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Health Insurance Subsidies: An Issue that Bears Watching

October 24, 2013 | No Comments
Posted by Frank Ciesla

As noted in an article in Reuters, the Federal District Court has refused to dismiss the litigation challenging the granting of subsidies on federal exchanges.  This is important in New Jersey, since New Jersey is a federal exchange and not a state exchange.  Assuming this litigation continues, and it is ultimately resolved on the merits, it will take a while to be resolved, more than likely into the middle of 2014.  For providers, this issue bears watching.  Should the courts decide that the subsidy does not apply to individuals who obtain their insurance through a federal exchange, the most likely result will be a wholesale dropping of insurance policies by those individuals who have obtained their insurance through the federal exchange if they cannot obtain subsidies.

As pointed out in our blogs of October 7, 2013 and August 23, 2013,  the insurance company is required to maintain the policy for 90 days after a beneficiary ceases making payment.  If people should drop their policies (by ceasing to make insurance payments) those policies will appear to be in effect for a 90 day period.  However, the insurance companies are only responsible for making payment to the providers for care rendered during the first month.  Should the court decision result in a denial of subsidies to individuals that have obtained their coverage through federal exchanges, and those individuals drop their policies, the providers who have provided health care during the “90 day period”, are financially exposed for the care rendered during the final 60 days.  As this suit continues, we will keep an update on our blog.

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