By Pension and Benefits Editorial Staff
The proposed funding methodology for the 2021 Basic Health Program (BHP) year would largely remain the same as the methodology used in the 2020 program year, with one new adjustment. Since BHP enrollees are not subject to income reconciliation at the end of the year, the Income Reconciliation Factor (IRF) would seek to prospectively capture the effect of income reconciliation by adjusting for potential fluctuations in income from the time the enrollee applies until the time they file their income taxes. CMS proposes to set the value of the IRF equal to the value of the IRF for states that have expanded Medicaid eligibility, which is 99.23 percent for program year 2021.
Basic health program. The Patient Protection and Affordable Care Act provides states with an option to establish a BHP. The BHP makes affordable health benefits coverage available for individuals under age 65 with household incomes between 133 percent and 200 percent of the federal poverty level (FPL) who are not otherwise eligible for Medicaid, the Children’s Health Insurance Program (CHIP), or affordable employer-sponsored coverage. It may also cover individuals whose income is below these levels but are lawfully present non-citizens ineligible for Medicaid. Federal funding for a BHP is based on the amount of premium tax credit (PTC) and cost-sharing reductions (CSRs) that would have been provided for the fiscal year to eligible individuals enrolled in BHP standard health plans in the state if such eligible individuals were allowed to enroll in a qualified health plan (QHP) through the Affordable Insurance Exchanges. Each year, CMS publishes both a proposed and final BHP Payment Notice describing the proposed funding methodology for the relevant BHP year.
Methodology. The funding methodology and payment rates are expressed as an amount per eligible individual enrolled in a BHP standard health plan (BHP enrollee) for each month of enrollment. The payment rates may vary based on categories or classes of enrollees and would depend on the actual enrollment of individuals found eligible in accordance with the state’s certified BHP Blueprint edibility and verification methodologies in coverage through the state BHP.
In the November 2019 final payment notice, CMS finalized the payment methodologies for BHP program years 2019 and 2020. The 2020 payment methodology was the same as the 2019 payment methodology with one additional adjustment to account for the impact of individuals selecting different metal tier level plans in the Exchange, referred to as the Metal Tier Selection Factor. For program year 2021, CMS proposes to apply the same payment methodology that is applied to program year 2020, with one modification to the calculation of the IRF.
Income reconciliation factor. For individuals enrolled in a QHP through the exchange who receive APTC, there is an annual reconciliation follow the end of the year to compare the advance payments to the correct amount of PTC based on household circumstances shown on the federal income tax return. If the APTC paid was too little, the taxpayer would receive the difference, and if the APTC paid was too much, the taxpayer is charged as additional tax. The final rule proposes including an adjustment, the IRF, that would account for the difference between calculating estimated PTC using the household income relative to FPL as determined at initial application and the actual household income relative to FPL received during the plan year as reflected on the federal income tax returns. This adjustment would seek to prospectively capture the average effect of income reconciliation aggregated across the BHP population had those BHP enrollees been subject to tax reconciliation after receiving APTC assistance for coverage provided through QHPs offered on an Exchange. The reconciliation effects would be estimated based on tax data for 2 years, reflecting income and tax unit composition changes over time among BHP-eligible individuals.
SOURCE: 85 FR 7500, February 10, 2020.
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