How Do Immigrants Obtain Health Insurance Under the ACA?

Some Different Rules Apply for Medicaid and for Premium Subsidies

Liberty Island overlooking Manhattan Skyline
istockphoto

If you're an immigrant arriving in the U.S., one of the first things on your to-do list is obtaining health insurance. Unlike many other countries, the U.S. does not have universal health coverage, and although Medicare and Medicaid are government-sponsored health plans, they're not available to new immigrants.

So let's take a look at some frequently-asked questions about what's available for immigrants, including new arrivals and those who have been in the U.S. for a long time.

Are ACA Premium Subsidies Limited to U.S. Citizens?

No. Premium subsidies (premium tax credits) in the exchanges are available to lawfully-present residents, which includes a long list of immigration statuses (note that Deferred Action for Childhood Arrivals—DACA—is not considered an eligible immigration status for purchasing coverage in the exchange).

In fact, premium subsidies are available to recent immigrants with income below the poverty level, which is not the case for non-immigrants or immigrants who have been lawfully present U.S. residents for more than five years.

The ACA calls for people with income below the poverty level to receive Medicaid instead of private plans in the exchange, which is why premium subsidies generally aren't available to applicants with income below the poverty level. But recent immigrants aren't eligible for federally-funded Medicaid until they have been in the U.S. for at least five years (states have the option to use their own funding to extend Medicaid coverage to recent immigrants, which some do, particularly in the case of pregnant women).

When the ACA was written, lawmakers realized that the ACA's lower income threshold for premium subsidies (i.e., the poverty level) would leave recent immigrants with low incomes without any realistic coverage options. So they specifically provided for premium subsidies that would cover new immigrants with income below the poverty level.

In this situation, the applicant's income is treated as if it's at the poverty level (or 133 percent of the poverty level in states that have expanded Medicaid, where that's the lowest income that makes a person eligible for subsidies in the exchange instead of Medicaid). In 2017, that means the enrollee would have to pay 2.04 percent of his or her income for the second-lowest-cost silver plan in the exchange (here's an explanation of how the math works).

Ironically, the coverage gap that lawmakers were trying to prevent for recent immigrants ended up applying instead for 2.6 million non-immigrants in 18 states that opted not to accept federal funding to expand Medicaid (an option states had as a result of a 2012 Supreme Court ruling that eliminated the federal government's right to condition overall Medicaid funding on a state's willingness to expand coverage).

Because those states haven't expanded Medicaid, adults without dependent children are generally ineligible for Medicaid regardless of how low their incomes are. And because premium subsidies aren't available to people with income below the poverty level (since they were supposed to have Medicaid under the ACA), those individuals simply don't have any realistic access to health insurance, as paying full price for coverage isn't generally practical for people with income below the poverty level.

But in every state, recent immigrants with lawfully-present status are eligible for premium subsidies even if their income is below the poverty level.

How Does the Exchange Know That Applicants Are Lawfully Present?

During the enrollment process, the exchanges must verify that the enrollee is lawfully present in the U.S. There is a section on the application where non-citizens can enter their immigration status and include details such as an alien number or an I-94 number (here's a complete list of the documents that can be used to prove immigration status, and how to enter them if you're enrolling via HealthCare.gov; state-run exchanges have similar processes).

If you're not able to enter the document number or you get an error, you'll have an option to upload a copy of your immigration documents, or mail them to the exchange. If you aren't able to provide immigration documents at all, your coverage may end up being retroactively canceled.

In 2014, there were about 109,000 people whose HealthCare.gov enrollments were terminated when they were unable to provide proof of legal U.S. residency. And by mid-2015, coverage was terminated for another 306,000 people who had enrolled in HealthCare.gov plans for 2015 but had not provided adequate immigration documentation.

So if you enroll and are having trouble with the system that verifies immigration status, don't just let it slide, as your coverage could be terminated if you do. Reach out to the exchange for help, either on the phone or in-person at an enrollment center, and make sure that your documentation is accepted.

What Coverage Is Available for Immigrants Who Are 65 or Older?

Before 2014, there were few options for recent immigrants aged 65 or older. Private individual health insurance policies generally weren't available for anyone over the age of 64, and like Medicaid, there's a five-year wait before recent immigrants can enroll in Medicare. So older immigrants often had to rely on long-term travel insurance, unless they had access to an employer-sponsored plan in the U.S.

Even after five years, Medicare was often unaffordable for immigrants. Since Medicare is partially funded by payroll taxes that U.S. workers pay during their careers, Medicare Part A (hospital insurance) is only premium-free for people who have paid Medicare taxes for at least ten years (stay-at-home spouses can qualify for Medicare based on a spouse's work history).

