Every day, people change jobs, get married, or get divorced. Life-changing decisions often cause gaps in health insurance coverage, a situation that could persist under health reforms enacted last year. But a new report suggests policy modifications that would help keep insurance coverage stable as reforms go into effect.
In the report, released today, the Commonwealth Fund, a private foundation that supports independent health policy research, explains how coverage gaps may occur. Individuals will receive federal premium subsidies in the form of tax credits, which will be tied to income. As a result, people with income fluctuations could be uncertain about their out-of-pocket costs or eligibility for Medicaid. Some may forgo insurance to avoid the confusion.
Also, small businesses will be able to buy coverage for their employees through state insurance exchanges created through the reform legislation. Employees could face coverage disruptions if they lose their job and have to sign up for individual coverage, or if they change jobs from a small business using a state exchange as its insurer to a large company that buys insurance outside of an exchange.
To avoid potential coverage gaps, the report offers several recommendations: make coverage effective for 1 year regardless of lifestyle changes; create support programs to help consumers with changing incomes navigate the new system; begin Internal Revenue Service alerts to people whose incomes and therefore insurance tax credits have changed; coordinate families’ eligibility for tax credits, Medicaid, and the Children’s Health Insurance Program; and create state exchanges that cover small businesses and individuals so that people who lose or quit a job with a small employer do not have to sign up for new, individual coverage.
“The implementation of the new law must take the guesswork and uncertainty out of health insurance decisions,” the report’s authors wrote.