Study Touts Timely Reporting of Income Changes Under ACA

Timely reporting of income changes is essential for residents of California and other states to avoid owing the federal government refunds for health insurance subsidies under the Affordable Care Act, according to a study by UC-Berkeley, UCLA and the Economic Policy Institute, Payers & Providers reports (Payers & Providers, 9/12).

Background on Exchange

The ACA's health insurance exchanges -- which primarily will serve individuals and small businesses -- are designed to function similarly to websites like Amazon and Expedia, allowing users to choose among various health plans through an easily navigable online store.

California's exchange is expected to open for registration in October (California Healthline, 9/10).

Under the ACA, individuals with annual incomes between 100% and 400% of the federal poverty level who do not have access to affordable coverage through their employer are eligible for subsidized coverage through the exchanges (California Healthline, 9/9).

Details of Study

Researchers found that mid-year income changes could cause individuals to owe money to the federal government for exchange subsidies.

However, researchers said individuals can avoid higher repayments by reporting such changes as soon as possible.

Elise Gould -- a health policy researcher at EPI -- said that reporting income changes quickly "will make a significant difference in both the share of people who will owe repayments and the size of those repayments."

For example, if no families report income changes during a single year, 38% of those receiving subsidies would owe the government a median of $857 each, the report found. If families report income changes in a timely manner, only 23% would owe money to the government and those that do would pay a median of $343 each.

Recommendations

Gould said that "[c]onsumer education is essential" for residents to avoid higher payments to the government.

Ken Jacobs -- chair of UC-Berkeley's Center for Labor Research and Education -- suggested that exchanges in California and other states:

Inform consumers about how tax credits work;
Educate consumers about the importance of promptly reporting changes in income, family size and tax filing status; and
Periodically remind enrollees to report such changes (Payers & Providers, 9/12).

This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.