AFFORDABLE INSURANCE EXCHANGES: HIGHLIGHTS OF THE PROPOSED RULES

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1 45 CFR, Parts 155 and 157 Patient Protection and Affordable Care Act; Exchange Functions in the Individual Market: Eligibility Determinations; September, 2011 National Conference of State Legislatures 444 North Capitol Street, N.W., Suite 515 Washington, D.C NCSL staff contacts: Joy Johnson Wilson, Federal Affairs Counsel, Health Policy Director at or Rachel B. Morgan RN, BSN, Health Committee Director, at

2 Table of Contents 45 CFR, Parts 155 and 157 Patient Protection and Affordable Care Act; Exchange Functions in the Individual Market: Eligibility Determinations; Introduction... 3 Affordable Insurance Exchange Establishment Standards... 4 Process for Approval of an Exchange... 4 Exchange Plan/Plan Review... 5 Process for Allowing a State to Begin Operation of an Exchange After Process for a State Operated Exchange to Cease Operation After Entities Eligible to Carry Out Exchange Functions... 6 Exchange Governing Structure... 6 Establishment of a Regional Exchange or Subsidiary Exchange... 7 Standards for a Regional or Subsidiary Exchange... 7 Transition Process for Existing State Health Insurance Exchanges... 8 Financial Support for Continued Operation... 8 General Functions of an Exchange... 8 Required Consumer Assistance Tools and Programs of an Exchange... 9 Navigator Program Standards... 9, 10 Ability of States to Permit Agents and Brokers to Assist Qualified Individuals, Qualified Employers, or Qualified Employees Enrolling in Qualified Health Plans 10 Payment of Premiums Initial and Annual Open Enrollment Periods

3 Introduction The Department of Health and Human Services (HHS) released proposed rules to implement certain functions of the new Affordable Insurance Exchanges (AIE) to provide guidance on the eligibility determination process related to enrollment in a qualified health plan (QHP) 1, advanced payments of the premium tax credit, cost-sharing reductions, Medicaid, the Children s Health Insurance Program (CHIP) and participation in Small Business Health Options Program (SHOP) 2. In this proposed rule HHS is interpreting the provisions in the Affordable Care Act (ACA) as establishing a system of streamlined and coordinated eligibility and enrollment through which an individual may apply for enrollment in a QHP and insurance affordable programs with as few administrative hurdles as possible. Part 155 of this rule outlines proposed standards for states relative to the establishment of exchanges and outlines the proposed standards for exchanges related to minimum exchange functions. Part 157 outlines the basic standards that employers must meet to voluntarily participate in a SHOP. Subjects that will be included in future separate rulemaking include but are not limited to: (1) standards outlining the exchange process for issuing certificates of exemption from the individual responsibility provision and payment; (2) defining essential health benefits, actuarial value and other benefit design standards; and (3) standards for exchanges and QHP issuers related to quality. Rule: 45 CFR Parts 155 and 157 Version: Proposed Rule Published: August 17, 2011 Comment Period Ends: October 31, Qualified Health Plan the term qualified health plan means a health plan that (A) has in effect a certification that the plan meets criteria for certification or is recognized by each exchange through which the plan is offered; (B) provides the essential health benefits package ; and (C) is offered by a health insurance issuer that (i) is licensed and in good standing to offer health insurance coverage in each state in which the issuer offers health insurance coverage; (ii) agrees to offer at least one qualified health plan in the silver level and at least one plan in the gold level in each of the exchanges; (iii) agrees to charge the same premium rate for each qualified health plan of the issuer without regard to whether the plan is offered through an exchange or whether the plan is offered through an exchange or whether the plan is offered directly from the issuer or through an agent; and (iv) complies with the regulations developed by the secretary and the other requirements as an applicable exchange may establish. 2 Small Business Health Options Program a program operated by an exchange through which a qualified employer can provide its employees and their dependents with access to one or more QHPs. 2

