Thu, Aug 08 2013
Some of the millions of poor people expected to lose out on Obamacare coverage next year because their states are not expanding Medicaid might have a way to get help, but the strategy carries risk.
Experts say the key is for them to project their 2014 income to at least the federal poverty level, about $11,500 per person or $23,500 for a family of four.
That would entitle them to federal subsidies that would cover nearly all the cost of private coverage sold on new online insurance marketplaces set up by the federal health law. The subsidies are available on a sliding scale to people making between the poverty level and four times that amount.
Everyone applying for subsidies must estimate their 2014 income. For the poor, the difference between qualifying -- or not -- could be $1,000 or less a year. Since many rely on hourly or seasonal work, their incomes often fluctuate by a few thousand dollars each year. That's one reason why people often lose eligibility for Medicaid, the state federal insurance program for the poor.
While there are steep fines for knowingly lying on a government application for financial assistance, if someone merely miscalculates their income above the poverty level in 2014, and is later found to have made less than the poverty level, they won't have to pay any money back, according to the Treasury Department.
"There's little risk because under the rules you don't have to pay anything back," said Richard Trembowicz, vice president for Celtic Insurance Co., a subsidiary of Centene Corp. which is offering plans on several exchanges, including Mississippi.
While most people are unaware of this option now, "I would be surprised if this is not commonly known before the end of March 2014," Trembowicz added, saying he expects advocates and others to advise people about the eligibility rules for subsidies when the exchanges open Oct. 1.
In addition, he said, people will have a new incentive to report income to the government that they might not have disclosed before, such as cash from babysitting and tips.
Under the Affordable Care Act, everyone under 138 percent of the federal poverty level, or $15,870 for an individual, was supposed to qualify for Medicaid. But after the Supreme Court last year made the Medicaid expansion optional, only 23 states and the District of Columbia opted to expand the program in 2014. Texas and Florida -- the two biggest states that are not expanding Medicaid -- have a total of about 3 million people under the poverty level who are currently uninsured.
Medicaid is a much more affordable option for people at or near the poverty level because of its limited out of pocket costs, but experts say qualifying for subsidies to get private insurance would be better than having no coverage.