Another Glitch: How Some Americans Could Miss Out On Obamacare Subsidies In 2014

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President Obama discusses the error-plagued launch of the Affordable Care Act's website at the White House in Washington on Oct. 21, 2013

Many Americans buying insurance coverage for 2014 may never get the chance to claim new federal tax credits to subsidize the cost of health insurance, due to an odd wrinkle in the signup process.

The problem will impact individuals who currently receive insurance on the individual market, but only if they fail to take action in the coming months. Hundreds of thousands—if not millions—of people who purchase coverage independently are now receiving letters from insurers canceling policies that do not comply with new Affordable Care Act (ACA) regulations. In cancelling such plans, some insurers are telling customers they will be automatically enrolled in alternative ACA-compliant coverage unless they object.

This could be a major snag in the ACA’s plan to subsidize insurance purchased on the individual market. New tax credits, available to individuals earning less than 400 percent of the federal poverty level, or about $46,000 per year, can only be accessed through new ACA insurance marketplaces. Those who purchase coverage outside the exchanges cannot claim subsidies, even if they qualify for them, according to the Centers for Medicare and Medicaid Services, the agency overseeing implementation of the ACA. Automatic enrollment directly through an insurer would avoid the exchanges, and the subsidies, entirely.

(MORE: Obama Official Apologizes For Broken Health Care Website)

Blue Shield of California sent letters to more than 100,000 customers this fall, canceling current policies and offering to enroll customers in alternate coverage. “It’s automatic,” says Steve Shivinsky, a spokesman for the insurer. “We map them into a comparable plan and if they take no action then they are automatically covered in the plan we’re recommending.” Such automatic enrollment would bypass the subsidy program.

The second page of the Blue Shield of California cancellation letter, a sample of which the insurer provided to TIME, informs consumers that they may have access to subsidies if they sign up for new coverage through the state’s exchange, Covered California. Customers who think their incomes may qualify them for subsidies are asked to call Blue Shield of California directly so trained enrollment specialists can help them sign up for coverage through the exchange.

Kaiser Permanente, another California insurer, sent a similar cancellation letter to some 160,000 customers this fall. The first page of Kaiser’s letter, also provided to TIME, includes a line in bolded font that says, “Everything is taken care of. There’s nothing you need to do.” Like Blue Shield, Kaiser also allows customers to sign up for new plans through Covered California with the help of enrollment specialists over the phone.

But whether consumers will take the extra steps necessary to seek out new coverage, and access subsidies along the way, is still an open question. Lizelda Lopez, a spokeswoman for the California exchange, says about one-third of the 900,000 Californians whose insurance plans are likely to be be terminated this year qualify for subsidies. “If those individuals get those letters, what they want them to know is that they should come to Covered California,” says Lopez. While the California insurers offer to help customers sign up through the state exchange, consumers have to request this directly. And routing customers through the exchanges independently means they will encounter plans for sale from competing insurers.

(MORE: Report: ObamaCare Brings Affordable Coverage For Some Young Uninsured)

“There are lots of other products available,” says Shvinsky. “If we just tell them to go to Covered California web site, they can pick whatever plan they want.”

The ACA subsidies are technically tax credits, but consumers can’t apply for them later when they file their income tax returns. The subsidies are only available when consumers purchase coverage through the exchanges, according to CMS. “As far as retroactive premium tax credits for a plan outside the exchange, you can’t do that under the statute,” says Timothy S. Jost, a professor at Washington and Lee University and an expert on provisions of the new law.

New plans offered to consumers in place of canceled policies in the individual insurance market are often more expensive because they cover more benefits with less out of pocket spending to comply with the ACA. These higher prices may motivate some consumers to turn down offers of automatic enrollment in favor of shopping in an ACA exchange. This scenario, however, depends on consumers being able to use the new exchanges, where enrollment is intended to happen primarily online.

Healthcare.gov, an exchange web site being run by the federal government and managing enrollment for more than 30 states, has been hobbled by computer problems since its Oct. 1 launch and may not be fully operational until the end of November, long after many consumers will have received termination letters from their insurers.