4 Exchange Functions in Creating a Seamless Process HHS is soliciting comments regarding these options. the Individual Market: Provisions in the ACA specify that an exchange will perform eligibility Eligibility Determinations determinations. HHS is proposing that exchanges will determine eligibility for for Exchange Participant exchange participation, as well as for insurance affordability programs 3. For those and Insurance Affordability Programs states that choose to establish a Basic Health Program, all provisions applicable to Medicaid and CHIP in the rule will also be generally applicable to the Basic Health Program 4. HHS has considered isolating one component of the eligibility determination process, specifically the determination of advanced payment for premium tax credits, but elected not to take this approach since separating the functions may result in significant challenges. They note that states may work with HHS to leverage technological and operational capabilities to execute these functions. Limiting Fraud and Abuse The proposed eligibility process is designed to minimize opportunities for fraud and abuse through the use of clear eligibility standards and electronic data sources. Simplified Eligibility Determinations in Medicaid and CHIP Individuals will be determined eligible for Medicaid and CHIP with those for advanced payments of the premium tax credit and cost-sharing reductions, by generally using modified adjusted gross income (MAGI) 5 as the basis for income eligibility, effective January 1, HHS is also requesting comments regarding strategies to further limit the risk for fraud and abuse in addition to those in the proposed rule. 3 Insurance Affordability Programs-refers to advance payments of the premium tax credit, cost-sharing reductions, Medicaid, CHIP, and any State-established Basic Health Program, if applicable, as defined in 42 CFR of the Medicaid proposed rule. 4 The ACA permits a state to provide coverage in a Basic Health Program that meets all requirements established by HHS, and provides at least the essential health benefits to eligible individuals in lieu of offering that individual coverage through an exchange. 5 Modified Adjusted Gross Income (MAGI) is defined as the Internal Revenue Code s Adjusted Gross Income (AGI, which reflects a number of deductions, including trade and business deductions, losses from sale of property, and alimony payments), increased (if applicable) by tax-exempt interest and income earned by U.S. citizens or residents living abroad. Income thresholds for determining Medicaid eligibility must be adjusted to account for the fact that some individuals could lose eligibility under these new rules. 3

5 Eligibility Standards ( ) Citizenship and Immigration Requirements Individuals eligible for enrollment in a QHP must be a citizen, national, or a noncitizen lawfully present 6, and be reasonably expected to remain so for the duration of the enrollment period. The enrollment period sought does not have to be an entire benefit year. Eligibility of Incarcerated Individuals HHS is proposing that individuals who are incarcerated may not be eligible for enrollment in a QHP. They grant an exception for those individuals who are pending disposition of charges. Residency Requirements HHS is proposing a standard regarding residency requiring that an individual must reside in the state that establishes the exchange. They use the term service area of the exchange to account for regional or subsidiary exchanges that serve broader or narrower geographic areas than a single state, or a situation in which a federally facilitated exchange is operating in the state. An intent to reside standard similar to Medicaid s will be used to accommodate those individuals in transition between service areas or is out of the area temporarily. The proposed rule provides for situations where dependents of a primary tax payer do not live in the same exchange service area. HHS is seeking comment regarding language that an individual be reasonably expected for an entire period for enrollment to be considered eligible under these terms, and how this policy may be implemented in such a way that is simple for individuals understand and exchanges to implement. HHS solicits comments as to whether there are any standards regarding in-network adequacy for out-of-state dependents they should consider. 6 Lawfully present means (1) A qualified alien as defined in section 431 of the Personal Responsibility and Work Opportunity Act (PRWORA) (8 U.S.C. 1641); (2) An alien in nonimmigrant status who has not violated the terms of the status under which he or she was admitted or to which he or she has changed after admission; (3) An alien who has been paroled into the United States pursuant to section 212(d)(5) of the Immigration and Nationality Act (INA) (8 U.S.C. 1182(d)(5)) for less than 1 year, except for an alien paroled for prosecution, for deferred inspection or pending removal proceedings; (4) An alien who belongs to one of the following classes: (i) Aliens currently in temporary resident status pursuant to section 210 or 245A of the INA (8 U.S.C or 1255a, respectively); (ii) Aliens currently under Temporary Protected Status (TPS) pursuant to section 244 of the INA (8 U.S.C. 1254a), and pending applicants for TPS who have been granted employment authorization; (iii) Aliens who have been granted employment authorization under 8 CFR 274a.12(c)(9), (10), (16), (18), (20), (22), or (24); (iv) Family Unity beneficiaries pursuant to section 301 of Public Law as amended; (v) Aliens currently under Deferred Enforced Departure (DED) pursuant to a decision made by the President; (vi) Aliens currently in deferred action status; (vii) Aliens whose visa petitions have been approved and who have a pending application for adjustment of status; (5) A pending applicant for asylum under section 208(a) of the INA (8 U.S.C. 1158) or for withholding of removal under section 241(b)(3) of the INA (8 U.S.C. 1231) or under the Convention Against Torture who has been granted employment authorization, and such an applicant under the age of 14 who has had an application pending for at least 180 days; (6) An alien who has been granted withholding of removal under the Convention Against Torture; or (7) A child who has a pending application for Special Immigrant Juvenile status as described in section 101(a)(27)(J) of the INA (8 U.S.C. 1101(a)(27)(J)). 4

