The change to the health care law under the budget agreement reached Wednesday sets up a new requirement that the eligibility of people who receive cost-sharing reductions under Section 1402 of the Patient Protection and Affordable Care Act, P.L. 111-148, or the health insurance premium tax credit under Sec. 36B, be verified.
Under the agreement, the secretary of Health and Human Services must ensure that health insurance exchanges verify that individuals applying for the credit or cost-sharing reductions are eligible and must certify to Congress that the exchanges are verifying eligibility. The secretary is required to report to Congress by Jan. 1, 2014, what procedures exchanges are using to verify eligibility.
The health insurance credit is available to eligible individuals who purchase coverage under a qualified health plan through one of the new health insurance exchanges. The credit subsidizes the cost of health insurance for certain low-income individuals.
To be eligible for the credit, a taxpayer must (1) have household income between 100% and 400% of the federal poverty line (FPL) amount for his or her family size (starting in 2014, persons with income below 133% of the FPL are eligible for Medicaid), (2) not be claimed as a dependent by another taxpayer, and (3) if married, file a joint return. The credit amount is the sum of “premium assistance amounts” for each month the taxpayer or any family member is covered by a qualified health plan through an exchange. The premium assistance amount is the lesser of (1) the premium amount or (2) the result of a formula based on a “benchmark plan” and the taxpayer’s household income (Sec. 36B(b)).