Everything You Wanted to Know About Cost Sharing & Tax Credits in Affordable Care Enrollment (ACE) TA Center December 10, 2015

Transcription

1 Everything You Wanted to Know About Cost Sharing & Tax Credits in 2016 Affordable Care Enrollment (ACE) TA Center December 10, 2015

2 Participant Learning Objectives Know how to determine client eligibility for financial assistance (tax credits & cost sharing reductions) Understand how to apply for and maintain financial assistance, including changes for 2016 Understand how underpayments and overpayments are reconciled Learn how some RWHAPs, including ADAPs, are helping with plan affordability

3 LAURA LORI AMY Introductions

4

5 Premium Tax Credits (PTCs) and Cost Sharing Reductions (CSRs): What are they??

6 Premium Tax Credit (PTC) A tax credit to lower the cost of insurance premiums for Marketplace coverage Persons in Household 2016 Federal Poverty Level (100% FPL) Max Income for CSR (250% FPL) Max Income for PTC (400% FPL) 1 11,770 $29,425 $47,080 2 $15,930 $39,825 $63,720 3 $20,090 $50,225 $80,360 4 $24,250 $60,625 $97,000 5 $28,410 $71, ,640 6 $32,570 $81,425 $130,280 7 $36,730 $91,825 $146,920 8 $40,890 $102,225 $160,360 PTC

7 What is an Advance Premium Tax Credit (APTC)? When the premium tax credit is given in advance, thus lowering the monthly premium amount. If you choose to have the credit paid in advance, you will reconcile the amount paid in advance with the actual credit you compute when you file your tax return. If not given in advance, it can be claimed at the time taxes are filed.

8 Cost Sharing Reductions (CSR) Given in the form of discounts. Reduces deductibles, copays, and coinsurance no reimbursements necessary. Persons in Household 2016 Federal Poverty Level (100% FPL) Max Income for CSR (250% FPL) Max Income for PTC (400% FPL) 1 11,770 $29,425 $47,080 2 $15,930 $39,825 $63,720 3 $20,090 $50,225 $80,360 4 $24,250 $60,625 $97,000 5 $28,410 $71, ,640 6 $32,570 $81,425 $130,280 7 $36,730 $91,825 $146,920 8 $40,890 $102,225 $160,360 CSR

9 How PTCs are calculated % of FPL Premium Cap % of Income 0-133% 0-2% % 3-4% % 4-6.3% % % % % % 9.5%

10 Example of CSRs Type of cost sharing Average annual medical and drug deductible for single coverage Standard Silver % FPL Variant for Incomes % FPL 150% FPL and under $2,556 $2,077 $737 $229 Average copayment for primary care $28 $23 $17 $14 office visit Average out-ofpocket limit for single $5,826 $4,624 $1,692 $881 coverage

11 What do they have in common? Clients can be eligible for both a PTC and CSR Eligibility is determined during Marketplace application and plan renewals Amount of financial help depends on income and premium cost and can change from year-to-year Help your client review plan options each year based on how much financial help they will get

12 Biggest difference = How PTCs and CSRs are paid PTC: Clients have two choices 1. Paid directly to insurer * RWHAP programs every month (APTC)* are encouraged to recommend APTCs 2. Paid in a lump sum when to their clients to help reduce they file federal tax return potential financial at year s end complications CSR: Paid directly to insurer every month

13 What costs will my client have to pay? PTCs and CSRs may not cover the entire cost of coverage Check with RWHAP programs, including ADAP, to see if they can help Be clear with clients about their responsibility in paying remaining costs What letters, bills, notices will come in the mail, and when? How much will they need to pay?