6 Eligibility Standards ( )(continued) Eligibility for Medicaid Enrollment HHS proposes that an exchange determine applicants eligibility for Medicaid and CHIP, and enroll applicants into these programs if the individual; (1) meets the citizenship and immigration requirements as certified by the state Medicaid agency; (2) meets residency requirements; (3) has a household income that is at or below the proposed 133 percent of the federal poverty level (FPL) that is at the applicable MAGI-based income standard; and (4) falls into one of the Medicaid MAGI-based income standard categories 7. HHS notes that they fully intend to align the standards to which the exchange will adhere for determining Medicaid eligibility with those standards in the state Medicaid plan. Eligibility for Enrollment in a Basic Health Program The ACA provides states with an option to create a Basic Health Program to provide coverage to qualified individuals in lieu of exchange coverage. HHS is proposing that if a Basic Health Program is operating in the service area of an exchange, the exchange will determine an individual s eligibility for the program. Advance Payments of the Premium Tax Credit HHS is proposing the eligibility of the primary taxpayer 8 to receive advance payments of the premium tax credit on behalf of him or herself, for their spouse, or one or more of their tax dependents. Because the primary taxpayer actually receives the premium tax credit on their tax return for the benefit year, individuals not considered primary taxpayers may apply for coverage without the presence of the primary taxpayer throughout the application process. The primary taxpayer s presence is only necessary at the point at which the exchange authorizes an advance payment. 7 The proposed definition for applicable Medicaid modified adjusted gross income (MAGI)-based income standard is to have the same meaning as applicable Medicaid modified adjusted gross income standards, applied under the state Medicaid plan or waiver of the plan, and as certified by the state Medicaid agency for determining Medicaid eligibility. 8 HHS proposes to define primary taxpayer to mean an individual who (1) attests that he or she will file a tax return for the benefit year ; (2) if married, attests that he or she expects to file a joint tax return for the benefit year; (3) attests that he or she expects that no other taxpayer will be able to claim him or her as a tax dependent for the benefit year; and (4) attests that he or she expects to claim a personal exemption deduction on his or her tax return for the family members listed on his or her application, including the primary taxpayer and his or her spouse. 5

7 Eligibility Standards ( )(continued) Advance Payments of the Premium Tax Credit (Continued) HHS proposes that the exchange determine the primary taxpayer eligibility to receive advanced payments if it is expected that; 1) they have a household income of at least 100 percent but not more than 400 percent of the FPL, for the benefit year coverage is requested, and 2) one or more applicants that the primary taxpayer expects to claim a personal exemption deduction on their tax return for the benefit year, including the primary taxpayer and their spouse: i. meets the standards for eligibility for enrollment in a QHP through the exchange; and ii. is not eligible for minimum coverage, excluding coverage through the individual market, as well as employer sponsored minimum essential coverage where the employer s contribution exceeds 9.5 percent (in 2014 and indexed in future years) of the household income or for a plan s share of total allowed costs of benefits is 60 percent of costs. Household income does not include the income of an individual in a primary taxpayer s family who is not required to file. HHS proposes that the exchange determine a primary taxpayer s eligible for advance payments of the premium tax credit if the exchange determines that; 1) they meet the standards regarding eligibility; 2) they expect to have a household income of less than 100 percent of the FPL; and 3) one or more applicants for whom the primary taxpayer expects to claim as a deduction on their tax return for the benefit year is a non-citizen who is lawfully present, and ineligible for Medicaid by reason of immigration status, any of which may include the primary taxpayer and or their spouse. In order to qualify to receive advanced payments of the premium tax credits, a primary taxpayer or application filer must; 1) be enrolled in a QHP through the exchange; and 2) file a tax return for the years the credit is received (exchanges must determine these individuals ineligible upon HHS notification), and 3) provide the Social Security number (SSN) of the primary taxpayer The above standards also apply for the purposes of eligibility for cost-sharing reductions. 6

