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HHS Seeks Ways to Cut Insurance Subsidy Paperwork Burdens

By John Reichard, CQ HealthBeat Editor

April 27, 2012 -- A Health and Human Services (HHS) bulletin released this week lays out an interim strategy that health insurance exchanges would follow in determining employer-sponsored health coverage.

Knowing the details of someone's insurance status, including any employer coverage, is key in determining whether someone is eligible for federal subsidies to lower their premium costs.

The strategy outlined in the bulletin would be used starting in 2014 and 2015, the first two years the health care law (PL 111-148, PL 111-152) requires that the new exchanges start operating.

The proposed strategy would allow the process of documenting the type of employer coverage an exchange customer has to be carried out in two stages: one that starts before someone enrolls in a health plan, and the second afterward.

There are several ways people going to exchanges can qualify for federal subsidies that would lower their premium costs.

For example, they qualify if they are uninsured and fall within a certain income range. They also may qualify if they are working and their employer doesn't offer coverage, or if their employer offers coverage that costs too much, or the insurance doesn't meet the coverage standards the health care law sets out.

But if someone has employer-provided insurance even for a portion of a year, whether or not it meets the health law standards, no subsidy is available. (In other words, the federal government does not want to be on the hook for subsidies if people decide to take employer-sponsored coverage. But the government will provide subsidies if people decide they do not want employer coverage that doesn't meet health care law standards.)

Documenting a customer's status in relation to employer-sponsored coverage means gathering data from employees and employers. Federal officials know that if the process is too frustrating and time-consuming for the parties involved—the applicant, the employer or the exchanges—the health care law won't function smoothly and could lose political support once it's up and going.

The bulletin, issued by the Center for Consumer Information and Insurance Oversight at the Centers for Medicare and Medicaid Services, seeks to ease the paperwork burdens on these parties while dealing with the absence of authoritative data sources to document employee coverage status.

"Data sources that contain all the information exchanges will be seeking to verify do not currently exist," the bulletin says.

So, as an interim strategy, the bulletin says HHS is proposing to provide a standardized method for employers and employees to voluntarily collect the information an employee will need to complete an application in order to enroll in a health plan offered by an exchange. The bulletin doesn't detail what the "standardized method" is.

An example of that information an employee will need to give the exchange but may not know is "the employer identification number."

The second part of the interim strategy calls for allowing exchanges to rely on "limited pre-enrollment verification based on data sources available to an exchange and a post-enrollment verification screening process where data sources are not available during the eligibility determination process."

This interim strategy could be modified or dropped as "exchanges gain access to data sources that might allow more pre-enrollment verification."

The bulletin also, in effect, admits that HHS needs help. It asks for public comment on how exchanges "can best achieve real-time verification of access to employer-sponsored coverage information during the enrollment process without creating burdens on applicants or employers."

Neil Trautwein of the National Retail Federation said in an email message that he will be talking to his membership to get their views on the bulletin but noted that "complexity is not the ACA's [Affordable Care Act's] friend." Trautwein commended the apparent attempt of the bulletin to be flexible as "helpful, though I keep encouraging regulators to keep their eye not only on the regulation before them but the cumulative weight of the ACA regulations. If they are not careful, regulators may break the back of employer-based coverage."

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