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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.


“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.

7 Responses

  1. Thank You Katiebird!

    One employee over 45 was paying $516.00 per month, her child under our Small Employer Pool Plan via California was $516.00 too! So, people working, who are not in the poverty line got screwed royally due to the SKY ROCKETING PREMIUMS that ACA didn’t address. So, this person had to go out of network, to buy her child a separate plan that was affordable within budget. She could not afford one for herself due to no rate security, meaning that the exchanges Obama set up are 1) Not ready and now put off until 2015 (Hemmm, could it be because they weren’t ready for October 2013)? 2) Will sell you insurance but will you be able to afford it? 3) The insurance companies are playing games with the issuance of letters of insurance to purchase these high premium insurance. 4) The insurance companies knowing people 45 and over are at higher risk for dying without insurance are making these folks fill out large applications, so the myth of no pre-condition dream is just a dream. 5) So, in essence the only option for affordable insurance for someone 45+ would be the California High Risk Pool (w/a waiting list and offers insurance at a pool rate/affordable for working people) in place for over 20 years, which Obama has not set up nation wide.

    Also, ACA via Obama Administration has not linked the IRS to ACA application verification, ala FAFSA and thus the issue KatieBird so eloquently addressed above exists creating an access problem.

    ACA’s failure in my opinion was not stabilizing the premiums or capping the increase at 5 to 10% upon ACA’s passage. I will try and find my insurance bills pre ACA and post ACA so you can see what an access disaster this created and how it was a cash windfall for insurance companies and how many new plans are essentially catastrophic plans (will cover major illness) and some without medication coverage.

    I am still hoping people will continue to support HR 676 (Public Option) which is the only true access to health care in my opinion and it makes good business sense.

    HR676 Healthcare for All Americans

    • I really don’t see how this is going to work at all. A commenter at Corrente reminded me of the Repayment Requirement – that if it’s determined that you got a higher subsidy than you deserved then you must pay it back.

      So the SYSTEM won’t be doing the verifying but, we’ll have to do all the calculations ourselves (crossing our fingers that we get it right) or we might have to pay back the whole thing??????

      Honestly. How can they go live with a system this flawed?

      • Katiebird,

        Considering all the technology we have, ‘Silicon Valley’, heck whole Bay (companies are now spread out), you would think the Obama Administration would at the very least have a system ala StateFund, which lets you calculate your premiums and pay on-line, with quarterly reports, annual reports etc. Can you imagine if you got a top rate insurance, via the subsidy and then had to repay $6 to $10K…without planning for it!

        Also, the McCain (Arizona) plan of combining the medical part in worker’s comp insurance was ignored by the Obama Administration, which would have been a pro-small business, pro-worker move that would improve both sides of current insurance crisis.

        I do Worker’s Comp via State Fund because the others were insanely high, my current rate is 14+% (No injuries in 20+ years)per $100 dollars of pay, in addition to payroll. So, the Worker’s Comp is higher than the combined employer/employee Social Security payment. 😯

        For all the talk of business the Obama Administration doesn’t seem to have a clue about the hurdles of Small Business (78% of US economy) and what they need to be competitive and keep employees employed and or hire employees.

        Thank you KatieBird for keeping us informed. 😉

        • There is a cap on the repayment of subsidies. It’s about 2500 for a family of 4 making $94,000. http://www.huffingtonpost.com/2013/04/03/obamacare-tax-bills_n_3008174.html. But still, the whole idea of the repayment is ridiculous.

          • But, that repayment criteria is for people who qualified for subsidies at application time — what about people who mistakenly believe they qualify (and there is no verification without the reporting) do they get the same cap? Or is it considered fraud or something. The law is so difficult to understand. It’s hard to find the information.

    • Well, these Obama catastrophic insurance shams just hit home for me, via family (not worth it, too many option outs for the insurance company) . These not insurance plan will lead to many people filing for bankruptcy and finding themselves without the care they need. The plans prior to ACA by Obama Administration cost $130.00 per month for 0-23, after Obama’s ACA these catastrophic insurance plans that led people to get them were sold as being the most affordable, for $210., but the untold story is that once you get sick they discharge you and refer you to services which are not covered and so you end up with NO CARE! The services cost $500.00 dollars a day…not including medications. God help us.

      I hope someone sets up a site to start collecting the stories about these disasters in the making and realize that HR 676 was kept out by President Barrack Obama because he is the darling of the insurance give away and that the people were sold out. The delay is just to avoid dealing his very own problem he made, but the chickens are already coming home, now if the media would take their noses out of the arugala long enough to investigate and inform the people of the disaster he has made worse.

      Most disappointed…especially at Pelosi and Reid who lied!

  2. the Obama Administration doesn’t seem to have a clue about the hurdles

    What do you expect from a person whose only jobs were community organizer and guest lecturer?

    It’s painfully obvious that Obama, Pelosi, and Reid have no idea how the government they are supposedly running works either.

    Why does Nancy Pelosi remind me of Leona Helmsley before the fall?

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