8 Calculation of Advance Payments of the Premium Tax Credit ( (f)(5)) Reconciliation Process Premium Tax Credit with Advance Credit Payments HHS is proposing that once an exchange determines eligibility of a primary taxpayer to receive a premium tax credit, the exchange will calculate the amount of the advance payments of the tax credit. HHS proposes to use the IRS rules in calculating the premium assistance amount for a coverage month which would be the lesser of the following; i. The premiums for the month for one or more QHPs in which a taxpayer or a member of the taxpayer s family enrolls; or ii. The excess of the adjusted monthly premium for the applicable benchmark plan over 1/12 of the product of a taxpayer s household income, and the applicable percentage for the taxable year. The proposal to adopt the IRS rule ensures that the advanced payment calculation will be consistent with the ultimate premium tax credit calculation. Exchanges must also permit primary taxpayers to accept partial payments of the premium tax credit for which they ve been determined eligible. HHS highlights two key differences between Medicaid and CHIP and advance payments for the premium tax credit; (1) Eligibility for Medicaid and CHIP is based on current income, eligibility for advance payments of the premiu8m tax credit is based on annual income, and (2) Unlike Medicaid and CHIP, the premium tax credit is paid on an advance basis and then reconciled based on the information reported on an individual s tax return for the entire year. The amount of credit for which an individual is found eligible is reconciled with advance credit payments on a taxpayer s income tax return for a taxable year. A taxpayer whose premium tax credit for the taxable year exceeds the taxpayer s advance credit payments may receive the excess as an income tax refund. A taxpayer whose advance credit payments for the taxable year exceed the taxpayer s premium tax credit owes the excess as an additional income tax liability. 7

9 Reconciliation Process Premium Tax Credit with Advance Credit Payments (continued) Cost-sharing Reductions (( (g)) Limitation on Additional Tax Imposed The additional tax imposed on a taxpayer whose household income is less than 400 percent of the FPL is limited to certain amounts as determined by the IRS. For taxable years beginning after December 31, 2014, the limitation amounts may be adjusted. As large repayments due to reconciliation may deter enrollment, HHS is permitting an exchange to decrease the repayment based on actual income at the end of the year through a strong eligibility process that maximizes accuracy and permits reporting of changes that occur during the year. HHS proposes that the exchanges determine the eligibility for cost-sharing reductions if they meet eligibility standards if the individual is; (1) eligible for enrollment in a QHP; (2) is eligible for advance payments of the premium tax credit, (3) has a household income for the taxable year that does not exceed 250 percent of the FPL, and (4) must enroll in a silver-level QHP with an actuarial value that without cost-sharing reductions mean the QHPs share would exceed 70 percent. There are also special eligibility standards for cost-sharing reductions based on Indian status. There are three proposed categories of eligibility as follows: (1) an individual who has household income greater than 100 percent of the FPL and less than or equal to 150 percent of the FPL; (2) an individual who has household income greater than 150 percent of the FPL and less than or equal to 200 percent of the FPL; and (3) an individual who has household income greater than 200 percent of the FPL and less than or equal to 250 percent of the FPL. HHS is soliciting comments on ways of achieving this outcome. 8

