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Health Insurance & Affordable Care Act

How Poor Might Qualify For Obamacare Subsidies In States That Don't Expand Medicaid

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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.

Still, some consumer advocates are skeptical that many people will use the approach.

"It's conceivable that some people may do this, but I think it will be pretty limited," said Tim Jost, a law professor at Washington and Lee University.

He added there is a gray area between overestimating one's income and intentionally lying to the government.

Catherine E. Livingston, a tax attorney with Jones Day in Washington, said "I think it would be quite challenging to prove they intentionally lied."

But even if people with incomes at the poverty level qualify for subsidies for private insurance, the coverage might still be unaffordable, said Laura Goodhue, executive director of the consumer advocacy group Florida CHAIN.

That's because they would owe as much as 2 percent of their income towards the cost of the premium and could still have co-pays and deductibles.  The health law does provide those under 250 percent of the poverty level with additional subsidies to lower these out-of-pocket costs.

Under regulations released in July, all the exchanges or marketplaces must first check the income level that an individual reports on his or her application against a federal database that contains data on the applicant's federal income tax returns as well as Social Security and current wage data.

But if an individual projects their income up to 10 percent higher than shown in electronically available data such as a prior tax return, there will be no questions asked. If there is more than a 10 percent discrepancy, the exchanges will ask for more information, such as a pay stub. If an applicant is unable to provide such data, the regulations allow the exchanges in 2014 to rely on the individual's "self-attestation" to determine the subsidy. This applies only when someone overestimates their income, according to a spokeswoman for Health and Human Services.

Thu, Aug 08 2013

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