MORE: The Bright Side of Obamacare’s Broken Promise

93 comments
SharongeGe
SharongeGe

my friend's mom makes $62 every hour on the internet. She has been unemployed for 8 months but last month her check was $13696 just working on the internet for a few hours. ......>>>>>>>>>>  www.jobs60.ℂom

ChandraPanchabhikesan
ChandraPanchabhikesan

President Obama is trying his level best to provide affordable health-care to all Americans. His opponents are hell-bent on destroying   his plans. Of course there are bound to be glitches and plans are under-way to correct them. Give him due credit for trying. It is not an easy issue to tackle!

Pancha Chandra Brussels 

valentine.godoflove
valentine.godoflove

WRITTEN IN CAPS FOR THE ELDERLY.....DEFEND THE WEAK AGAINST TYRANTS....GRANDMASTER KNIGHT TEMPLAR

JUST LIKE THE SONG BY BRITTANY SPEARS....."OOOOPPPPSSS I DID IT AGAIN".....THE OBAMA MOSLEM PRESIDENT AMERICA DESTROYER....THE UN-AFFORDABLE OBAMA HEALTH CARE LAW.....WAS CREATED ......MORE TO COLLECT INDIVIDUAL VERY PERSONAL INVASIVE DATE.......THAN TO PROVIDE HEALTH CARE COVERAGE.....TO BE USED AGAISNT YOU IN THE FUTURE.......IF YOU DO NOT AGREE WITH THE LEFTWING RADICAL ENVIRONMENTAL WACKO BABY KILLING DEMOCRATS!!

#1.    WHERE DO YOU FIND A LAW THAT WAS PASSED IN THE MIDDLE OF THE NIGHT  DECEMBER 24TH , CHRISTMAS EVE,,,,,WHEN NOBODY WAS PAYING ATTENTION

#2.  WHERE DO YOU FIND A LAW.,.....THAT WAS SIGNED ....B L A N K.......AND RAMMED DOWN THE BEHIND OF THE AMERICAN CITIZENS .....

#3.   WHERE DO YOU FIND A LAW WITH 2,20O PAGES....THAT EVEN THOSE WHO PASSED IT ,,,,,NEO COMMUNIST LEFTWING RADICAL DEMOCRAT ENVIRONMENTAL WACKOS BABY KILLERS.......DID NOT EVEN READ????!!!!

WHO HAS THE TIME TO READ 2,200 PAGES OF DOOODOOOO!!

#4.  AND THE SUPREME COURT JUDGE WHO APPROVED THIS......WAS OBVIOUSLY......THREATENED.....JUST LIKE IN THE MOVIE.....GODFATHER.....OBAMA'S FAVORITE!!!!.....SO MUCH SO .....THAT HE WAS TALKING FROM BOTH SIDES OF THE MOUTH !!!!

#5.   WHERE HAVE YOU FOUND  A LAW....THAT FORCES.....FORCES YOU....TO BUY A PRODUCT....AND IF YOU DO NOT BUY IT......

#6.   THE  IRS???????....THE IRS????????......ENFORCES THE LAW!!!!!!!!!!!!! FORCES YOU TO BUY IT.....OR THEY WILL PUNISH YOU !!!!!!!!

THIS LAW IS ILLEGAL.....IT VIOLATES THE FREEDOM OF EXPRESSION.....HOW WOULD YOU LIKE TO BE FORCED TO BUY  1 BRAND OF ANYTHING?????....IT WAS DESIGNED AND PASSED BU NEO COMMUNIST LEFTWING RADICAL ENVIRONMENTAL WACKO BABY KILLLING DEMOCRATS....

CITIZENS OF THE UNITED STATES????......ARE YOU TOO STUPID TO ACCEPT THIS ABOMINATION OF YOUR RIGHT TO BUY OR NOT BUY WHAT YOU WANT???.......ARE YOU SLAVES????

UNITE......AND THROW THE RASCALS OUT OF  OOFFICE!!!!

VALENTINE, COMEDIAN......LOKL



FedRegs
FedRegs

Let me see if I have this right.

If I go to an exchange, I have to enter all my information first (if it were working), then I get to see the plans. What if I don't choose? Do you think the government might try to automatically enroll me as well?


mattdavidian
mattdavidian

“As far as retroactive premium tax credits for a plan outside the exchange, you can’t do that under the statute”  If it cannot be claimed when you file your taxes, then it is not a tax credit!  What happens if a two earner couple signs up for a plan, doesn't qualify when they sign up, but one of the spouses later looses their job, putting their annual income at a point where they do qualify for the subsidy?  What happens to a self employer person who only finds out what their annual income is at the end of the year?  In either of these situations, you should be able to reconcile tax credits received vs. tax credit eligible for on your tax return.  I find it very hard to believe they would intentionally not make it possible to claim the tax credit on your tax return.