10 Eligibility Determination Process for Insurance Affordability Programs ( & ) HHS proposes the following standards for determining eligibility for insurance affordability programs; Exchanges must accept applications for insurance affordability programs through a single streamlined application process that will be defined in future rulemaking. Exchanges are prohibited from requiring an individual who is not seeking coverage for themselves or applying for coverage on behalf of another party, to provide information regarding the non-applicant s citizenship, status as a national, or immigration status on any application or supplemental form. Income Verification Applicant filers for Insurance Affordability Program benefits do not have to be the primary taxpayer. Upon application for benefits through an exchange, the exchange must make a request for tax return data on all individuals whose income is calculated toward calculating a primary taxpayer s household income from the Internal Revenue Service (IRS) through HHS. To make this request, an exchange must first submit certain identifying information to HHS. In order to incorporate Medicaid and CHIP into the streamlined application process it is necessary to have readily available current income data. Medicaid regulations proposed in 42 CFR Parts 431, 433, 435, and 457, specify that a state Medicaid agency must request state quarterly wage information, as well as other sources of current income for use in verifying an individual s MAGI-based income information, to the extent that the information is useful. HHS proposes that exchanges treat the list of data sources in NPRM 42 CFR (a) as their primary source of MAGI-based data for purposes of verification and includes; 1. Information related to wages, net earnings from self-employment, unearned income and resources from State Wage Information Collection Agency (SWICA), the Internal Revenue Service (IRS), the Social Security Administration, the agencies administering the state unemployment compensation laws, the state-administered supplementary payment programs, and any state program administered under a plan approved under Titles I, X, XIV, or XVI of the Act, and 2. Information related to eligibility or enrollment from the Public Assistance Reporting Information System (PARIS), the Supplemental Nutrition Assistance Program, and other affordable programs Exchanges should collect the most recent income data available for all individuals whose income is counted in calculating a primary taxpayer s household income. HHS is soliciting comments regarding how an exchange may best use available data to assist an applicant in navigating the components of the eligibility process related to household income and family/household size, in particular helping the filer determine if tax data is representative of the coming year. HHS plans to provide sub-regulatory guidance regarding how available information may be used in a manner that is straightforward and helpful to applicant filers and they solicit comments related to this issue. 9

11 Eligibility Determination Process for Insurance Affordability Programs( & ) (continued) HHS proposes the following standards for determining eligibility for insurance affordability programs (continued); Exchanges may not require an individual to provide their SSN except in the case of an individual who is filing as an application for assistance, in which case they must provide the SSN of the primary taxpayer in their household. Tax data filed with the IRS will be used to verify household income and family size. An eligibility determination is a necessary precursor to enrollment in a QHP. Individuals must be permitted to decline an eligibility determination and to proceed directly to selecting and enrolling in a QHP. Applicants become ineligible for advanced payments of premium tax credits once they have been found eligible for other minimum essential coverage, which includes Medicaid and CHIP. The exchanges will be held responsible for notifying the state Medicaid or CHIP agency and transmitting relevant information to the agency to prevent delays in coverage. An application for an eligibility determination may be made at any point in time during the benefit year. Once determined eligible for advance payments of the premium tax credit, the exchange must allow an applicant to accept less than the expected annual amount of advanced payments authorized which may reduce the enrollees risk of repayment at the point of reconciliation. The exchange may provide advanced payments on behalf of a primary taxpayer only if they first attest that they will meet the definition of a primary taxpayer as defined in the proposed rule, including claiming a personal exemption deduction on their tax return for the applicant identified as a member of their family. Notice of Eligibility Determination Written notice of an eligibility determination must be provided to each applicant once final. Notices must be written in plain language and meet the needs of diverse populations. Additional information will be provided in future rulemaking. 10

12 Eligibility Determination Process for Insurance Affordability Programs ( & ) (continued) Reporting Rules for Employers When an exchange determines an applicant eligible for the insurance affordability programs based in part on a finding that their employer does not provide minimum essential coverage, or coverage that is not affordable, or does not meet the minimum value standard 9, the exchange will notify the employer and identify the employee. Affordable Coverage Standard (A) In general; (1) Affordability an employer sponsored plan is considered to be affordable for an employee or a related individual if the portion of the annual premium the employee must pay for self-only coverage for the taxable year does not exceed the required contribution percentage (9.5 percent) of the applicable taxpayer s household income for the taxable year. (2) Employee safe harbor an employer-sponsored plan is treated as not affordable for an employee or a related individual if, when they enroll in a QHP for a period coinciding with the plan year (in whole or in part), an exchange determines that the plan is not affordable, or (B) Required contribution percentage The required contribution percentage is 9.5 percent. The percentage may be adjusted in published guidance of general applicability for taxable years beginning after December 31, 2014, to reflect rates of premium growth relative to growth in income and, for taxable years beginning after December 31, 2018, to reflect rates of premium growth relative to growth in the consumer price index 10. HHS anticipates providing additional information on the content of this notice in future rulemaking. 9 Minimum Value An eligible employer-sponsored plan provides minimum value only if the plan s share of the total allowed costs of benefits provided under the plan is at least 60 percent. 10 Consumer Price Index (CPI) A measure of the average changes in prices paid by urban consumers for a fixed group of goods and services. It is calculated and issued monthly by the Bureau of Labor Statistics. 11

