Coverage Alternatives for Low and Modest Income Consumers

The Patient Protection and Affordable Care Act (ACA) describes a continuum of subsidized coverage for individuals with incomes below 400 percent of the Federal Poverty Level (FPL): Medicaid, the Children’s Health Insurance Program (CHIP), Basic Health Program (state option) and advanced premium tax credits (APTCs)/cost-sharing reductions (CSRs) — collectively, insurance affordability programs (IAPs). To ensure a seamless system of coverage, the ACA requires a single streamlined application for all IAPs and a coordinated process for IAP eligibility and enrollment. States are looking beyond the eligibility and enrollment process and are exploring different mechanisms to address the costsharing cliff in the Exchange and also to promote continuity of coverage and care as consumers transition across IAPs.

The ACA gives states the option to create a Basic Health Program (BHP), a state-run, subsidized coverage vehicle for individuals with incomes below 200 percent FPL who are eligible for a Qualified Health Plan (QHP) and federal tax subsidies.1 Some states, particularly those that have already expanded their Medicaid programs above 138 percent FPL, have expressed interest in pursuing a BHP in order to reduce premiums and cost-sharing that lower income families would otherwise have to pay for QHP coverage. In sub-regulatory guidance issued on February 6, 2013, the Centers for Medicare and Medicaid Services (CMS) indicated that it will issue BHP proposed rules for comment in 2013 and final guidance in 2014. Based on this timeline, BHP implementation in interested states cannot occur before the 2015 coverage year.

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