7. Impact of Noncompliance and Eligibility for Financial Assistance for Coverage on a Health Insurance Exchange

Section 1902(xx)(7)(B) of the Act specifies the effect of noncompliance with the community engagement requirement as it relates to eligibility for financial assistance for coverage on a Health Insurance Exchange. An individual who is eligible for Medicaid coverage that provides MEC is generally not eligible for advance payments of the premium tax credits (APTC) and the premium tax credit (PTC) used to pay for coverage through a Health Insurance Exchange. Under section 1902(xx)(7)(B) of the Act, for purposes of section 36B(c)(2)(B) of the Code, an individual is deemed to be eligible for MEC for a month if the individual would have been eligible for Medicaid but for their failure to meet the community engagement requirement. As such, an applicable individual who does not demonstrate community engagement or is not deemed to have done so, who would otherwise be eligible for Medicaid coverage under the State plan (or waiver), is precluded from eligibility for APTC and PTC. We expect to issue operational guidance regarding how States should coordinate with exchanges, to ensure proper implementation of this provision.