14 Let s recap: How do PTCs and CSRs compare? Can they be used to pay for: PTC CSR Premiums How the financial assistance is applied: Money sent directly to the insurer every month to lower the premium Money sent to the insurance individual in one lump sum once his/her annual taxes have been filed Deductibles Copays Coinsurance For APTCs only For PTCs only Discounts given by the insurer to lower an individual s out-of-pocket costs

15 Eligibility considerations

16 You are eligible if: PTC: % FPL* CSR: % FPL You purchase coverage through the Marketplace and are enrolled in a Silver plan. You are not eligible for CHIP, Medicaid, or Medicare Your employer plan doesn t meet criteria for minimum essential coverage You do not file a Married Filing Separate return exception for abuse/abandonment You can t be claimed as a dependent by another person *139% - 400% in states that have expanded Medicaid

17 What is a Silver plan? P G S B Platinum Gold Silver Bronze Monthly cost $$$$ $$$ $$ $ Cost when $ $$ $$$ $$$$ you get care Good option Plan to use a lot Want to save Need to Don t plan to if you of health care on monthly balance your need a lot of services premiums while monthly health care keeping your premium with services out-of-pocket your out-ofcosts low pocket costs

18 Income requirements for 2016 Persons in Household 2016 Federal Poverty Level (100% FPL) Max Income for CSR (250% FPL) Max Income for PTC (400% FPL) 1 $11,770 Placeholder for FPL $29,425 Table $47,080 2 $15,930 $39,825 $63,720 3 $20,090 $50,225 $80,360 4 $24,250 $60,625 $97,000 5 $28,410 $71,025 $113,640 6 $32,570 $81,425 $130,280 7 $36,730 $91,825 $146,920 8 $40,890 $102,225 $160,360

19 Income requirements for 2016 Persons in Household 2016 Federal Poverty Level (100% FPL) Max Income for CSR (250% FPL) Max Income for PTC (400% FPL) 1 $11,770 Placeholder for FPL $29,425 Table $47,080 2 $15,930 $39,825 $63,720 3 $20,090 $50,225 $80,360 4 $24,250 $60,625 $97,000 5 $28,410 $71,025 $113,640 6 $32,570 $81,425 $130,280 7 $36,730 $91,825 $146,920 8 $40,890 $102,225 $160,360

20 What is Modified Adjusted Gross Income (MAGI)? MAGI is The amount used to determine eligibility for lower costs in the Marketplace Gross income minus exemptions and deductions, such as: tax-exempt interest, nontaxable Social Security benefits, foreign income RWHAP Archived Webinar: Understanding Modified Adjusted Gross Income (MAGI) Nov. 20,

21 Does immigration status matter? Clients who are lawfully present and meet all other eligibility requirements may qualify Lawfully present individuals are non-u.s. citizens who have permission to live or work in the U.S. i.e., refugee, asylee, green card holder, victim of human trafficking, member of federally recognized Indian tribe Learn more in our upcoming webinar: Access to Health Coverage for Immigrants Living with HIV (January 14, 2016, 2 to 3:30pm EST)

22 Marketplace Financial Assistance for 2016

23 Applying in 2016 PTCs and CSRs are calculated through the Marketplace during the application process CSR eligibility is determined along with PTC Clients must authorize collection of tax data from the IRS

24 Renewing in 2016 Plan renewals Clients should carefully review 2016 plans and select the health care plan that meets their needs Remind clients to update income and household information

25 Avoid owing money next year Changes in household or employment circumstances can change the amount of PTC or CSR Clients should report: Accurate income information when they apply Any changes to income or family size throughout the year

26 PTCs and CSRs in action

27 Case Study: Alex

28 Case Study: Alex Alex lives alone and makes $35,260 (300% FPL) Immigrated to the U.S. from Mexico Non-U.S. citizen with permission to live or work in the U.S. (lawfully present) Renewing health insurance plan from last year

29 Case Study: Alex (continued) Alex is lawfully present in the U.S., so he can apply for coverage He is eligible for PTC, not CSR He may select any level (Platinum, Gold, Silver or Bronze) plan At Alex s income level, he must contribute 9.5% of his income (approx. $279 monthly) toward the premium He will be required to file taxes after the end of the year

