PPACA exchange: Tax credit tracking improved

Managers of the state-based exchange in Colorado are reporting a sign that a key Patient Protection and Affordable Care Act (PPACA) subsidy program may have worked better in their state in 2015 than it worked in 2014.

See also: GAO: Many PPACA exchanges missed a tax credit reporting deadline

The staff of the exchange, Connect for Health Colorado, says the size of the gap between the amount of advance premium tax credit (APTC) cash exchange plan carriers actually received and the amount they think they should have received appears to be shrinking.

The APTC reconciliation gap has shrunk to 4.9 percent of $172 million in total 2015 APTC payments, from 6.7 percent of $351 million in APTC payments made for 2014, according to Connect for Health Colorado figures.

Connect for Health Colorado is expecting to get more exchange coverage notices, or Form 1095-A notices, and the extra 1095-A data, which should reduce the size of the 2015 reconciliation gap even more, exchange managers say.

The change suggests that the exchange and exchange plan issuer systems may have done a better job in 2015 of tracking enrollment, changes in enrollment, grace periods for late payments, and cancellations of coverage due to non-payment, according to the exchange managers’ analysis.

Drafters of PPACA created the APTC program in an effort to help moderate-income consumers use the tax credit subsidy money to reduce their share of the cost of exchange plan premiums while the benefit year is still under way.

A family that uses the APTC subsidy is supposed to predict what its income will be during the benefit year while it’s applying for coverage. For 2015, for example, a family that applied for coverage on Nov. 1, 2014 might have had to try to estimate what its income might be throughout 2015. 

Exchange plan users who received APTC subsidies to cut what they paid of their own pockets for 2015 coverage are now supposed to use Form 8962 to reconcile the amount of APTC help they actually received with the amount of help the Internal Revenue Service (IRS) thinks they should have received. APTC users who received little subsidy help get cash back from the IRS. Many APTC users who received too much subsidy help are supposed to reimburse the IRS for some or all of the excess subsidy money.