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Policy Allows People Who Did Not Get Subsidy Information to Receive Credits Retroactively

By Rebecca Adams, CQ HealthBeat Associate Editor

February 28, 2014 -- Insurers may have a hard time implementing a new federal policy designed to accommodate people who tried to obtain coverage through the new health law marketplaces but could not get information about their eligibility for subsidies because of technical problems. Federal officials recently said that the individuals could get subsidies retroactively for certain policies inside or outside the marketplaces.

The subsidies have been one of the major attractions of the new exchanges because the Obama administration had said that taxpayer-subsidized coverage was only available for marketplace plans.

But the new policy, outlined in a three-page guidance memo published without notice on a federal website, provides flexibility for people who submitted an application but did not get prompt information about their eligibility for subsidies. The policy does not appear to apply to people who started applications but did not submit them.

The change could be especially helpful in places where state officials decided to run their own websites but faced technical problems. Those include Hawaii, Maryland, Massachusetts, Minnesota, Nevada, and Oregon.

The new guidance provides a way for states that covered the costs of subsidies for people who otherwise would have been eligible to get reimbursed by the Centers for Medicare and Medicaid Services.

The policy probably covers a small number of people but translates into significant administrative costs for insurers, said Brian Haile, senior vice president for health policy at the Jackson Hewitt Tax Service Inc. It only applies to insurance that meets the federal standards required to be a "qualified health plan," instead of cheaper and less comprehensive coverage.

"The effect on the insurance industry is substantial," Haile said in an email. "The guidance requires insurers to re-process eligibility and enrollment files, bill the federal government for subsidies, re-adjudicate past medical claims, refund enrollees premiums and cost-sharing that exceed subsidy amounts, and repay any tax credits funded by state governments during this period."

A spokeswoman for America's Health Insurance Plans said the trade association is still reviewing the guidance.

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