Over the past couple months I have been learning new things about PPACA that I didn’t know. I am sure glad they passed it so we could find out what was in it. One item that has surfaced is a really big item in my opinion. It seems that in their haste to bring the bill to a vote, there is a flaw. Actually there are many but I am referring to funding of subsidies for the purchase of health insurance through exchanges. The following is directly from the bill’s text.
‘‘(2) PREMIUM ASSISTANCE AMOUNT.—The premium assistance amount determined under this subsection with respect to any coverage month is the
19 amount equal to the lesser of—
20 ‘‘(A) the monthly premiums for such month
21 for 1 or more qualified health plans offered in
22 the individual market within a State which
23 cover the taxpayer, the taxpayer’s spouse, or any
24 dependent (as defined in section 152) of the tax25
payer and which were enrolled in through an
26 Exchange established by the State under 1311Of the Patient Protection and Affordable Care Act,
If you read this carefully, you will notice that it is very explicit as to the purchase of coverage through an exchange established by the State. It does not mention purchasing through a federal exchange. So, our tax code only allows the subsidies for those individuals who purchase through a state based exchange. So let’s consider if Nebraska were to decide not to set up their own exchange, the federal government has promised to set up one for states who opt not to set up their own. Since that exchange doesn’t meet the statement mentioned above as being established by the state, there would be no subsidies to individuals who used the federal exchange. Senator Hatch has stated that this was intentional and cannot be changed without a change in statute. Others have stated that the intent was to allow for subsidies even when purchased through a federal exchange. I personally think this is probably one of the most important items in the legislation when it comes to the producer arena. Without subsidies, the consumer will not opt for using an exchange. They will purchase their coverages from professional agents through the free market system. On the other hand, let’s say that they want to allow the federal exchange to offer the subsidies; our industry should demand that agents be allowed to offer the same subsidies to people who qualify but choose not to use the exchange.
My understanding is that any change in tax code, whether to increase, decrease or offer credits has to be approved by congressional action. It will be interesting to see how this progresses. I have posed this to quite a few individuals over the last couple months and to my surprise, no one seems to know the answer. I would welcome any thoughts or questions about this. It truly is a game changer depending on how it comes out.