PPACA FAQ: Verifying Eligibility, The Honor System

In previous segments (Part 1, Part 2) we’ve talked about the health insurance options of a four person family with wife (employee) husband and two children. In the scenario we discussed, the employee was offered affordable coverage through her employer but, coverage that included her children was well over what this family could afford and there was no option at all for her husband.

In a way, the situation for this family is still the same — the law hasn’t changed. But with the announcement this week (see this and this) that due to the complexities in reporting, the penalties for large companies (those with 50+ employees) will not be collected until 2015, how will this family’s eligibility be verified?

For now it seems, we are all on The Honor System:

Delay in Obamacare requirement puts onus on the honor system

In addition, without the reporting requirements of the employer mandate in 2014, “the exchanges and the IRS will not be able to verify whether someone’s coverage is unaffordable” and thus whether the person is eligible for subsidies, said law professor Timothy Jost of Washington and Lee School of Law in Lexington, Virginia.

That leaves it up to individual consumers to be honest about what they do, or do not, qualify for.

A ‘BOATLOAD’ OF ILLEGITIMATE TAX CREDITS

“The shift of employees to the exchanges could cost (the government) a boatload,” said Nicholas Bagley, a law professor at the University of Michigan. “Some people who are ineligible for subsidies, because their employer offers affordable insurance, may attempt to get subsidies on the exchanges. The IRS will have a hard time policing that sort of conduct.”

States running their own Obamacare exchanges are scrambling to figure out how to deal with the delay in the employer-reporting requirement.

I can see how they think that would work. But, let’s look at our family again.

Mom’s insurance costs 9.5% of family income but the employer-offered plan that covers the children is much more than that. Will the family understand that the mom’s affordable insurance means that the children are not eligible for insurance through the exchanges? And what if Mom’s employer does offer a plan for dad? My understanding of the PPACA is that dad isn’t eligible for subsidies and the new Exchanges either.

Is that really true? It seems very unfair to me.

How can an Honor System work for such a deeply unfair policy?

I am going to ask my Senators, Pat Roberts & Jerry Moran and my Congressman, Kevin Yoder what they think about it.