At last, we have IRS guidance informing consumers and tax preparers about issues with overlapping coverage through Medicaid and the Marketplace. I described this problem in a recent blog, highlighting the confusion that could result from 1095 forms showing dual coverage in Medicaid and the Marketplace. We have been concerned that during the tax reconciliation process, consumers and tax preparers might draw the conclusion that they should not have received premium tax credits for the overlapping months and could end up paying back the tax credits. We have been talking with federal officials about this issue for many months, so today’s guidance is indeed welcomed.
The guidance deals with two circumstances that could affect individuals who have dual enrollment for a period of time in Medicaid and CHIP. This first circumstance occurs when individuals who are enrolled in a Marketplace plan and report a change in income at renewal or some other time during the year. At that time, if they are assessed as eligible for Medicaid, they are by law entitled to maintain their premium tax subsidies while Medicaid processes their eligibility. Once Medicaid eligibility is determined, the effective date of coverage is retroactive to the date of the account transfer. Here’s what the IRS guidance tells us about this situation:
Retroactive Medicaid eligibility determinations: A client may be retroactively determined to be eligible for government-sponsored insurance (Medicaid, for example). The client may receive both a Form 1095-A and a Form 1095-B for an overlapping period. Although this may appear to be contradictory information, the client’s eligibility for the premium tax credit does not change until the first day of the first calendar month beginning after the date of the approval.
The second circumstance deals with someone who has been determined or assessed as ineligible for Medicaid or CHIP and enrolled in a Marketplace plan. Once enrolled in the Marketplace plan, individuals generally can maintain their PTC until the end of the year. This would not protect an individual who received a new eligibility determination or assessment of Medicaid but failed to cancel their Marketplace plan.
Dual enrollment in Medicaid and the Marketplace: If a Marketplace makes a determination or assessment that an individual is ineligible for Medicaid or CHIP and eligible for APTC when the individual enrolls in a qualified health plan, the individual is treated as not eligible for Medicaid or CHIP for purposes of the premium tax credit for the duration of the period of coverage under the qualified health plan (generally, the rest of the plan year). Accordingly, if your client was enrolled in both Medicaid coverage and in a qualified health plan for which advance credit payments were made for one or more months of the year following a Marketplace determination or assessment that your client was ineligible for Medicaid, your client can claim the premium tax credit for these months, if the client is otherwise eligible. The Marketplace may periodically check state Medicaid data to identify consumers who may be dual-enrolled, and direct them to return to the Marketplace to discontinue their APTC. If you believe that your client may currently be enrolled in both Medicaid and a qualified health plan with advance credit payments, you should advise your client to contact the Marketplace immediately.
It’s not clear exactly what circumstances would lead to an individual being enrolled in Medicaid after the Marketplace assessed or determined the individual ineligible for Medicaid. The Marketplace should not transfer the account of someone they have assessed as ineligible for Medicaid. But we know that there are still some kinks being worked out in the account transfer process. And, back in the early days of the Marketplace, individuals may have applied at both Medicaid and the Marketplace but not be aware that they were enrolled in Medicaid because the notice of eligibility never reached them.
More can be done to make sure that consumers are aware of dual enrollment and their responsibility to take action to terminate their Marketplace plan once enrolled in Medicaid. One helpful step would be for the Marketplace to send a notice to enrollees to cancel their plan when it receives the acknowledgement from Medicaid that the individual has been determined eligible. But for now, we’re happy to celebrate that we have something in writing to help assisters and tax preparers advise consumers about dual enrollment and overlapping 1095 forms.