Federal health officials have released three proposed rules governing state-based insurance exchanges and premium tax credits, and Medicaid eligibility, for which an estimated 20 million people will be eligible.
Officials also announced awards of $185 million to 13 states and the District of Columbia to help them build these insurance marketplace options.
"Americans across the country know our health insurance system is broken, especially for families and those who buy insurance on their own," Kathleen Sebelius, Secretary of the Department of Health and Human Services said in a briefing Friday .
"Shopping for coverage has become a daunting task and too many Americans have been priced out or locked out of the system and families spend valuable hours pouring over the fine print to find a plan that will cover their needs."
More than half of the states in the country have launched efforts to create exchanges, and 49 have accepted $50 million in federal funds last year to begin that process, she said. The framework for health insurance exchanges was established in the Patient Protection and Affordable Care Act of 2010 and is scheduled to take effect in 2014.
According to an HHS statement, the three proposed rules accomplish three goals:
1. Exchange Eligibility and Employer Standards. Detail the standards and process for enrolling in qualified health plans and insurance affordability programs as well as basic standards for employer participation in the Small Business Health Options Program, or SHOP.
These standards will be designed to be fast and easy, and will minimize burdens on states because they will use electronic data to verify applicant information. "In most cases, this will allow for a near real-time eligibility process so that individuals can receive an eligibility determination and enroll in a plan in a single session," according to an HHS statement.
They also will avoid paperwork redundancy by combining information for various programs that best suit an individual's needs and simplifies redetermination process for annual renewals without disruption.
2. Health Insurance Premium Tax Credit. Lay out regulations how individuals and families can receive tax credits to offset their premiums and defray insurance costs for middle class Americans.
Taxpayers with household incomes between 100% and 400% of the federal poverty level will be eligible for tax credits to offset premium costs if they are not eligible for other healthcare coverage. The credits will be paid in advance to the insurance company providing the plan. When the Affordable Care Act is fully phased in, according to a report from the Congressional Budget Office, these credits could average in excess of $5,000 a year.
Commissioner for the Internal Revenue Service Doug Shulman said during the briefing that "from a consumer perspective, (a person would) show up at the exchange, they'd get an advance refundable credit, based on information the exchange has.
"We set up systems at the IRS to pay the insurer a co-pay – usually the consumer is also paying a piece of it, that's the credit. And then, at the back of it, when the person files tax return if they got too much of a credit they will reconcile at that time."
3. Medicaid Eligibility. Expands and simplifies Medicaid eligibility and promotes a seamless system of affordable coverage by coordinating Medicaid and the Children's Health Insurance Program with the new exchanges.
Under the ACA, adults under age 65 who earn up to 133% of the federal poverty level are eligible for coverage under Medicaid. This rule simplifies eligibility rules so that Medicaid uses the same standards as other insurance affordability programs available through the exchange, and assures through data sharing that individuals are enrolled in the appropriate program regardless of where their applications are submitted.
Public written comments will be accepted for the next 75 days.
Sebelius emphasized other efforts the HHS has put in place to make healthcare insurance more affordable, including grants to states to create structures to review and reject "huge premium hikes that can cause people to lose their coverage." She said the Obama administration has "also mandated that insurers cut their administrative costs and that they spend the bulk of consumer premiums on healthcare instead of on advertising and large CEO bonuses."
"And we've already seen the fruits of that labor with a sharp slowdown in rise of premiums in many states across the country."