Why Do Colorado Insurance Exchange Applicants Need to Disclose Asset Information?

There have been a couple of recent articles about Colorado’s experience enrolling people in expanded Medicaid and qualifying them for subsidies on the state-run insurance exchange.  One problem is a lengthy application form asking for all sorts of personal and financial data, including the applicant’s assets. If there are errors entering the data, the computer system freezes the application, and approval can take weeks.

And why do people who want to access the exchange need to apply for Medicaid first?  There are two main reasons.  The first is that Section 1413 of the Affordable Care Act (ACA) requires there to be a single, streamlined application to allow people to access all health financing options (Medicaid, exchange subsidies, etc.) under the law, although it permits the federal Department of Health and Human Services or various states to do this).  For those who make less than the Medicaid expansion cutoff (138 percent of the poverty line, or about $15,900 per year), the ACA originally assumed they would be eligible for Medicaid and thus eliminated any insurance subsidies.  Since the U.S. Supreme Court’s opinion in National Federation of Independent Business v. Sebelius made Medicaid expansion optional for the states, people in opt-out states making less than that amount are in a really bad position – too wealthy for Medicaid, but not wealthy enough for exchange subsidies.  The point is that before people are deemed eligible for the exchanges, whoever considers their applications must conclude they are not eligible for Medicaid.

That brings us to the second reason why the Department of Health Care Policy and Financing wants to know about applicants’ assets, even though it’s not really pertinent for Medicaid eligibility (and it’s certainly not pertinent for exchange subsidy eligibility).  Colorado has long used a horizontally integrated public benefits admissions process to determine eligibility for public assistance programs.  When people apply for Medicaid, they are automatically considered for the Children’s Health Insurance Program, the Supplemental Nutrition Assistance Program and a number of other welfare programs.  Sound like a potential mess?  You could say that.

Mess or not, the system remains in place to this day.  Before a Colorado resident qualifies for exchange subsidies, he or she must submit an application that it used for Medicaid and all public assistance programs.  It’s called the Program Eligibility and Application Kit (PEAK).  One of the programs for which PEAK determines eligibility is the Medicaid Long-Term Care Program, which pays for nursing facility care for recipients over age 65.  Unlike traditional Medicaid, the eligibility test for that does include a maximum asset component – generally, an applicant won’t be eligible if he or she has more than a couple thousand dollars of qualifying assets (under the theory that those with valuable assets should sell them to pay for their own nursing care before making taxpayers do it).

And there you have it.  That’s why people applying for subsidies on the Colorado health insurance exchange need to disclose various assets, and (indirectly) why the applications of many people are frozen and sent to weeks-long limbo.  Funny thing is, the whole single application and horizontal integration was supposed to make it easier for public assistance applicants, not harder.

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