After five years, immigrants who are 65 or older can purchase Medicare even if they haven't paid into the Medicare system via payroll taxes. In 2017, Medicare Part A is $413/month for people without a work history, and Medicare Part B is $134/month (everyone pays a premium for Medicare Part B, regardless of work history). Medigap coverage and Medicare Part D are important supplements that can be added to Medicare, but they come with additional premiums.

But lawfully-present immigrants can enroll in private plans in the individual market as soon as they arrive in the U.S., and thanks to the ACA, they're no longer prevented from doing so if they're over the age of 64 (individual market coverage is available regardless of age, as long as the person isn't also enrolled in Medicare). In addition, premium subsidies are available regardless of age, and as described above, the subsidies are available to recent immigrants with income below the poverty level.

For now, under the ACA, individual and small group premiums for older enrollees are capped at no more than three times the premium charged for a 21-year-old. So an 85-year-old will be charged the same amount as a 64-year-old (in both cases, it's three times the rate charged for a 21-year-old, unless the state requires a lower ratio; it cannot be higher than three to one).

The American Health Care Act (AHCA), which passed the House in May 2017 and is under consideration in the Senate, would increase the ratio, however, so that older enrollees would be charged five times as much as younger enrollees (or even more, if a state were to seek a waiver and implement a higher ratio).

There are still travel insurance plans and "inbound immigrant" health plans available, but they tend to be more limited in scope than the plans available in the exchange, with benefit caps and pre-existing condition exclusions. These plans are not considered minimum essential coverage, which means that the ACA penalty for being without coverage is assessed on lawfully-present immigrants who rely on these plans, unless they have a penalty exemption.

The AHCA would eliminate the ACA penalty retroactively to the start of 2016, but until legislation to eliminate the penalty is enacted, there is still a penalty for being without minimum essential coverage in 2017, unless you qualify for a penalty exemption.

Can an Immigrant Enroll in Coverage Outside of Open Enrollment?

Yes. Becoming a U.S. citizen or gaining lawfully-present status in the U.S. is a qualifying event, which gives the person 60 days to enroll in a plan through the health insurance exchange (note that this is one of just a few qualifying events that does not trigger a special enrollment period for off-exchange plans; the special enrollment period is only available in the exchange).

Some recent immigrants have access to employer-sponsored plans, and those plans also have special enrollment periods for people who are hired outside of open enrollment or experience a qualifying event. So although open enrollment—for both individual and employer-sponsored plans—only comes around once per year, new immigrants have an opportunity to enroll in coverage regardless of when they immigrate.

Can Undocumented Immigrants Obtain Coverage?

Under ACA rules, legally present immigrants can enroll in plans offered through the exchange, and can receive premium subsidies if their income makes them eligible. But the ACA does not have any provisions that allow undocumented immigrants to obtain coverage.

The law explicitly prevents undocumented immigrants from purchasing coverage in the exchange—even if they pay full price; see section 1312(f)(3) of the ACA. Undocumented immigrants are also ineligible for Medicaid. Since they cannot enroll in the exchanges or Medicaid, undocumented immigrants are exempt from the ACA's individual mandate penalty.

California began using state funding to make Medicaid (Medi-Cal) available for undocumented immigrant children as of 2016, and 170,000 children gained coverage as a result.

California officials wanted to take this a step further and allow undocumented immigrant adults to purchase coverage (without subsidies) in California's exchange, Covered California. The state enacted legislation (SB10) in June 2016 to get the ball rolling on this, and submitted a 1332 waiver proposal to the federal government in September 2016, since federal approval is necessary in order to change the rules that currently bar undocumented immigrants from purchasing even full-price exchange plans.

But in January 2017, two days before Donald Trump was inaugurated, California withdrew their 1332 waiver proposal amid concerns that the Trump Administration could potentially use Covered California data to locate and deport undocumented immigrants.

Undocumented immigrants can obtain coverage under employer-sponsored plans or student health plans if they're otherwise eligible, and they can also purchase individual market coverage as long as they buy it off-exchange. But for the time being, they are not able to enroll in coverage through the health insurance exchange in any state.

Sources:

Healthcare.gov. Immigration Status and the Marketplace

Internal Revenue Service, Revenue Procedure 2016-24.

Kaiser Family Foundation: The Coverage Gap: Uninsured Poor Adults in States that Do Not Expand Medicaid. October 19, 2016.

Medicare.gov. Medicare 2017 Costs at a Glance.

National Immigration Law Center. "Lawfully Present" Individuals Eligible under the Affordable Care Act.

Continue Reading