Wednesday, January 30, 2013

Fwd: qotd: "Shared responsibility payment" buys you nothing

Quote-of-the-day mailing list

-------- Original Message --------
Subject: qotd: "Shared responsibility payment" buys you nothing
Date: Wed, 30 Jan 2013 15:03:34 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

Centers for Medicare and Medicaid Services
January 30, 2013
Fact Sheet: Individual Shared Responsibility for Health Insurance
Coverage and Minimum Essential Coverage Proposed Rules

Under the Affordable Care Act, the Federal government, State
governments, insurers, employers, and individuals are given shared
responsibility to reform and improve the availability, quality, and
affordability of health insurance coverage in the United States.
Starting in 2014, the individual shared responsibility provision calls
for each individual to have basic health insurance coverage (known as
minimum essential coverage), qualify for an exemption, or make a shared
responsibility payment when filing a federal income tax return.

Highlights of the Proposed Regulations

A principle in implementing the individual shared responsibility
provision is that the shared responsibility payment should not apply to
any taxpayer for whom coverage is unaffordable, who has other good cause
for going without coverage, or who goes without coverage for only a
short time. The proposed regulations include several rules to implement
this principle.

For example:

Hardship Exemption Clarified to Protect Taxpayers, Address Key Concerns.

The statute gives HHS authority to exempt individuals determined to
"have suffered a hardship with respect to the capability to obtain
coverage." In developing these proposed regulations, HHS considered
several particular circumstances that provide good cause to go without
coverage. To provide clarity for taxpayers facing these circumstances,
the HHS proposed regulations enumerate several situations that will
always be treated as constituting a hardship and therefore allow for an
exemption. Hardship exemptions include:

* Individuals whom an Exchange projects will have no offer of affordable
coverage (even if, due to a change in circumstance during the year, it
turns out that the coverage would have been affordable). This rule will
protect individuals who turn down coverage because the Exchange projects
it will be unaffordable but whose actual income for the year turns out
to be higher so they are not eligible for the affordability exemption;

* Certain individuals who are not required to file an income tax return
but who technically fall outside the statutory exemption for those with
household income below the filing threshold; and

* Individuals who would be eligible for Medicaid but for a state's
choice not to expand Medicaid eligibility. This rule will protect
individuals in states that, pursuant to the Supreme Court decision,
choose not to expand Medicaid eligibility.
The HHS regulations also provide that the hardship exemption will be
available on a case-by-case basis for individuals who face other
unexpected personal or financial circumstances that prevent them from
obtaining coverage.
Specific Rules and Process for Receiving an Exemption

The proposed regulations also codify the statute's nine categories of
individuals who are exempt from the shared responsibility payment. These
categories are as follows:

Individuals who cannot afford coverage;
Taxpayers with income below the filing threshold;
Members of Indian tribes;
Individuals who experience short coverage gaps.
Religious conscience;
Members of a health care sharing ministry;
Incarcerated individuals; and
Individuals who are not lawfully present. (Select the Fact Sheet on
"Individual Shared Responsibility..." dated January 30, 2013.)

Comment: Today CMS and the IRS released two sets of proposed rules
which included the exemptions that will be allowed to avoid having to
pay a penalty for not being insured.

Basically, the exempt individuals will be those for whom there are no
affordable plans, those whose income falls below the threshold for
filing tax returns, or those who would qualify for Medicaid under
federal law but their state elected not to expand eligibility. A few
other exemptions are listed in the excerpts above.

One concern in the actual rule (though not listed in the CMS Fact Sheet)
is that the exemption for individuals who would otherwise have to pay
more than 9.5% of their income for their share of the premium of an
employer-sponsored plan applies only to the employee's coverage, but not
to coverage of the family members as well. At today's premiums, this
means that an employee could pay much more than 9.5% of income if the
family were to be included under the employer-sponsored plan, and that
would be just for the premiums. The deductibles and other cost sharing
would be in addition.

It is interesting that, instead of calling the penalty for being
uninsured a tax or a fine, CMS now calls it a "shared responsibility
payment," a payment to be made when filing a federal income tax return.
It is ironic that this shared responsibility payment buys you... nothing!

With all of the administrative waste that characterizes our health care
system, this rule adds even more administration complexity by providing
opportunities to allow individuals to remain uninsured. And the reward
is, if they qualify, they don't have to make a shared responsibility
payment. Hurray!

What happened to the reform advocates who were trying to advance
policies that would ensure that everyone was covered? Didn't they have a
say in this process? Oh, that's right. Sen. Baucus had them arrested.

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