There are tens-of-thousands of Utah adults who, due to an unforeseen gap in the Affordable Care Act, are actually too poor to qualify for subsidies to help them buy health insurance on healthcare.gov.
The gap exists in states that haven’t expanded their Medicaid programs to cover them, and it has left millions without access to affordable coverage.
Utah and MedicaidGov. Gary Herbert said this week there will be some form of Medicaid expansion in Utah, but hasn’t said what it will look like.
A legislative task force has endorsed three alternatives to a full Medicaid expansion:
Do nothing » Keep Medicaid eligibility rules as they are.
Help those under poverty line » Use public dollars to buy private insurance for residents with incomes under the federal poverty level. Those earning 100%-138% of that amount would shop with federal subsidies on the federal exchange.
Help wider population » Use public dollars to buy private insurance for the full expansion population, those earning up to 138% of poverty level.
But there’s a fix that, though it carries some risk, is being touted nationally.
Insurance consultant Brad Kuhnhausen said people in this situation could project their 2014 income to at least the federal poverty limit, which is the starting point to qualify for subsidies. That’s an income of about $11,490 for a single person and $23,550 for a family of four.
Doing so entitles them to subsidies that come close to covering the entire cost of many health plans sold on the federal exchange.
The subsidies are awarded on a sliding scale based on income. The poorer you are — within the qualifying range — the bigger subsidy you get.
"No one should intentionally underestimate their income. That would be deception and even possibly fraud," said Kuhnhausen, owner of the insurance broker, AIM Administration Inc. "But having a reasonable [higher] income estimate and falling a little short would not be a cause of concern to the IRS."
This may not always be true.
The exchange checks applicants’ stated incomes against federal wage and tax databases. If there’s less than a 10 percent discrepancy, there will be no questions asked, according to regulations released in July by the U.S. Centers for Medicare and Medicaid Services (CMS).
If there’s more than a 10 percent difference the exchange will ask applicants to provide some proof of income. If they can’t, the exchange will accept their "attested" income "without further verification," but only during the exchange’s first year of operation.
This only works if you overestimate your income, stressed Kuhnhausen.
Those who underestimate their earnings in order to receive a larger subsidy could be in for "big trouble," said Kuhnhausen. At the end of the year, if their filed taxes show they received a larger subsidy than warranted, they would have to pay the money back.
Conservative bloggers and columnists have seized upon this loophole as another failing of Obamacare, suggesting the Obama administration is encouraging people to lie in order to get coverage.
But for hourly or seasonal workers whose paychecks fluctuate, it’s easy to earn more or less than expected in any given year.
Kuhnhausen points to the publicized case of a St. George teen who lost coverage while undergoing treatment for cancer and fell into Utah’s coverage gap.
The young man has a job at an auto body shop "and with this publicity and the good will of the Utah people, earning [above poverty] is a real possibility," especially if he gets well soon and is able to return to work, he said.
"If he was my son, I’d have him do as I advised and then work hard to make that income — or at least be on pace for that income — by the end of 2014," he said. "There would be no penalties for that."
Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.