30 Case Study: Vanessa

31 Case Study: Vanessa Vanessa is married and they have two children Their household income is $60,000 (just below 250% FPL) Vanessa and her family are renewing their 2015 health plan

32 Case Study: Vanessa (continued) Vanessa and her family are eligible for both PTC and CSR They must select Silver plans to get CSRs Vanessa and her family are required to contribute 8.1% (approximately $405 monthly) toward premium costs They should review any plan changes for 2016 to make sure it is still the right plan for them Vanessa and her spouse need to file their taxes jointly after the end of the year

33 FAQ: Financial Help for Health Insurance

34 Tax reconciliation

35 Reconciliation: How it works Premium Tax Credits (available to people with income between 100 and 400% FPL) Cost-Sharing Reductions (available to people with income between 100 and 250% FPL) APPLICATION Person applies for premium tax credit and cost-sharing reductions during exchange open enrollment periods with either most recent tax returns or other documentation of income (e.g., pay stubs). Applicant has a choice to take the premium tax credit in advance or as a refund when he/she applies PAYMENT Premium tax credit is paid in advance on a monthly basis directly to the health plan. Payment amounts are based on income, with an individual expected to pay between 2 and 9.5% of income toward premiums and the tax credit making up the difference. ADAP may cover amount not covered by federal subsidy. PAYMENT Cost sharing reductions mean that plans pay a greater amount of the covered costs, taking that burden off the enrollee. The cost-sharing subsidies are paid directly to the plan. ADAP may cover amount not covered by federal subsidy. RECONCILIATION When the person files a tax return for the actual year in which he/she received the tax credit, underpayments or overpayments are reconciled (overpayments are capped based on income). RECONCILIATION There is no consumer reconciliation process for cost-sharing reductions.

36 Reconciliation in action: 2014 tax year example Why does the IRS reconcile premium tax credits? Consumer earns Consumer receives Consumer files 2014 income and generates advance premium tax tax return and a modified adjusted credit based on 2013 reconciles income gross income (MAGI) federal tax information used to calculate for the 2013 tax year showing MAGI advance premium tax credits with actual Consumer should be reporting changes in income reported for income to the Marketplace throughout the 2014 in federal taxes; year to avoid under/over-payments of under-/overpayment advance premium tax credits! assessed by IRS

37 The Linchpin to Reconciliation: the Federal Tax Return Recipients must file a federal tax return! If married, the client must file a joint tax return with his/her spouse (except in cases of domestic abuse) Applicants cannot be claimed as a dependent on someone else s tax return. Free tax filing assistance:

38 Walking through the IRS Forms IRS Form Purpose Origin 1095-A Health Insurance Marketplace Statement 8962 Premium Tax Credit 1040 U.S. Individual Income Tax Return Statement of covered individuals and amount of monthly APTC sent to QHP(s) Reconciles projected APTC with actual PTC due to client Individual/family tax filing document Marketplace Generated IRS Form IRS Form

39 Marketplace Form 1095A and IRS Form 8962 In January, anyone who received When a person files federal taxes, a premium tax credit will receive he/she will need to fill out IRS a form from the Marketplace (IRS Form 8962 to document premium Form 1095-A) which will include tax credits received and actual information on how much the amount of premium tax credits individual received in premium tax owed based on income and credits for the year. household size.