13 Eligibility Redetermination Process for Insurance Affordability Programs ( ) HHS proposes that the redetermination process will be primarily dependent on the individual providing the exchange with updated information during the benefit year as opposed to having the exchange examine electronic data sources and/or contact the individual to determine if a change has occurred during the year. HHS also proposes that the exchange redetermine the eligibility of an enrollee in a QHP during the benefit year in two situations: (1) If an enrollee reports updated information and the exchange verifies it, and (2) If the exchange identifies updated information through the limited data matching to identify individuals who have died or gained eligibility for a public health program. Individuals will be required to report any changes to the exchange within 30 days of the change. Exchanges will also use the verification procedures used at the point of initial determination to verify changes reported by individuals such as: (1) Changes in incarceration of the eligible individual, (2) Residency, (3) Immigration status, (4) Household income or size, or (5) The availability of qualifying coverage in an eligible employer-sponsored plan. HHS proposes to allow exchanges to make additional efforts to identify and act on changes that may affect enrollee eligibility if approved by HHS. Approval would be granted if HHS finds that the modification would reduce administrative costs and burdens yet not undermine coordination with Medicaid and CHIP. HHS is soliciting comments as to whether there should be an on-going role for exchanges initiated data matching beyond what has been proposed in this rule and the allowance for flexibility. They also ask whether the exchange should offer an enrollee an option to be periodically reminded to report any changes that have occurred. HHS is soliciting comments as to whether exchanges should be required or allowed to limit the requirement on an individual to report changes in income to changes of a certain magnitude. For example changes to all nonincome related information would be required, but only report changes greater than five, ten or 15 percent of income. 12

14 Verification of Eligibility for Enrollment in a QHP ( ) The ACA provided authority to the secretary to modify the statutory verification methods in certain cases. HHS proposes to split the verification process of the exchange into two main sections which contain; 1. The verification process related to eligibility for enrollment in a QHP, and 2. The verification process related to insurance affordability programs. HHS proposes to grant authority to the exchanges to request documentation from an applicant when information provided by the applicant is not reasonably compatible with other information in the records. State Flexibility in Verification Process The proposed rule would permit the flexibility to develop alternative verification processes that achieve the same goals as those proposed for general use if approved by HHS. Verification of Lawful Presence The rule proposes a process by which the exchange will ensure that an individual is a citizen, national, or otherwise a lawfully present individual. 1. For individuals who attest to citizenship and have a SSN, the exchange will transmit the applicant s SSN and other identifying information to the Social Security Administration (SSA) via HHS for verification with SSA records. The SSA may change information requirements for which HHS will provide additional guidance to the exchanges. 2. SSA will transmit results of record verification through HHS to the exchanges. 3. If the SSA is unable to match the individual s basic identifying information to an SSA record, HHS will notify the exchange regarding the inconsistency. HHS will then transmit applications that cannot be verified by the SSA, and information on individuals who have not attested to their citizenship and do not have a Social Security card to the Department of Homeland Security (DHS) and return the response to the exchange. 13

