off enrollment by the end of this year.  Enrollees who earn below 138% of FPL (about $26,000 per year for a family of three) will get the current Medicaid benefit (with the exception of long-term care).  Parents up to 150% of FPL (about $28,000 for a family of three) will get subsidized coverage on the forthcoming Exchange.

However, eligible folks who aren’t able to enroll by the cutoff date, or whose income shifts into the eligible range after the cutoff date will be out of luck.  These folks will have to look for affordable coverage on the Exchange.

The Exchange will provide premium tax credits to help lower the cost of insurance for most low- and moderate-income folks who purchase coverage on the Exchange.  But, it will still be too expensive for many families.  For example, a family of three earning 150% of FPL will still have to come up woth $1,099 per year on their own for coverage on the Exchange whereas the same family would have gotten free coverage with very low cost-sharing through FHP.

But there is a solution to this affordability problem.

  • First, we ask the State to apply for an 1115 waiver – similar to those being pursued by Massachusetts and Vermont – to provide an affordability wrap for premiums and cost sharing for folks up to 200% of FPL not eligible for Medicaid.  This would help to get out-of-pocket costs on the Exchange down as close as possible to FHP levels. If NY can’t get federal matching funds, the State should earmark a portion of the $2.5 billion in State Medicaid savings under the ACA for this.
  • Next, New York should lay the foundation for a Basic Health Plan (BHP) by authorizing establishment of this program starting in 2015.  The ACA gives states the option of creating a federally-funded BHP to cover adults up to 200% of FPL not eligible for Medicaid.  This program would result in State savings of between $500 million and $1 billion each year.

This is a big opportunity for State lawmakers to ensure affordable coverage is available to the individuals and families who need it most.  And, when federal funds or state savings are factored in, it would require little or no additional cost to the State.

Quite simply, it’s the right thing to do.

The choice is pretty darn clear

Under the ACA, states are allowed the option of creating a Basic Health Plan (BHP) for low-income adults who earn too much to qualify for Medicaid.  Ordinarily, if these folks don’t have employer-sponsored coverage then come 2014 they will be able to buy insurance through the Exchange with the help of federal tax credits.  But, even with the tax credits this coverage may still be too expensive for them. The BHP then would act as a bridge between the free or low-cost Medicaid coverage and the higher priced options available on the Exchange.

Don’t be fooled by the name though - there is nothing “basic” about it.  According to the ACA, BHP coverage must be as affordable and comprehensive as what these adults would have gotten on the Exchange.  In New York, coverage would likely resemble that of the Family Health Plus program.

New York currently offers public coverage to low-income adults through its Family Health Plus program, the cost of which is split with the federal government.  New York also pays for Medicaid coverage for low-income immigrants without help from the federal government.  Through the BHP program, New York would be able to cover both of these groups and have the federal government pay for it all.  This would save the state between $500 million and $1 billion per year.

Sounds great, right? Problem is, the federal government still hasn’t released guidance on this program, and isn’t planning on doing so anytime soon.  Unfortunately, state policymakers won’t commit to the program until they are sure of all the details.  So, until that happens, it is unlikely that New York will get any of the cost-savings and affordability protections that the BHP has to offer.

HCFANY has created a policy brief on this issue to explain it in detail, urge federal policymakers to release BHP guidance, and provide recommendations to state policymakers.

Click here to read HCFANY’s policy brief, titled “The Basic Health Program Option in the Affordable Care Act.”