Filed Under:Health Insurance, Individual Health

Feds map PPACA coverage rule limits

(Image courtesy IRS)
(Image courtesy IRS)

"Obamacare will require everyone to have health insurance in 2014," but, actually, not really.

The U.S. Department of Health and Human Services (HHS) and the Internal Revenue Service (IRS) talk about the gaps in the "universal coverage" requirements in the Patient Protection and Affordable Care Act of 2010 (PPACA) in three batches of proposed PPACA regulations.

HHS discusses the PPACA "minimum essential coverage" exemption in a proposed rule, "Patient Protection and Affordable Care Act; Exchange Functions: Eligibility for Exemptions; Miscellaneous Minimum Essential Coverage Provisions" (CMS-9958-P) (RIN 00938-AR68).

HHS officials describe the kinds of coverage mandate exemptions that individuals can get, types of niche coverage that can qualify as minimum essential coverage, and exemption administration procedures.

The HHS proposed regulations are set to appear in the Federal Register Friday. Comments will be due 45 days after the official publication date.

The IRS addresses the nuts and bolts of minimum essential coverage exemptions in a notice of proposed rulemaking for "Shared Responsibility Payment for Not Maintaining Minimum Essential Coverage" (RIN 1545-BL36) and also in health insurance tax credit final regulations (RIN 1545-BL49)

In the rulemaking notice, IRS officials give their take on types of coverage that can qualify as minimum essential coverage. Officials also discuss how the IRS will handle short coverage gaps and individuals with such low income that they need not file income tax forms.

The shared responsibility rulemaking notice is set to appear in the Federal Register Friday. Comments will be due 90 days after the publication date. The IRS regulations would start to take effect in plan months starting after Dec. 31, 2013. 

HHS draft regs
Opponents of PPACA are still fighting to kill, repeal or block implementation of part or all of the law.

If PPACA takes effect on schedule and works as drafters expect, PPACA "shared responsibility" provisions will require many individuals to have "minimum essential coverage" starting in 2014 or else pay a tax.

PPACA also calls for HHS to work with state officials to develop exchanges, or health insurance supermarkets, that are supposed to start selling high-quality, standardized coverage to individuals and small employers starting Oct. 1. States plan to start and oversee exchanges in some states, and HHS will run the exchanges in others.

HHS officials developed their individual mandate exemption draft to implement PPACA Section 1411, which lists types of people who are not affected by the coverage ownership mandate, and PPACA 1311(d)(4)(H), which requires exchanges to issue exemption certificates to people who are exempt from the PPACA requirements.

Granting certificates of exemption will be a "minimum function" of a state's exchange, HHS officials said in the preamble to the proposed regulations.

The HHS shared responsibility exemption rules will apply both to categories of people who need not buy coverage because, under PPACA, they are not "applicable individuals," and to categories of people who need not buy coverage because of PPACA shared responsibility exemption provisions, officials said.

Individuals may be able to qualify for PPACA mandate exemptions due to:

  • Religion.

  • Hardship.

  • Incarceration.

  • Demonstrated inability to afford coverage.

  • Income falling below the IRS tax return filing threshold.

  • Status as an illegal alien.

  • Membership in a health care sharing ministry.

  • Membership in an Indian tribe.

  • Short-term gaps in coverage.

The HHS is proposing that a state's exchange would be responsible for handling religion and hardship exemption applications.

Taxpayers could get religion-based and hardship exemptions from the exchanges. The IRS would manage or share the application processes for the other exemptions.

The length of a hardship exemption would last for the duration of the hardship. Most other exemptions would last for a year, but a religious exemption or an exemption based on membership in an Indian tribe could last for a lifetime. 

Children could qualify for a childhood-long religious exemption while they were under 18. Once they turned 18, they would have to apply for their own adult lifetime exemption based on their own attestation of having an objection to the PPACA coverage requirement stemming from religious principles.

The standards for applicants seeking hardship exemptions would be comparable to the standards now in place in Massachusetts, which already has a coverage ownership requirement, officials said.

HHS officials also stated that they would treat Medicare Advantage plan coverage, foreign health coverage, refugee medical assistance, AmeriCorps coverage, and self-funded student health insurance plans as minimum essential coverage.

HHS may allow state high-risk pool coverage for people with health problems to qualify as minimum essential coverage on a temporary basis, officials said.

"State high-risk pools across the country vary in their coverage and benefits," officials said. "Some high-risk pools may not substantially comply with the requirements of the Affordable Care Act."

Organizations offering other types of coverage can apply to HHS for permission to have the coverage qualify as minimum essential coverage, officials said.

The IRS rulemaking notice

The IRS has proposed defining a PPACA individual coverage mandate "shared responsibility family" to "include all individuals for whom a taxpayer (including a spouse, if married filing jointly) is liable for the shared responsibility payment," officials said.

Taxpayers will be responsible for paying the shared responsibility payments for their dependents.

Taxpayers affected by the shared responsibility payments will owe the penalty payments for months in which they lack minimum essential coverage.

Like HHS officials, IRS officials discuss the types of coverage that will qualify as minimum essential coverage.

Both the COBRA benefits continuation coverage offered under the Consolidated Omnibus Budget Reconciliation Act of 1985 and retiree health coverage will count as "eligible employer-sponsored plan" coverage for purposes of individuals getting out of having to pay shared responsibility penalties, officials said.

The IRS also talks about prisoners.

"An individual confined for at least one day in a jail, prison or similar penal institution or correctional facility after the disposition of charges is exempt for the month that includes that day," officials said.

The IRS would make the short-term coverage gap available to individuals if the "continuous period without minimum essential coverage is less than three full calendar months and is the first short coverage gap in the individual's taxable year."

If an individual has minimum essential coverage for "one day in a calendar month, the month is not included in the continuous period when determining the application of the short coverage gap exemption," officials said.

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