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In re J.H.

Supreme Court of Vermont

December 2, 2016

In re J.H.

         Supreme Court on Appeal from Human Services Board September Term, 2016

          William H. Sorrell, Attorney General, Montpelier, and Seth A. Steinzor, Assistant Attorney General, Waterbury, for Appellant.

          Christine Speidel, Springfield, and W. David Koeninger, Bennington, Vermont Legal Aid, Inc., for Amicus Curiae Office of the Health Care Advocate.

          Reiber, C.J., Dooley, Skoglund, Robinson and Eaton, JJ.

          REIBER, C.J.

         ¶ 1. The State appeals the Human Services Board's decision reversing a determination by the Economic Services Division of the Department for Children and Families (DCF) that J.H. cannot be considered for a subsidized qualified healthcare plan on the Vermont Health Connect exchange because she has health insurance available to her through her husband's employer. The appeal turns on the question of whether, under controlling federal law, healthcare insurance must be considered available to J.H. through her husband's employer even though her husband elected not to enroll in his employer's plan and she herself could not enroll in the plan unless he did. We affirm the Board's ruling that J.H. could be considered for a subsidized healthcare plan through Vermont Health Connect, but we do so based on a different rationale than that given by the Board.

         ¶ 2. Under the Patient Protection and Affordable Care Act of 2010 (Affordable Care Act), each and every "applicable individual"[1] is required to maintain "minimum essential coverage" (MEC) for health care or pay a tax. I.R.C. § 5000A(a)-(b). Individuals may obtain MEC through government-sponsored or employer-sponsored healthcare plans or through a state insurance exchange such as Vermont Health Connect.[2] Id. § 5000A(f)(1). Moreover, individuals meeting certain criteria may obtain federal subsidies to help them purchase insurance on an exchange. Those subsidies consist of credits against income tax liability, which are called advance premium tax credits (APTC), and limits on out-of-pocket expenses for health care, which are called cost-sharing reductions. See id. § 36B (creating tax credit for individuals with coverage under qualified health plan); 42 U.S.C. § 18082 (establishing program for advance determination of premium tax credits and cost-sharing reductions and for payment of such subsidies to issuers of qualified healthcare plans on behalf of eligible individuals). To receive the cost-sharing reductions, an individual must be eligible for APTC. 45 C.F.R. § 155.305(g)(1)(i)(B). Similar state subsidies may also be available to those eligible for federal premium tax credits. See 33 V.S.A. § 1812 (setting forth eligibility standards for state subsidies).

         ¶ 3. Federal regulations require state exchanges like Vermont Health Connect to perform certain functions related to eligibility, including determining, based on federally prescribed standards, an individual's eligibility to purchase a qualified healthcare plan through a state exchange and to receive APTC and cost-sharing reductions. See 45 C.F.R. § 155.200(a) (requiring exchanges to perform functions set forth in specified subparts of regulation related to determining individual eligibility); 45 C.F.R. § 155.305(f)(5) ("The Exchange must calculate advance payments of premium tax credit in accordance with [Treas. Reg.] 1.36B-3."); see also 33 V.S.A. § 1805(6) (listing, as one of state exchange's duties, determining premiums and subsidies required under federal law). In Vermont, DCF's Economic Services Division determines eligibility for enrollment in qualified healthcare plans through Vermont Health Connect "in accordance with applicable provisions of federal and state law and regulations" pursuant to its Health Benefit Eligibility and Enrollment Rules. Health Benefit Eligibility and Enrollment Rule 2.05, Code of Vermont Rules 13 170 001 [hereinafter HBEE Rules], https://www.lexisnexis.com/hottopics/codeofvtrules.

         ¶ 4. The critical federal regulation in this case is Treasury Regulation § 1.36B-2. Under that regulation, an applicable taxpayer-defined as "a taxpayer whose household income is at least 100 percent but not more than 400 percent of the Federal poverty line for the taxpayer's family size for the taxable year"-may obtain the federal subsidies if the taxpayer is enrolled in a healthcare plan through an exchange and is not eligible for MEC other than through the exchange. Treas. Reg. § 1.36B-2(a)-(b). In general, "an employee who may enroll in an eligible employer-sponsored plan . . . and an individual who may enroll in the plan because of a relationship to the employee (a related individual) are eligible for minimal essential coverage under the plan." Id. § 1.36B-2(c)(3); HBEE Rule 23.01(c)(2) (same). "An employee or related individual may be eligible for minimum essential coverage under an eligible employee-sponsored plan . . . if the employee or related individual could have enrolled in the plan . . . during an open or special enrollment period." Treas. Reg. § 1.36B-2(c)(3)(iii) (emphasis added); HBEE Rule 23.01(c)(4)(i) (same).

         ¶ 5. Pursuant to these rules, if J.H. is eligible for MEC under her husband's healthcare plan-meaning she "could have enrolled" in the plan-she may not receive federal or state subsidies through a Vermont Health Connect plan on the exchange.

         ¶ 6. The salient facts in this case are undisputed. J.H. previously received Medicaid through the Dr. Dynasaur program but aged out of the program upon turning nineteen in 2013. The State continued to provide her with coverage under the program for two more years, however, due to an administrative error. In October 2015, DCF notified J.H. that her Dr. Dynasaur coverage would terminate at the end of that month but that she could apply for coverage through Vermont Health Connect.

         ¶ 7. The following month, J.H. applied for healthcare coverage on the exchange. She reported that she was newly married, had a total gross household income of $36, 868, and that her husband's employer offered healthcare insurance to him and to her as a spouse. The coverage available under the husband's employer-sponsored plan met the Affordable Care Act's MEC standards. Under the plan's terms, J.H. could not enroll in it unless her husband also enrolled.

         ¶ 8. J.H.'s husband, as an unadopted former foster child over the age of eighteen, is eligible for Medicaid until he reaches the age of twenty-six. HBEE Rule 9.02(2)(e). Persons with this status are eligible for Medicaid regardless of the amount of their household income. Id. Rule 9.03(e). The husband could have enrolled in his employer-sponsored plan, but he chose not to do so because he had available to him premium-free Medicaid coverage.

         ¶ 9. Based on these facts, DCF's Economic Services Division concluded that the husband's employer-sponsored plan was available to both J.H. and her husband and that J.H. was therefore ineligible to receive subsidies for insurance purchased through Vermont Health Connect. J.H. appealed to the Human Services Board, ...


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