40 Federal Tax Return The information from Form 8962 will be compared to the amount of the person s APTC to find out if that person is: a) owed a refund, or b) owes the IRS money because of an overpayment. Line 46 on IRS Form 1040 indicates excess premium tax credits a person owes to the IRS Line 69 on IRS Form 1040 indicates net premium tax credit (i.e., amount owed to the taxpayer as refund)

41 Repayment amounts are capped based on income Income Single filers All other filers < 200% FPL $300 $600 At least 200% FPL and < 300% PFL At least 300% FPL and < 400% FPL $750 $1,500 $1,250 $2, % FPL and greater N/A N/A

42 DE DC ".HI ADAP supporting QHP premiums, and prescription drug copayment and coinsurance D ADAP supporting QHP premiums D ADAP supporting QHP prescription drug ADAP not currently supporting QHPs copayment and coinsurance ~NASTAo NA110WAL ALLIANCE 0~ HATE. & HRRITOllA~ A. IDS O RECTORS

43 Example of where ADAPs fit into tax reconciliation Client Enrolls in a Qualified Health Plan with both APTC & ADAP Premium Support Amount Who pays/who gets refunded Monthly APTC (calculated $175 pays the plan every month at enrollment) Consumer amount left $50 Normally the insured consumer pays the remaining after APTC premium amount, BUT ADAP steps in to shoes of consumer and pays the plan RECONCILIATION: Was the consumer getting the right amount of APTC? Actual APTC (calculated at $200 Client s APTC was underpaid by $75/month. Client is tax time) going to get a refund check from the IRS for the amount the IRS should have been paying. But since ADAP was paying the consumer/client amount left after APTC, ADAP has to recoup the refund. Actual amount consumer $25 owed after APTC

44 HRSA/HAB ACA policies on reconciliation PCN and Frequently Asked Questions: RWHAP grantees paying premiums on behalf of clients must vigorously pursue any excess premium tax credit a client receives from the IRS as a result of APTC underpayment throughout the year RWHAP grantees can cover client tax liabilities associated with a PTC overpayment (NEW) The payment to the IRS must be made from funds available in the year when the tax liability is due.

45 HRSA/HAB ACA policies on reconciliation PCN and Frequently Asked Questions: Programs are responsible for establishing and maintaining policies and procedures for coordinating payments to the IRS (direct payments to clients are prohibited). RWHAP funds may NOT be used to pay the fee/penalty for a client s failure to enroll in minimum essential coverage.

46 HIV/AIDS Bureau Policies Get information directly from the HIV/AIDS Bureau: Guidance and policy notices on ACA and RWHAP Responses to frequently asked questions HIV/AIDS Bureau Archived Webcast: Policy Clarification Notices and the Affordable Care Act July 23,

47 ADAP Policies between Application and Tax Time Require clients to take full amount of PTC in advance Educate clients on the need to file taxes, report changes in income, and the reconciliation process At application Throughout the coverage year Check in with clients on importance of reporting changes to the Marketplace during the year (including at ADAP 6 month recertification) Direct clients to tax filing resources Require submission of tax returns to ADAP Assist with APTC overpayments that clients owe to IRS Recoup APTC refunds At tax time State policies may vary: check with ADAP in your state!

48 PTC Case Study: Murray

49 PTC Case Study: Murray Murray lives in a non-medicaid expansion state and gets $865 in APTC/annually based on his annual income of $27,000/yr. Murray s hours got reduced mid-way through the year and he failed to report this to the Marketplace When Murray files his taxes, his MAGI was $11,000 for the year.

50 Case Study: Murray (continued) Murray s new income means he is entitled to APTC of $2,724/annually Murray will get a refund from the IRS in the amount of $1,859

51 Resources National Alliance of State & Territorial AIDS Directors (NASTAD), Amy Killelea, Xavior Robinson, HIV Health Reform, HIV Medicine Association, HRSA/HAB ACA and Ryan White Resources,

52 Want to know more about 2016 plan renewals? Interested in learning about the ACE TA Center s enrollment and renewal tools? OCT Open Enrollment and Health Insurance Plan Renewals: What You Need to Know View archived webinar recording: targethiv.org/ace/webinars

53 Questions?

54 Thank you for joining us! Please complete the evaluation! targethiv.org/ace Sign up for our mailing list, download tools and resources, and more Contact Us BISOLA MIRA STEWART TAJAN