The Access to Care Report (#11)/ Regulations for ACA individual mandate to affect access and attorney obligations
September 19, 2013
This is #11 in a series of Access to Care Reports. (See also postings by Mitchell Law Office
In order to maintain insurance premiums at reasonable levels under the Affordable Care Act (ACA), it is important for health insurance coverage to be extended to a pool of participants that is representative of the larger society.
A “carrot and stick” approach is being used to developing such an insurance pool.
Participation is being encouraged through outreach and education efforts, and the offering of subsidies for those with limited income, while “opting out” is being discouraged through penalties under the individual mandate.
This arrangement will have implications for access to care and legal needs.
Individuals without alternative coverage are faced with several choices. They can purchase policies through the new Health Exchanges; establish that they are eligible for an exemption; or pay a penalty. The penalty for 2014 is set at $95 or 1 percent of income above a certain level. However, this relatively low penalty is set to increase substantially in 2015 and 2016.
The Department of Treasury has issued final rules to govern this “individual shared responsibility”, as the penalty has been named by the Department of Health and Human Services (HHS).
A penalty will not be assessed if coverage is “unaffordable”— if an individual qualifies for a hardship exemption— or an exemption is established based on religious or other grounds.
As quoted by the Treasury Department, “the Congressional Budget Office (CBO) expects that “less than two percent of Americans (will)… owe a shared responsibility payment”.
A financial hardship exemption applies when an Exchange does not offer “affordable” coverage, and when a state has chosen not to make the expanded Medicaid program option available. Other financial and personal circumstances will be evaluated by the Exchanges on a case-by-case basis.
Many detailed aspects of the individual mandate are covered by the new regulations. Coverage by an individual for any part of a month is considered to be “coverage during the month”. An exemption is allowed for gaps in coverage of less than three months.
Medicare Part A and Medicaid are considered to provide adequate coverage under the ACA.
Income tax returns for calendar year 2014 will have to indicate which, if any, family members have been determined exempt from the penalty. Noncovered, nonexempt members will owe the penalty amount.
Access to care will be reduced by those who obtain an exemption from the individual mandate. They will not have to pay a penalty—but they will remain uninsured.Thus, the “flip side” of the regulations is that qualifying for an exemption may have a negative impact on an individual. More generous provisions for exemptions can lead to more uninsured persons.
Individuals may often need legal assistance to evaluate their options and decide whether they are subject to a penalty. Attorneys may find that detailed regulations have to be referenced in order to consider the specific situations of clients.
Attorneys may find that, when clients seek to be exempted from coverage or the individual mandate, all possible alternatives for health care coverage will need to be pursued for best representation. Wherever possible, efforts to assist clients with obtaining coverage may become a legal responsibility of attorneys, as an alternative to an exemption.
Previous installments of “Access to Care Reports” address the various ways in which access to care issues are affecting legal practices: