The National Association of Health Underwriters has tried to show Affordable Care Act program managers that it can take a practical, apolitical approach to thinking about ACA issues.

Some members of the Washington-based agent group strongly supported passage of the Patient Protection and Affordable Care Act of 2010 and its sister, the Health Care and Education Reconciliation Act of 2010.

Many loathe the ACA package.

But NAHU itself has tried to focus mainly on efforts to improve how the ACA, ACA regulations and ACA programs work for consumers, employer plan sponsors and agents. In Washington, for example, NAHU has helped the District of Columbia reach out to local agents. NAHU also offers an exchange agent certification course for HealthCare.gov agents.

Now NAHU is investing some of the credit it has earned for ACA fairness in an effort to shape draft eligibility screening regulations proposed this summer by the Internal Revenue Service, an arm of the U.S. Treasury Department.

Janet Stokes Trautwein, NAHU's executive vice president and chief executive officer, says she and colleagues at NAHU talked to many agents and brokers about the draft regulations.

For a look at just a little of what she wrote in her comment letter, read on:

NAHU wants exchanges to warn applicants about the consequences of income eligibility fraud when they apply for coverage. (Photo: AP)

The NAHU wants exchanges to warn applicants about the consequences of income eligibility fraud when they apply for coverage. (AP Photo)

1. Exchanges have to communicate better

The IRS included many ideas in the draft regulations about ways to keep consumers honest when they apply for Affordable Care Act exchange premium tax credit subsidies.

ACA drafters wanted people to be able to use the subsidies to reduce out-of-pocket coverage costs as the year went on, to reduce those costs to about what the employee's share of the payments for solid group health coverage might be.

To do that, the drafters and implementers at the U.S. Department of Health and Human Services and the IRS came up with a system that requires consumers to predict in advance what their incoming will be in the coming year.

Consumers who predict their income will be too low and get too much tax credit money are supposed to true up with the IRS when the file their taxes the following spring. The IRS has an easy time getting the money when consumers are supposed to get refunds. It can then deduct the payments from the refunds. When consumers are not getting refunds, or simply fail to file tax returns, the IRS has no easy way to get the cash back.

The exchanges and the IRS also face the problem that some people earn too little to qualify for tax credits but too much to qualify for Medicaid. Those people have an incentive to lie and say their income will be higher than it is likely to be.

Trautwein writes in her letter that the ACA exchange system could help by doing more to educate consumers when the consumers are applying for exchange coverage.

"The health insurance exchange marketplaces [should] be required to clearly notify consumers of the consequences of potential income-based eligibility fraud at the time of application, in order to help discourage it from ever happening," Trautwein writes.

NAHU wants to see the IRS and HHS to get their eligibility systems to sync up. (Image: Thinkstock)

The NAHU wants to see the IRS and HHS to get their eligibility systems to sync up. (Image: Thinkstock)

2. Federal health and tax systems have to work smoothly together

Trautwein notes in her letter that the ACA exchange system has an exchange eligibility determination process, and that the IRS has another set of standards for determining, based on a consumer's access, or lack of access, to employer-sponsored health coverage, who is eligible for premium tax credit subsidies.

NAHU is worried about the possibility that a lack of coordination between the IRS and the HHS could lead to incorrect decisions about whether exchange applicants have access to the kind of affordable employer-sponsored coverage with a minimum value required by the ACA laws and regulations, Trautwein writes.

"We believe that it is fairly easy for consumers to mistakenly apply for and then receive advanced payments of a premium tax credit for which they are not eligible" based on wrong ideas about affordability, she says.

Consumers could easily end up owing thousands of dollars in credit repayments because of those kinds of errors, she says.

In the long run, employers should be reporting on the coverage they expect to offer in the coming year, rather than trying to figure out what kind of coverage they offered in the past year, Trautwein says.

In the meantime, the IRS and HHS have to work together to improve the employer verification process, she says.

NAHU wants the IRS to understand typical employers' level of ACA confusion. (Image: Thinkstock)

The NAHU wants the IRS to understand typical workers' level of ACA confusion. (Image: Thinkstock)

3. Employees do not and cannot speak ACA

Trautwein says NAHU members also worry about exchange efforts to depend on information from workers to verify what kind of coverage the workers had.

"Based on our membership's extensive work with employee participants in employer-sponsored group benefit plans, we can say with confidence that the vast majority of employees do not readily understand the various ACA-related labeling nuances of their employer-sponsored health insurance coverage offerings," she says.

"Terms that are now commonplace to health policy professionals, like minimum essential coverage and excepted benefits, are meaningless to mainstream consumers," she says.

NAHU does not see how an exchange will know what kind of coverage a worker really had access to until after employer reporting is reconciled with information from the exchanges and from individual tax returns, which might not happen until more than a year after the consumer received the tax credit subsidies, Trautwein says.

"This weakness on the part of the exchanges could leave consumers potentially liable for thousands of dollars of tax credit repayments, all because of confusing terms and requirements and inadequate eligibility verification mechanisms," she says.

Instant Insights /

3 things NAHU told the IRS about ACA premium tax credits

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