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Will Obamacare Cost Sharing Reduction Subsidies Be Available in 2017, Or Are They Ending?

Will Obamacare Cost Sharing Reduction Subsidies Be Available in 2017, Or Are They Ending?

Posted Aug 23, 2016 by Jenifer Dorsey

As we approach the 2017 open enrollment period, the Affordable Care Act continues to face scrutiny and challenges. Last summer’s Supreme Court Decision in the King v Burwell case determined the fate of advanced premium tax credits—they remain in place for coverage purchased both the state-based and federally facilitated exchanges.

This year’s case: House v. Burwell. On the line this time: the cost sharing reductions that lower out-of-pocket healthcare costs for consumers who earn up to 250 percent of the federal poverty level and purchase silver plans through state-based and federally facilitated exchanges.

 

 

Legality of cost sharing reductions in question

Here is how cost sharing reductions currently work:

  • A consumer purchases a silver plan through a state-based and federally facilitated exchange and applies for Obamacare subsidies to help reduce her monthly premium and out-of-pocket expenses. Because she earns less than 250 percent of the federal poverty level, she qualifies for both an advanced premium tax credit and a cost sharing subsidy.
  • Her plan’s cost sharing subsidy further reduces her out-of-pocket share of covered healthcare expenses, including deductible, coinsurance and copay amounts. When this consumer visits the doctor, she is billed by her health insurance plan according to her plan’s usual benefits as well as the percentage of cost sharing reduction for which she is eligible.
  • Her health insurer picks up the tab and rather than pass the extra costs on to other consumers. The company then bills and is reimbursed by the federal government.[1]

So, what exactly is the key issue in House v. Burwell? The U.S. House of Representatives brought forth the lawsuit, claiming that, according to Article I of the Constitution, the executive branch cannot spend money without congressional appropriation.[2]

House v. Burwell decision

On May 12, 2016, Judge Rosemary Collyer of the federal district court for the District of Columbia ruled in favor of the House.[3] However, she has allowed for an appeal to a federal court of appeals or the Supreme Court and has not yet put a stop to the spending. As such, cost sharing reductions (i.e., CSRs) remained available at the time this article was published.

CSRs available now, but what about 2017?

With the administration currently appealing the decision, there is no way of knowing what the future holds.

 

 

What could happen if cost sharing subsidies go away?

If Collyer’s decision is upheld, the impact could affect consumers, health insurance companies, and the federal government.

There is a range of possible scenarios. Among them, it is said that if the decision is upheld on appeal, high-level Obamacare officials could face criminal charges if a subsequent President or Attorney General were to pursue them.[4] As far as insurance companies go, experts speculate that they may raise premiums if government reimbursement ceases.[5]

The Commonwealth Fund estimates that, in 2016, as many as 7 million Americans have health insurance with cost-sharing reductions.[6] HHS data shows the following breakdown for consumers receiving cost sharing reductions[7]:

  • 59 percent live in states with federally facilitated exchanges
  • 46 percent live in states with state-based marketplaces that use the HealthCare.gov platform

No comprehensive estimate for the 13 states with entirely state-based exchanges is available at this time.[8]

Obamacare changes for 2016

It is unlikely changes that result from an upheld decision would immediately impact consumers or 2017 open enrollment.[9] However, consumers who face increased out-of-pocket costs—whether due to a future House v. Burwell decision or 2017 plan changes—may want to consider supplemental products such as a medical gap, critical illness, and telemedicine plans.

These products are available year-round and can be combined with Obamacare plans to help you pay your out-of-pocket share of medical bills and healthcare your plan doesn’t cover.

How much are supplemental plans? Get a free, no-hassle quote.

No contact information required unless you apply.

Call the number at the top of your screen to speak with a licensed health insurance producer who can answer your questions and help you find additional benefits.

 

 


Legal Disclaimers


[1] Chandler, Seth. “The Impact Of Judge Collyer’s Ruling In House v. Burwell.” Forbes. May 15, 2016. http://www.forbes.com/sites/theapothecary/2016/05/15/the-impact-of-judge-collyers-ruling-in-house-v-burwell

[2] Blasé, Brian. “Judge Rules Administration Illegally Delivering Funds to Insurers Participating In Obamacare.” Forbes. May 12, 2016. http://www.forbes.com/sites/theapothecary/2016/05/12/judge-rules-administration-illegally-delivering-funds-to-insurers-participating-in-obamacare

[3] Denniston, Lyle. “Judge: Billions Spent Illegally on ACA Benefits.” SCOTUSblog. May 12, 2016. http://www.scotusblog.com/2016/05/judge-billions-spent-illegally-on-aca-benefits/

[4] Chandler, Seth. “The Impact Of Judge Collyer’s Ruling In House v. Burwell.” Forbes. May 15, 2016. http://www.forbes.com/sites/theapothecary/2016/05/15/the-impact-of-judge-collyers-ruling-in-house-v-burwell

[5] Schencker, Lisa. “House Republicans Won Their ACA Lawsuit. Here’s What Happens Next.” Modern Healthcare. May 12, 2016. http://www.modernhealthcare.com/article/20160512/NEWS/160519949

[6] S. R. Collins, M. Gunja, and S. Beutel, How Will the Affordable Care Act's Cost-Sharing Reductions Affect Consumers' Out-of-Pocket Costs in 2016? The Commonwealth Fund, March 2016. http://www.commonwealthfund.org/publications/issue-briefs/2016/mar/cost-sharing-reductions

[7] U.S. Department of Health & Human Services. Office of the Assistant Secretary for Planning and Evaluation. “Health Insurance Marketplaces 2016 Open Enrollment Period: Final Enrollment Report.” March 11, 2016. https://aspe.hhs.gov/health-insurance-marketplaces-2016-open-enrollment-period-final-enrollment-report

[8] Ibid.

[9] Schencker, Lisa. “House Republicans Won Their ACA Lawsuit. Here’s What Happens Next.” Modern Healthcare. May 12, 2016. http://www.modernhealthcare.com/article/20160512/NEWS/160519949