UPDATED: Some ACA enrollees see May tax credits vanish, impact of mandate repeal looms

Updated on May 12 to reflect responses from the U.S. Department of Health and Human Services.

HHS started ending tax credits for people who either didn’t amend their 2016 tax return to reconcile the amount of credits they received or verify they received the proper amount.

It’s the first time this assessment has happened, per the federal agency.

Shoppers on the federally run exchange aren’t eligible to receive new tax credit payments unless they prove the correct amount was paid in a prior year, according to HHS.

Enrollees were supposed to receive notices in February from the U.S. Centers for Medicare and Medicaid Services, so as to give them plenty of time to file a tax return and reconcile payments.

According to HHS, people also received notice from the federally run marketplace and the U.S. Internal Revenue Service.

A three-page letter provided by HHS said that people could be at risk of losing tax credits, and that another notice wouldn’t be sent.

The letter mentions a variety of forms related to taxes that were either due in 2016 or received in 2017. It states the agency will stop paying advanced premium tax credits to the insurer if the 2016 tax return is not amended or filed.

Decisions can be appealed, but the members have 90 days from an eligibility notice.

The evaluation has impacted people around the mid-state.

Close to two dozen people reached out to Music Health Alliance around May 1 when the full premium was automatically withdrawn by their insurer.

Sandy Dimick of Family & Children’s Service said the agency hadn’t received any complaints regarding the issue.

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It may not be open enrollment but the team at Music Health Alliance is inundated with complaints from people who bought insurance on the individual health insurance market. They are getting a mid-year surprise.

By mid-day on May 1, the non-profit had heard from 16 people who had been receiving tax credits against monthly premiums, but now had the full premium automatically withdrawn from their bank accounts.  The cause turned out to be a review by federal officials that found missing documentation in tax records, according to Tatum Allsep, executive director at Music Health Alliance.

It’s the first time a review like this has happened and people are scrambling to rectify the situation and cover the unexpected hike in premiums, said Allsep.

It’s not submission of insurance related tax documents (the 1095 or 8962) but income verification, which is challenging to pin down for many in the music industry, she said.

“Everything is being checked — which is not a bad thing. That’s fine. But when you’re doing it and not giving people a chance to (respond) with what they are looking for, that’s an issue,” said Allsep. “Now if you just don’t read your mail (and didn’t see notices) then that’s not an excuse. But that’s not the problem.”

A spokesperson for the U.S. Department of Health and Human Services could not immediately comment.

The snafu is a reminder, Allsep said, that people without employer-sponsored plans have to be diligent and prepared for change on the exchange year after year.

This year the looming question is how reducing the tax penalty to $0 in 2019 will impact premiums.

This week, Dr. Tom Price, the former U.S. Secretary of Health, said the repeal of the individual mandate under the tax bill will lead to higher premiums because healthier people would not have to buy a plan — a statement that surprised industry researchers and observers given his opposition to the mandate. Price did reiterate his long-held opposition to the mandate on May 2 by saying the mandate “distorted health care markets.”

Insurers wanting to sell plans in Tennessee don’t have to file for their requested premiums until the end of July.

Most of the buyers in Tennessee receive federally funded tax credits that absorbed most of the big hikes in recent years. In 2018, 84 percent received tax credits, per HHS data.

Yet, the 16 percent who pay the full premium could see another round of increases if insurers price for a smaller and potentially more unhealthy pool, as many experts warn will be the case.

It will be hard to track how many people go fully uninsured or who opt for short-term plans, because the carriers don’t have to report number of members to the state insurance agency, said John Graves, assistant professor at Vanderbilt University School of Medicine.

People who opt for short-term insurance, which Graves called “Swiss cheese,” may find it doesn’t cover needed care.

In Tennessee, no short-term plans cover maternity care and 29 percent cover prescription drugs, according to a review of short-term plans by Kaiser Family Foundation.

Short-term plans will work for some and the person will just re-up every quarter, said Allsep. But others who either don’t read the fine print, or find themselves needing additional care could be in for big bills.

“(Some) can’t jump on an association plan with scaled down benefits and Medi-Share might sound great, but it won’t cover what they need,” said Allsep. “We have a problem on our hands if the mandate repeal leads to higher premiums (for those who don’t get tax credits.)”

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Photo by Hush Naidoo via Unsplash