Special Exchange Enrollment Periods Produces Mixed Results: Subsidy Calculation Error May Short-Change Some Families

Wednesday, May 6, 2015
Michael Gomes
BenefitMall

When open enrollment closed earlier this year on February 15, the Obama administration and health officials realized that millions of Americans were still uninsured. In order to increase the percentage of individuals and families signing up for coverage and reduce the number of Americans that might have to pay a tax penalty, CMS announced a special enrollment period for the 37 states using the federal Exchange from March 15 to April 30; some state Exchanges also followed suit. Previously, HealthCare.gov and some states also offered special enrollments beginning on February 15.  

Special Enrollment Period Numbers Lackluster

Despite the push for the special enrollment periods, so far, according to news reports, Americans seem to have a limited interest in the extended open enrollment. As of April 13, only 68,000 additional people signed for coverage through HealthCare.gov; public policy experts were hoping for many more sign-ups.  

However, some of the state-based Exchanges have been faring very well during the extended sign-up periods. For example, both California and Washington state, which run state-based Exchanges, are garnering large numbers of sign-ups. CNBC reported that, “a total of more than 38,700 people selected health plans during special enrollment in California and Washington, officials said. Most of those enrollments came from people subject to the fine for lack of coverage in 2014, although an unknown share of Washington's tally signed up for other reasons.” 

Interestingly, California and Washington will most likely account for one third of the people who signed up for insurance during the special enrollment period. HealthCare.gov only enrolled about 2,000 people per participating state as of April 13. In contrast, California signed up about 23,000 people on its own, and Washington enrolled 16,000 people.

Dana Howard, a spokesman for Covered California, attributed her state’s success to the fact that the Exchange was one of the first to announce and start its special enrollment period, and that they aggressively promoted the offer in both free and paid media.

By the close of open enrollment in February, 11.6 million people had signed up for coverage through both the federal and state-based Exchanges. We will have a more accurate picture of how many people bought health insurance during this special enrollment period once the window closes on April 30.

Many Households Owed Subsidies 

Those who already signed up for health insurance before the special enrollment period and who were expecting to receive subsidies to help pay for coverage may be in for an unpleasant surprise. Kaiser Health News recently reported that up to 40,000 households may not receive subsidies due to a technical error:

Thousands of families with a disabled or deceased parent may have received a lower subsidy than they deserved to buy health coverage through the federal insurance marketplace as a result of a calculation error by the federal government. In addition, some who should have been eligible for Medicaid may have been turned away, leaving them on the hook for higher-priced private insurance coverage. The Centers for Medicare & Medicaid Services (CMS) has acknowledged the glitch but many details about how the agency will fix it remain unclear.

The error seems to have occurred in cases where children were receiving Social Security income, which generally happens after a parent becomes disabled or passes away. HealthCare.gov was including the Social Security income that the child received in the family’s total income, thus inflating the total amount of money the family made. As a result, “Some people were wrongly turned down for Medicaid coverage and others received less in premium tax credits and cost-sharing subsidies than they were eligible for.” 

CMS has acknowledged the error and is advising assisters to help consumers submit an appeal to the federal Exchange or apply through HealthCare.gov or the state for a Medicaid determination. There is currently no estimation as to when the glitch will be fixed.

Stay Tuned

Stay tuned as we continued to report on the final numbers reported in the special enrollment period and the subsidy error, as well as any other issues affecting Brokers.

The views expressed in this post do not necessarily reflect the official policy, position, or opinions of BenefitMall. This update is provided for informational purposes. Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.