The Centers for Medicare and Medicaid Services (CMS) are opening a special ACA enrollment period for beneficiaries losing Medicaid or Children’s Health Insurance Program (CHIP) coverage.
The special enrollment period will run from March 31, 2023 to July 31, 2024 and allow individuals to receive coverage through state and federal ACA health exchanges.
To be eligible for the special enrollment period, individuals must have lost their Medicaid, CHIP, or Basic Health Program (BHP) coverage and qualify for ACA marketplace coverage.
State-based marketplaces are not required to offer the special enrollment period, but the federal ACA marketplace is.
Why is there a special enrollment period?
The COVID-19 pandemic saw legislation like the Families First Coronavirus Response Act pass, stopping state Medicaid programs from unenrolling individuals during the public health emergency. That bill led to a staggering 90 million Medicaid enrollees, some of whom no longer meet the income requirements for enrollment.
By the end of 2022, the omnibus spending package passed, which will allow states to start processing Medicaid redeterminations on April 1, 2023, regardless of the public health emergency.
Current projections from the Urban Institute see approximately 18 million individuals at risk of losing Medicaid coverage during those redeterminations. Of those 18 million, approximately 3.8 million people will become completely uninsured.
The redetermination process is expected to last about 12 months. One provision of the spending package is to provide 12 months of continuous coverage for the approximately 40 million children covered by Medicaid and CHIP. Adults, however, must look for coverage elsewhere.
The purpose of the special enrollment period is to give affected Americans the opportunity to receive coverage. An opportunity that many will likely take advantage of, considering that over 16.3 million Americans have obtained coverage for the 2023 plan year through state and federal ACA health exchanges. Of those, 3.6 million people hadn’t been previously insured.
The federal open enrollment period ended on January 31, 2023, but this special enrollment period is expected to generate even greater ACA participation.
Benefits of a special enrollment period
After the announcement that states would begin redetermining Medicaid coverage on April 1, there was some confusion about whether those affected would need to wait until November to enroll in a state or federal ACA marketplace. If they needed to wait, they’d see an interruption in their health coverage.
This special enrollment period negates those fears by giving everyone affected by the redetermination a chance to find coverage elsewhere. Once an individual has applied for marketplace coverage, they have a 60-day window to choose a plan.
Boosted ACA enrollment nationwide through federal subsidies
Between the open enrollment plan that just ended and the one beginning at the end of March, we’re seeing a record-low uninsured rate. The sharp rise in insured Americans is partly due to Premium Tax Credits (PTCs), which taxpayers can use to lower monthly insurance payments.
The Inflation Reduction Act extended PTCs, guaranteeing continued ACA enrollment through December 31, 2025. While not a permanent change, this move represents progress toward fulfilling President Biden’s American Families Plan.
There are more free resources available for helping Americans understand the different health coverage options and to complete the required forms, such as ACA navigators, which received nearly $100 million in funding over the last two years.
Risks for employers from increased IRS activity
With participation through state and federal ACA health exchanges, more individuals are likely to obtain PTCs, which tangentially triggers the IRS issuing ACA penalty notices via Letter 226J. If any full-time employee from your workforce receives a PTC from a state or federal health exchange, it will prompt the IRS to issue a Letter 226J penalty notice.
Employers must ensure their ACA filings are in good shape, especially with the expected spike of PTCs from the special enrollment period.
Contact Trusaic if your organization needs professional guidance on ACA compliance. Organizations that outsource their compliance efforts to us become 100% ACA compliant and save their staff time and money. That’s because we handle everything from employee offer eligibility tracking, affordability calculations, measurement method implementation, and IRS audit defense. We’ve prevented over $1 billion in penalties for our clients.
Take the self-assessment quiz ACA Vitals to find out if your company is 100% ACA compliant.
You can also review our interactive guide on the ACA’s Employer Mandate for more critical information on the role of PTCs and ACA compliance below.
