The CMS has sent letters to Medicaid consumers (PDF) who received tax credits to purchase insurance through the Affordable Care Act marketplace.
The agency says these people will have to terminate marketplace coverage and pay back the amount of the credit they've received.
A CMS spokeswoman declined to say how many people fall into this group only noting it was “a small number.”
“We're committed to helping consumers with their coverage through the Health Insurance Marketplace and will continue to work with them to understand their options,” the spokeswoman said.
The issue exists in states that used the the federal marketplace, HealthCare.gov, not those living in state-based exchanges.
Consumers are finding themselves being dually-enrolled if they've experienced a life change, like a drop in income, that made them eligible for Medicaid after they had purchased marketplace coverage.
Similarly, consumers who are enrolled in marketplace coverage may have applied and been awarded Medicaid coverage while failing to terminate a marketplace plan.
The notice from the CMS tells consumers the onus is on them to cancel their exchange plans, something people may not have realized.
“We have shown in research these are folks whose incomes fluctuate constantly and may not understand reporting,” Sara Rosenbaum, a professor of health law and policy at George Washington University.
Experts predict the glitch will cause problems come tax time.
“The CMS letter may lead to considerable confusion,” said said Kip Piper a Washington-area consultant and former senior official at the CMS. “Many people will not understand what they need to do. Low income families tend to move often, so many addresses may be inaccurate.”
More troubling is that many states use different brand-like names for their Medicaid and CHIP programs, so many individuals may wrongly assume it does not apply to them. Many state CHIP programs are integrated with Medicaid and not separate. So many know Medicaid or CHIP under different names or the same name, Piper added.
To help find these people, CMS is enlisting periodic data matching which uses existing non-employer sponsored coverage data to check whether a consumer who is enrolled in Marketplace coverage with tax credits is also enrolled in Medicaid or Children's Health Insurance Program coverage.
The CMS will be conducting periodic and regularly scheduled data matches, the agency says, and will send notices accordingly.
Consumers can enroll in both marketplace and Medicaid coverage, but they have to pay the full premium for marketplace coverage without tax credits. With dual coverage, Medicaid would kick in only after other coverage has been exhausted.
According to the CMS, the first round of PDM could not identify all dually-enrolled consumers because not all states were able to fully participate in the data mining. The states not affected in this round include Alaska, Delaware, Georgia, Maine, Michigan, New Jersey, Oregon, South Carolina, Tennessee and Wyoming, all state-based exchanges.
The CMS said those states should expect to see their residents scrutinized in future PDM scrubs.
Expert hope this a teachable moment for states and the CMS, said Judy Solomon, vice president for health policy at the Center on Budget and Policy Priorities.
She worries this issue affects people who already struggle with low income, demands of their time and limited access to healthcare.
The inadvertently provided tax credits are the latest issue plaguing HealthCare.gov. In recent months, the federal exchange has been marked with controversy regarding the security of consumer's information and concerns that it can be prone to fraudulent activity.