Proposed FPL Changes and the Impact to Financial Assistance

Joseph Maretti, Ridiculously Nice Sales

The Trump Administration has proposed updating the way in which the Federal Poverty Level (FPL) is measured. The formula that currently determines someone’s poverty level has been around since the Social Security Administration created Medicare in 1965. The way Americans have spent their disposable income, along with inflation, has changed considerably since then. One could argue that it’s time to adjust this formula to be more in line with today’s current inflation measures.

Today, the U.S. Census Bureau looks at the poverty threshold and factors in inflation to provide an update on how many Americans are living in poverty every year. The Department of Health and Human Services (DHHS) issues poverty guidelines based on the number of individuals for each household. For example, the poverty level for a household of four is an annual income of $25,750. To get the poverty level for larger families, simply add $4,420 for each additional person in the household. For smaller families, subtract $4,420 per person. Guidelines for Alaska and Hawaii are higher due to cost of living. DHHS then bases their poverty guidelines around this threshold to determine an individual’s eligibility for certain benefits. Under the current proposal, the Office of Management and Budget would adopt a lower rate of inflation to determine the poverty threshold. This means fewer people would qualify for certain benefits as the poverty threshold would rise more gradually over time.

How could this impact your facility?

Should this proposal go through, it could mean a significant number of individuals who currently qualify for the financial assistance benefit would no longer be eligible. To help paint a clearer picture, the Center on Budget and Policy Priorities (CBPP), a left-leaning think tank, released a report this month examining the 10-year impact of the proposal:

• More than 250,000 seniors or people with disabilities could either lose their eligibility for Medicare Part D’s low-income subsidy program or receive less assistance from it.
• More than 150,000 seniors or people with disabilities could lose assistance with their Medicare premiums.
• More than 300,000 children could lose Medicaid and CHIP coverage.
• More than 250,000 people could lose the coverage they gained through the Affordable Care Act’s Medicaid expansion.
• More than 150,000 ACA exchange enrollees could lose some or all of their cost-sharing assistance.
• Tens of thousands of ACA enrollees could lose their premium subsidies, along with millions who receive smaller subsidies.

According to the Congressional Budget Office (CBO), estimates indicate that the yearly cut across federal health coverage programs would total in the billions of dollars by the tenth year. The impact on program eligibility thresholds would roughly double between the tenth and twentieth year; should the policy go into effect.

In the event the administration is successful, it may be likely that alternative measures will be created to determine the poverty level for social programs at the State level, so as not to rely on the federal poverty line.

Many hospitals rely heavily on the revenue that is generated through these federal programs for their indigent patient population, so it’s important to keep this proposed legislation on your radar. Americollect will continue to monitor this situation as it unfolds and watch for any updates or changes to the proposed regulation.