JJHLH
JJHLH

If people think they are safe and that Obamacare won't affect them because they get their insurance through work, they are in for a rude awakening. There is a reason Obama delayed the employer mandate until 2015; so he wouldn't have to face the wrath of even more disillusioned voters who lose their plans and doctors during the 2014 elections. We already know how good Obama's word is. Period.

shepherdwong
shepherdwong

"But whether consumers will take the extra steps necessary to seek out new coverage, and access subsidies along the way, is still an open question."

Thanks for reporting on this issue, Kate Pickert. If it's well-reported, only the tuned-out morons will lose out.

ChandraPanchabhikesan
ChandraPanchabhikesan

President Obama is head and shoulders above his Republican rivals in intellect, humility and ability. Of course it is a rough ride when desperate opponents place banana skins every step of the way. The President will eventually come out of the gruelling exercise tougher in mind and spirit.  Never discount a decent, humane man who is dedicated to serving his nation to the best of his ability.

FredericYoung
FredericYoung

So was this a requirement that was spelled out in the system requirements document. If so and it is not included in current version, then it is BIG bug. If not, then those that are commenting on the inadequacies of the application, should familiarize themselves with the System Development Life Cycle and stop showing how uninformed they are.

MrObvious
MrObvious

That's not a glitch - more like poor information in regards to automatic enrollment.

11B_INF_Retired
11B_INF_Retired

Scrap the stupid ga dam TAX Mandatory Healthcare Plan and start all over! This time NO MANDATORY healthcare  forcing us Citizens to buy a product.

allthingsinaname
allthingsinaname

"Hundreds of thousands—if not millions—of people "

Well which is it? Ten's of reporters if not thousands are too lazy to get the facts before reporting. I think it is the second number.

Ohheck
Ohheck

Wait until Obamacare starts to limit how many children a couple can have, and when you reach it, your free birth control will be getting sterilized at no costs!

BigBoa
BigBoa

You are a buffoon if you believe that.

eoniii
eoniii

@ChandraPanchabhikesan Obama is trying to expand the power of the federal government and to redistribute wealth. There were far simpler and more effective ways to extend coverage to low-income Americans. Instead Obama told three huge lies: If you like your plan, you can keep your plan; the average family will save $2,500 a year in premiums; and providing 30 million Americans with health insurance won't cost anything to the Treasury. If a business lied like this to its customers, the CEO would go to prison for fraud.

drudown
drudown

@valentine.godoflove 

The irony, of course, is that the GOP wants to "kill" the very Social Safety Nets that nearly ALL Baby Boomers will depend on. 

And you think they are going to vote in their own doom by voting GOP?

Sure, right.

BigBoa
BigBoa

No,,,,but they'll automatically debit your checking account....

PaulDirks
PaulDirks

@FedRegs 

No. 

This has been another edition of easy answers to incredibly stupid questions.

BigBoa
BigBoa

Humane? Decent?

Ask the survivors of the Americans murdered in Benghazi how decent and humane he is.

Ask some of the cancer victims who have had their insurance canceled about how humane he is.

Yes, and what a humble man, that has to go around reminding people that he won.....

He is an arrogant, despicable twit.

JanetBrown
JanetBrown

@ChandraPanchabhikesan You have got to be kidding!!!! He is like the Pied Piper and all you libs are just mesmerized and hypnotized by his flute music.  If he opens his mouth he is lying.  My 8 year old grandson is smart enough to understand he is the PINOCCHIO IN CHIEF

shepherdwong
shepherdwong

@ChandraPanchabhikesan "President Obama is head and shoulders above his Republican rivals in intellect, humility and ability."

Agreed, but a pretty low bar.

jsnwsch
jsnwsch

@ChandraPanchabhikesan Ha ha ha. For a second I thought you were serious until I realized no one can be that self-diluted.

reallife
reallife

@ChandraPanchabhikesan LOL nice one... especially the "humility" part

"el pato lamo"

LOL


PaulDirks
PaulDirks

@NadiaPierse This satire article was stupid the first time it was posted. Now it's just an idiot magnet.


