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From Health Law Daily, May 28, 2014

ACA provides new health coverage options for those taking Social Security benefits early

By Susan L. Smith, JD, MA

Individuals that claim Social Security benefits early, especially those without access to health coverage, may benefit from certain provisions of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), according to a General Accountability Office (GAO) report titled “Challenges for Those Claiming Social Security Benefits Early and New Health Coverage Option.” In addition to demographic and occupational characteristics and early retirement income of early claimers, the GAO examined how the ACA changes health coverage options for early claims. The GAO found that while the ACA provisions should improve the availability of affordable coverage options, it is too early to know the effect of the ACA provisions on individual retirement decisions (GAO Report,GAO-14-311, May 28, 2014).

ACA health insurance options for early claimers. Provisions of the ACA that became effective in January 2014, offers new affordable health insurance options for early claimers, the GAO reported. These options include coverage through the Health Insurance Marketplace, federal assistance, and expanded Medicaid state programs covering a broader category of low-income adults.

Specifically, the ACA provides additional protections to individuals obtaining coverage through the individual market including requiring issuers offering individual plans to guarantee coverage and prohibits them from basing eligibility or coverage on health status, medical conditions, and other factors. In addition, issuers are prohibited from charging higher premiums based on health status, the use of health services, or gender. Individual plans must also cover certain categories of coverage and provide standardized coverage benefits. The ACA also changed the Medicaid eligibility rules to allow states to cover most adults who have incomes below 133 percent of the federal poverty level. Furthermore, under the ACA, individuals purchasing insurance through the Health Insurance Marketplace may be eligible for income-based premium tax credits and cost-sharing subsidies to reduce the cost of insurance. To be eligible, an individual may not have other qualified coverage such as a government sponsored program or an employer.

Findings. The GAO said that retiring before Medicare eligibility at age 65 may create a challenge to maintaining health insurance early in retirement.

The GAO estimated that, before 2014, nearly one million early Social Security benefit claimers did not have access to government or employer-sponsored health insurance. Although early claimers without access to government or employer sponsored insurance were able to purchase coverage directly through insurers through the individual market, they were more likely to be denied coverage or required to pay a higher premium because of pre-existing conditions.

Of the estimated million early claimers that lacked coverage, the GAO found that 14 percent may be newly eligible for Medicaid in the 26 states that expanded eligibility. Although the remaining 86 percent could choose to purchase coverage through exchanges and most could be eligible for federal tax credits to reduce their premiums, the GAO estimated that 29 percent may not be eligible for either premium tax credits or expanded Medicaid, including 10 percent of early claimers with incomes below the poverty level who live in states that did not expand Medicaid and have incomes too low for the tax premium credits. The GAO noted that the number of early claimers that enroll in the health care options could be influenced by individual and employer decisions made in response to the availability of the new options.

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