It’s no secret that during last year’s open enrollment many applicants for health coverage in immigrant families faced major barriers to enrolling in marketplace coverage. One big problem was that lawfully present immigrants with income under 100 percent FPL—who are ineligible for Medicaid based on their immigration status but are eligible for premium tax credits and cost sharing reductions in the Marketplace—were not determined eligible by the Marketplace. (If you are confused about why this is the case, scroll down to the * below).

For many months, advocates have urged CMS to find a two-part solution to this problem that includes: 1) a system fix so that eligibility determinations are made correctly going forward; and 2) identifying and notifying past applicants who may not have enrolled in a QHP because they received an improper eligibility determination to resubmit their application.

In this week’s assister newsletter, CMS announced that is taking a step forward to solve at least the second part of this problem. Here’s what CMS’s federally facilitated marketplace (FFM) plan looks like:

• CMS has used 2014 application data to identify immigrant applicants who: 1) have a resolved or unresolved data matching issue, 2) have requested financial assistance, and 3) have an annual income under 100 percent of the federal poverty level.
• These applicants will receive a notice in English or Spanish from the FFM asking them for immigration documents to resolve the data matching issue. After documentation is submitted, the FFM will review it to verify that the applicant is ineligible for Medicaid based on immigration status, and has a QHP-eligible immigration status.
• If the FFM verifies a Medicaid-ineligible but QHP-eligible immigration status, the applicant will receive another notice. Applicants will be notified that their data matching issue has been resolved and will be encouraged to return to the FFM application to answer additional questions to determine if they are eligible for premium tax credits and cost sharing reductions. Applicants can do this online or by phone.
• HHS plans to also use this strategy on an ongoing basis going forward to make sure applicants receive a correct eligibility determination.

Advocates continue to be concerned that there has not been an adequate system fix to ensure that eligibility determinations are correct going forward for this vulnerable group. CMS alleges that most of these applicants who are eligible for marketplace coverage live in states that have not expanded Medicaid. However, that is not necessarily the case. One source of the problem for eligible lawfully present individuals under 100 percent of the federal poverty level has been coordinating a denial of Medicaid eligibility based on immigration status between the state Medicaid agency and the marketplace (which can be at the state or federal level). Making this happen correctly, and expeditiously in Medicaid expansion and non-expansion states, when many states have faced Medicaid eligibility and renewal backlogs, continues to be a challenge.

CMS’s plan may not go all the way toward solving these problems, but it is an important step forward.

* I’m confused: why are lawfully present immigrants with incomes under 100 percent of the federal poverty level eligible for premium tax credits and cost sharing reductions?

As a general rule, the Affordable Care Act does not provide subsidies in the Marketplace to people under 100 percent of the federal poverty level (FPL) to help purchase health insurance. This is because Congress intended that very low income individuals would be insured through Medicaid and the ACA as written required states to expand Medicaid up to at least 133 percent of the federal poverty level.

The ACA does, however, carve out an exception to this general 100 percent of the federal poverty level rule, because Congress acknowledged that some lawfully present immigrants are not eligible for Medicaid because of their immigration status. Since the Personal Responsibility and Work Opportunity Act became law in 1996, federal Medicaid dollars cannot be used to provide coverage to all lawfully present immigrants. Instead, federal Medicaid funds can only be used for a smaller group of “qualified” immigrants, and there is a five-year waiting period in place, even for many qualified immigrants. (Need help learning the immigrant eligibility rules for federal health coverage programs? Click here). Given Medicaid’s narrower eligibility rules and waiting period, the ACA allows “lawfully present” immigrants who are not eligible for Medicaid because of their immigration status to qualify for premium tax credits and cost sharing reductions in the Marketplace even if their income is below 100 percent of the federal poverty level.

If the Supreme Court had not allowed states to opt out of Medicaid expansion, citizens and lawfully present individuals in poverty would have both had a federally subsidized coverage option. Citizens and qualified immigrants eligible for Medicaid would have enrolled in Medicaid; and lawfully present immigrants ineligible for Medicaid because of immigration status would have received premium tax credits and cost sharing reductions to buy coverage in the marketplace. However, because nearly half of states have not yet expanded Medicaid, citizens and a particular group of qualified immigrants (who are eligible for Medicaid based on immigration status) living in poverty are caught in a coverage gap.