30,000 could lose coverage or subsidies as exchange addresses income, immigration discrepancies

A sign in Access Health’s Hartford office.

As many as 30,000 customers of the state’s health insurance exchange could lose their coverage or see a drop in the subsidies used to discount their premiums next month because they did not submit information needed to verify their eligibility, acting exchange CEO Jim Wadleigh said.

Those changes, which will take effect Dec. 1, could affect more than 10 percent of the Connecticut residents who signed up for private insurance or Medicaid through the exchange, Access Health CT. They’re the result of the exchange’s implementing a process to adjust or cut off coverage of people who failed to address discrepancies related to the income or citizenship information they provided when applying for coverage.

The federal government recently began using a similar process for the exchanges it runs, and Wadleigh said federal officials had been pushing Access Health to move forward with the process.

Verifying the income and immigration or citizenship status of people who get coverage under Obamacare has been a controversial issue nationally. Critics of the health law have warned that failing to have processes in place early on to cut off those whose information couldn’t be verified made the exchanges vulnerable to fraud and could waste taxpayer dollars.

But immigration advocates and other groups have raised concerns about efforts to terminate coverage for people with lingering application discrepancies, saying they could hurt people who were trying to provide documentation but had not been able to because of language barriers or other problems.

The terminations and subsidy adjustments could be a potential source of confusion in the coming weeks as the exchange begins the second sign-up period for private insurance under Obamacare, which starts Nov. 15.

Who’s affected and why

The Connecticut residents affected are those who signed up for coverage through Access Health and who provided income or citizenship information on their applications that could not be verified through the federal and state data sources the exchange uses.

The federal health law allows people in those situations to receive coverage and financial assistance based on the information they entered. But they’re supposed to provide documentation to back it up within 90 days. After that, if the person still hasn’t provided verification, exchanges are supposed to go by the information they get from official sources, which would most likely mean reducing the amount of financial assistance the person receives or cutting off his or her coverage.

For example, a person who applied saying he earned $30,000 would qualify for subsidies to discount his insurance premiums. But if the most recent tax returns on file with the federal government show that the person made $60,000, he would lose his subsidy after 90 days unless he could prove that his income is now lower than it was when he filed those tax returns.

That’s how the verification process is supposed to work. But for most of this year, state and federally run exchanges didn’t terminate people’s coverage or subsidies if they didn’t provide proof. Wadleigh said Access Health’s system was not ready to handle the process when it launched last fall, and said officials had been waiting for guidance from the federal government before proceeding. In addition, he said, Access Health officials didn’t want theirs to be the first exchange in the country to cut off paying insurance customers.

What happens next

Wadleigh said about 30,000 Access Health customers haven’t provided information needed to verify their income or citizenship or immigration status. That includes about 21,000 people covered by Medicaid and 9,000 with private insurance plans. About two-thirds had discrepancies with their income, Wadleigh said, and the rest needed to address discrepancies in their citizenship or legal residency status.

Over the next week, the exchange will check the information the 30,000 customers provided against federal and state data sources. If discrepancies still exist, the customers will either have their coverage cut off or, if the discrepancy is related to income and has resulted in too steep a discount on private insurance, their premium subsidy will be cut or eliminated. The changes would take effect Dec. 1.

People whose subsidies are reduced or eliminated won’t lose coverage, but their next insurance bill — in December — would likely be significantly higher than they’re used to.

Wadleigh said the affected customers were sent four letters over a 75-day period, asking them to send information to verify what they entered on their applications. The letters were sent in the language people indicated they spoke when they created their accounts to apply for coverage, he said.

During the summer, exchange staff called about half the customers who had information that needed to be verified — which at the time included many who have since provided documentation. In addition, Wadleigh said, the exchange monitors returned mail to ensure that customers don’t miss notices because they’ve moved. It also uses bar codes on forms to track when they’re mailed back, so people won’t be at risk of having their coverage cut off while their paperwork is being processed.

“We feel as comfortable as can be that we’ve done a lot to reach out to these individuals, to try to get them to come back in and send us this information,” he said.

It’s possible that not all of the 30,000 people will face changes to their coverage status if the information they entered is accurate and can be verified through the upcoming check of federal and state data sources. People who applied for coverage this year were asked to estimate their 2014 income, but the exchange had to rely on tax returns from previous years in its initial checks. Until May of this year, the exchange used 2012 returns, but has since been using 2013 tax information. Access Health now also checks income information against data from the state Department of Labor.