TanmayLololAnaisPradhan
TanmayLololAnaisPradhan

@MrObvious If anything, its greed from the insurance companies trying to sign people up for stuff not in their best interests.

Then there are the republican governors making sure that the exchanges do not work in their states, and the Medicaid budgets of their states is screwed.

Sad, really, but not a glitch. Its actually just as these greedy bastds intended.

MrObvious
MrObvious

@11B_INF_Retired 

Sorry - but I don't feel like having people skating on my insurance plan. We had that before - where people were going to the ER which in turn had hospitals and healthcare facilities increase the cost of doing business (they don't do that stuff for free) and in turn increased my premiums.

Enough with these shysters. If you want to be part of the commons then you pay for it. There's no free lunch in great societies, although there are always people why try to get one.

jason024
jason024

@11B_INF_Retired Then we should block your moocher arse from using the Healthcare system when you can no longer pay your bills. 

TanmayLololAnaisPradhan
TanmayLololAnaisPradhan

@Ohheck Like Jon Stewart said -"There is so any things WRONG with that statement - factually, ideogilogically......grammatically"

reallife
reallife

@TanmayLololAnaisPradhan @MrObvious  "its greed from the insurance companies trying to sign people up for stuff not in their best interests."

LOL

yeah those poor boobs are too stupid to think for themselves, here comes obama and big government to "take care" of them. thank god! oops not god! thank obama



TanmayLololAnaisPradhan
TanmayLololAnaisPradhan

@MrObvious @11B_INF_Retired Exactly. Thank you !

Conservatives ! You should love the AHA. It means no more free rides !

And for the truly poor, there is Medicare.

The GOP is no longer conservative. They are monkey throwing wrenches in the machine.

Obama is actually a center-right guy. Even more conservative as Bush, as far as money is concerned.

In case you guys dont remember, Bush ordered bailouts and stimulus left and right, far less than this administration.

jason024
jason024

@NadiaPierse @PaulDirks Wow....you do know the meaning of satire right? And Fake? 

But hey continue posting the link. We can all laugh at you.

PaulDirks
PaulDirks

@adam.schlaeber @TanmayLololAnaisPradhan Unless they have a policy written before 03/10. Every cancellation letter going out now is a result of insurance company decisions AND it's designed to oversell coverage and bypass the exchanges.



TanmayLololAnaisPradhan
TanmayLololAnaisPradhan

@Ohheck @TanmayLololAnaisPradhan @MrObvious @11B_INF_Retired XD lol.

Actually, Germans really read a lot about the states. You would be surprised how much non Americans inform themselves about your politics

^_^

BTW, there is this really sweet Daily Show segment from yesterday, where they went down to Mississippi and Alabama with a couple actors pretending to be gay.

It really showed that southerners are not really as unkind as people stereotype them to be.

Really, a feel good episode yesterday.

TanmayLololAnaisPradhan
TanmayLololAnaisPradhan

@Ohheck @TanmayLololAnaisPradhan Yeah, its not all sunshine and honey. But that's true here in Germany, and everywhere else in the world.

I think its better than before for you guys though. Its more like the early 2000's, late 90's.

If by "We the people" you mean Tea Party, then that's really the last thing you guys need.

I think October showed what happens when everyone follows them.

Ohheck
Ohheck

@TanmayLololAnaisPradhan @Ohheck Sarcasm?, America has had so many problems since the beginning and the country all ways come back just like we will again. The last 4 years are showing a weakness in the way we would not have imagined. First, "WE the PEOPLE" need to get back into the picture!

TanmayLololAnaisPradhan
TanmayLololAnaisPradhan

@Ohheck @TanmayLololAnaisPradhan BTW, looking to you guys as a foreigner, it seems that nowadays you guys are much less divided, and much more united.

It seems the US has become much more conservative since the Bush days. But on the plus side, it doesn't seem like you guys were going to have a civil war, like the mood back in 2010 when the Tea party came in.

So, you should be happy. Life seems better for both the left and right, since 2008. More money coming in, less war. Not as much moral/ideological bickering as before.

Congrats America.

Ohheck
Ohheck

@TanmayLololAnaisPradhan @Ohheck It is now obvious you are here in the States making money doing what you do best, just talking to say something. So just be truthful, its a free country here for a few more years.

Ohheck
Ohheck

@TanmayLololAnaisPradhan @Ohheck If you really are, why the concern? You can keep it there, its not wanted here