15 I Verification of Eligibility for Enrollment in a QHP ( ) (continued) Verification of Lawful Presence (continued) 4. In the case of an inconsistency related to citizenship, status as a national, or lawful presence, an exchange will follow this procedure: i. The exchange will make a reasonable effort to identify and resolve the issue of inconsistencies in the information pertaining to citizenship, status as a national or lawful presence. ii. iii. iv. If the exchange is unable to resolve the inconsistencies, the exchange will notify the applicant. The exchange will provide the applicant 90 days from the date notification was sent in which to resolve the issue. The exchange has the authority to extend this period if the applicant can provide evidence that a good faith effort has been made to obtain additional documentation similar to Medicaid procedures and provide state more flexibility. Exchanges must allow an individual who is otherwise eligible for enrollment in a QHP, advance payment of the premium tax credit or cost-sharing reductions to receive coverage and financial assistance during the resolution period.(comment on how costs will be covered if the individual fails to pay once reconciliation occurs) v. The exchange must ensure that the primary taxpayer attests to the exchange that they understand that any advance payments of the premium tax credit received during the resolution period are subject to reconciliation in order to receive the assistance. vi. vii. viii. If after the conclusion of the resolution period, the exchange is unable to verify the applicant s attestation, the exchange will determine the applicant s eligibility based on the information available and notify the applicant of the determination. Eligibility determinations must be implemented no earlier than 10 days after and no later than 30 days after the date notice is sent to the applicant. Future rulemaking will address the standards that the exchange will use to adjudicate documentary evidence of citizenship provided by an applicant within this inconsistency process. 14

16 II Verification of Eligibility for Enrollment in a QHP ( ) (continued) Administration of Insurance Affordability Programs ( ) Verification of Residency in the Establishing State Any verification process used must also verify that the individual resides in the state that established the exchange. Exchanges must accept an applicant s attestation as to residency without further verification unless the public programs in the establishing state prohibit verification based solely on attestation, in which case the exchange will follow the Medicaid procedures. Exchanges may examine data sources regarding residency if the information provided by the applicant is not reasonably compatible with other information provided or in the records of the exchange. Documents providing information regarding immigration status may not be used by themselves to determine state residency. Exchanges must also verify an applicant s attestation that they are not incarcerated. HHS proposes that the exchanges first rely on electronic data sources that have been approved by HHS 11 Exchange Duties HHS proposes that the exchange conduct eligibility determinations for insurance affordability programs. They would simultaneously provide information to QHPs selected by applicants to make sure the issuer can make any changes required within the effective dates. The exchanges would also provide eligibility information on individuals eligible to HHS to allow HHS to begin, end, or adjust payments, credits, or cost-sharing reductions. When an exchange determines that an applicant is eligible to receive assistance through an advance payment, premium tax credit based on a finding that their employer does not provide minimum essential coverage, or coverage that is not affordable, the exchange will provide this information to the Secretary of the Treasury. Exchanges will notify the employer of certain information regarding an employee s eligibility for advanced payments of the premium tax credit. HHS is soliciting comments as to what electronic data sources are available and should be authorized for exchange purposes, including whether access to the data sources should be provided as a federally-managed service like citizenship and immigration status information from SSA and DHS. HHS asks for comments as to whether the information could be used by HHS to support any reporting necessary for monitoring, evaluation, and program integrity. Please comment on how this interaction could best work and the scope of information that should be transmitted among relevant agencies. 11 HHS will approve electronic data sources based on evidence showing that the data source is sufficiently accurate and offer less administrative complexity than paper verification. Please not that this allows doe the possibility that no electronic data source will be authorized. 15

