KFF: More than 20M of newly unemployed could qualify for ACA tax credits

As unemployment continues to skyrocket due to COVID-19, a new analysis shows that more than 20 million people losing job-based insurance could get a tax credit on the Affordable Care Act’s insurance exchanges.

But nearly 6 million people will not be eligible for such credits and must pay the full cost of coverage, according to the analysis from the Kaiser Family Foundation released Wednesday.

The analysis looked at the unemployment claims from March 1 to May 2 as the COVID-19 pandemic wrecked the economy. The analysis estimated that 26.8 million people will become uninsured due to the loss of their employer-sponsored coverage and don’t get any other coverage.

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Kaiser predicted that 79% of those people who lost coverage and became insured are likely to be eligible for income-based tax credits that lower the price of ACA plans. Kaiser found that 12.7 million could get an ACA plan via Medicaid and 8.4 million through the marketplace.

“Overall, nearly 78 million people live in a family experiencing job loss since March 1,” Kaiser said. “Some already have coverage from a source besides the previous employer, which they would retain, or could switch to coverage offered by their spouse’s employer or, for young adults, through parents.”

Some state-based ACA exchanges have reopened enrollment periods. Colorado’s exchange announced earlier this week it had signed up more than 14,000 people.

But the Trump administration has resisted reopening enrollment on HealthCare.gov, which is used by residents in 38 states to pick ACA plans. However, there are is an ongoing special enrollment period for people who recently lost their jobs.

HealthCare.gov signed up 8.3 million people for ACA plans for the 2020 coverage year after open enrollment ended last December. 

A growing issue will also be the Medicaid coverage gap, where someone is ineligible for Medicaid but has an income too low to qualify for tax credits for the ACA plans.

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At first, 150,000 people who live in states that had not expanded Medicaid under the ACA would fall into this gap. But Kaiser projects that number could balloon to 1.9 million by January 2021 when unemployment benefits for many workers expire.

The analysis also found that about 16.8 million people who lost employer coverage could be eligible for Medicaid by January 2021, which would place a “potential strain on state budgets and provider capacity,” Kaiser said.

So far, 14 states have not adopted the Medicaid expansion, according to Kaiser.

The analysis comes as major insurers have pulled some of their guidance on how many customers they will have by the end of 2020 due to massive uncertainty from the pandemic.

Humana, for example, pulled its large and small group and Medicaid membership outlook as states are not disenrolling beneficiaries and more individuals are qualifying each day.