The Department of Health and Human Services on Jan. 14 issued a proposed rule outlining the process that regulators will use to verify individuals' eligibility for federal premium subsidies to purchase health insurance through public exchanges.
Under the proposed rule, administrators of state and federal insurance exchanges must verify whether applicants seeking tax credits to buy health care coverage through an exchange are enrolled or eligible for qualifying coverage in an employer-sponsored health care plan. Until a centralized database is available, exchange administrators will be permitted to use any available data electronic source approved by HHS—as well as paper records, when necessary—to confirm applicants' eligibility for the subsidies.
Alternatively, exchange administrators can elect to have HHS regulators conduct the verification process, according to the proposed rule.
Under the reform law, premium subsidies are not available to individuals enrolled in coverage—or who are eligible for coverage—through their employer as long as that coverage meets affordability and minimum value standards. Recent Internal Revenue Service regulations make clear that coverage is not affordable if the premium paid by employees for single coverage exceeds 9.5 percent of their wages. In addition, premium subsidies are not available to employees earning more than 400 percent of the federal poverty level.
The proposed rule also seeks to finalize the method and manner in which employers will be notified when one or more of their employees has been determined to be eligible for subsidized coverage through an exchange, as well as the process by which employers can appeal such determinations.
Under the proposed rule, employers would receive notice when an employee is determined eligible for subsidized coverage. If the eligibility was triggered because the exchange determined that an employer did not provide qualified coverage, that employer would be warned that they may be liable for tax penalties through the IRS.
Employers would be able to appeal determinations about the nature of the coverage they offer prior to the penalty's enforcement, according to the proposed rule. HHS said it would establish a formal appeals process for employers in states that decline to construct their own.
More information on the proposed rule is available here.