17 IV. 45 CFR, Parts 155 and 157 Patient Protection and Affordable Care Act; Exchange Functions in the Individual Market: Eligibility Determinations; Administration of Insurance Affordability Programs ( ) Coordination with Medicaid, CHIP, the Basic Health Program, and the Preexisting Conditions Insurance Program (( ) Exchange Duties When communication with a federal entity is required, the exchanges will only communicate with HHS who will act as an intermediary for all federal agencies. Exchanges must report enrollee information to HHS based on the following events: 1. After receiving information that an enrollee who is receiving Insurance Affordability Program assistance has changed employers. This change may also trigger a redetermination of eligibility during the benefit year, and 2. If an enrollee enrolled in one of the Insurance Affordability Programs terminates their coverage in their QHP during a benefit year. Standards for Coordination with Medicaid and CHIP Exchanges must enter into agreements with the Medicaid or CHIP agencies as necessary to enable coordination. The agreements must ensure that: Determinations of eligibility for Medicaid and CHIP are consistent with the methods, standards, and procedures in the state plan, and the interpretive policies and procedures of the state agency. As part of the eligibility determination process, the exchange will also notify the state agency administering Medicaid or CHIP, and the applicant of the final determination. The state agency will intern provide the individual with their choices of available delivery systems which may be aided by the exchange through their agreement. The rule proposes that the exchanges perform a screen and refer function for those applicants who may be eligible for Medicaid in a MAGI-exempt category 12 or an applicant that is potentially eligible for Medicaid based on factors not otherwise considered in the rule. States will be permitted to establish a central eligibility system to conduct all determinations for the exchange, Medicaid, and CHIP. Exchanges will be expected to provide Individuals who have been referred to the agency administering the Medicaid program advance payments of the premium tax credit and cost-sharing reductions while the agency administering Medicaid completes a more detailed determination. The methods, standards and procedures for determinations of eligibility should also conform to specific related issues addressed in state law. HHS requests comments regarding whether and how this integration could best work for the exchange, Medicaid, and CHIP. 12 MAGI exempt categories include individuals eligible because of other aid or assistance, elderly individuals, medically needy individuals, and individuals eligible for Medicare cost sharing. 16

18 V. 45 CFR, Parts 155 and 157 Patient Protection and Affordable Care Act; Exchange Functions in the Individual Market: Eligibility Determinations; Coordination with Medicaid, CHIP, the Basic Health Program, and the Preexisting Conditions Insurance Program (( )(continued) Standards for Coordination with Medicaid and CHIP Exchanges must allow individuals who have not been automatically referred to the agency administering the Medicaid and CHIP programs an opportunity to request a full screening for eligibility in those programs. Proposes that an exchange work with the Medicaid and CHIP agencies to establish procedures through which an application initiates an eligibility determination for enrollment in a QHP or one of the insurance affordability programs. States are encouraged to develop integrated IT systems across the exchange, Medicaid, CHIP, enabling states to leverage administration functions and resources across programs. States will be expected to utilize a common or shared eligibility system or service across the exchange and Medicaid. Privacy and Security Standards the ACA provides for secure interfaces and standards for data matching between the exchange and agencies administering Medicaid. Exchanges must utilize a secure, electronic interface for the exchange of data for determining eligibility. The following standards will apply regarding privacy and security to any data sharing agreements: 1. Agreements with an exchange must contain terms that impose privacy and security standards on contractors and subcontractors that fulfill exchange functions or access information from or on behalf of an exchange. 2. The term personally identifiable information is defined as information that, alone or when combined with other personal or identifying information which is linked or linkable to a specific individual, can reasonably be used to distinguish or trace an individual s identity. The term also applies to information collected, received or used by the Exchange as part of its operations. 3. Exchange contracts or agreements with a contractor must require that information provided to, created by, received by, and subsequently disposed of be protected by the same or higher privacy and security standards applicable to the Exchange. 4. Exchanges are expected to execute data use agreements with the Medicaid and CHIP agencies to prevent the unauthorized use or disclosure of personally identifiable information. 5. Any person that knowingly and willfully uses or discloses personally identifiable information in violation of the ACA will be subject to civil monetary penalties of not more than $25,000 per disclosure and be subject to any other applicable penalties that may be prescribed by law. CMS proposes to interpret these requirements to apply the civil money penalty of $25,000 to each violation. 17

19 V Coordination with Medicaid, CHIP, the Basic Health Program, and the Preexisting Conditions Insurance Program (( )(continued) Right to Appeal ( ) Exchanges will be required to utilize any model agreements established by HHS for the purposes of sharing data. Standards for Coordination Between the Exchange and the Pre-Existing Conditions Insurance Program (PCIP) The PCIP will end coverage for it enrolled population effective January 1, HHS will develop procedures for transition of PCIP enrollees to coverage in QHPs offered through the exchanges. An individual may appeal any eligibility determination for enrollment in a QHP, advance payment s of the premium tax credit, cost-sharing reductions. Details of the individual eligibility appeals processes, including standards for the federal appeals process will be provided in future rulemaking. HHS seeks comments as to the content of these model agreements. HHS seeks comments on the additional responsibilities that should be assigned to exchanges as part of this process. 18