New Bill Mandates Quarterly Audits to Cut Subsidies for Dual Medicaid/Marketplace Enrollees

This legislation requires the Secretary of Health and Human Services (HHS) to set up a mandatory, quarterly program aimed at catching people who are enrolled in two places at once: a state Medicaid or Children’s Health Insurance Program (CHIP) plan, and a subsidized health plan through the federal Health Insurance Marketplace (Exchange).

If the system flags you as dually enrolled, the bill mandates immediate, concrete enforcement. Specifically, the Secretary must take “appropriate actions” to ensure that the individual immediately stops receiving premium tax credits (which lower monthly premiums) and cost-sharing reductions (which lower deductibles and co-pays). The goal is to prevent improper federal spending on overlapping subsidies, but the real-world impact could be a sudden, sharp jolt to affordability for those caught in the administrative crossfire.

The Double Coverage Trap

Why does this matter? Federal rules generally prohibit receiving tax credits for a Marketplace plan if you are eligible for and enrolled in Medicaid or CHIP. The bill seeks to enforce this rule by requiring HHS to use the existing Public Assistance Reporting Information System (PARIS)—a system already used to share data across states and federal agencies—to compare enrollment lists every three months. This comparison is supposed to identify anyone who has both a subsidized Exchange plan and active Medicaid/CHIP coverage.

Think of it like this: If you’re a parent whose income fluctuates, you might transition from the Marketplace to Medicaid, or vice versa. Sometimes, the administrative paperwork for dropping one coverage type lags behind the enrollment in the new one. For a few weeks or even a month, you might technically be enrolled in both. Under this bill, that administrative lag could trigger an immediate termination of your subsidies, even if you’re already in the process of correcting the enrollment error.

The Immediate Cost Shock

This is where the rubber meets the road for low-income families. For those who rely on subsidies to make coverage affordable, losing those premium tax credits and cost-sharing reductions essentially means their health insurance bill explodes overnight. If you’re paying $100 a month for a plan thanks to a subsidy, and that subsidy is suddenly revoked, your premium might jump to $500 or more, making the plan unaffordable almost instantly.

While the intent is to stop improper payments, the risk here is that the enforcement mechanism is faster than the correction mechanism. If the system flags a dual enrollment, the bill requires the subsidies to be cut off immediately. If you’re a working parent who just transitioned to a higher-paying job and is waiting for the state to officially terminate your CHIP coverage, you could lose the subsidies on your new Marketplace plan before the state catches up. This creates a coverage gap risk, forcing people to choose between paying a massive premium or dropping coverage entirely, which is a major concern for those who need continuous care.

The Implementation Challenge

The legislation gives HHS 60 days to establish this program, which is a tight turnaround for setting up mandatory, quarterly data matching and enforcement across all states. The bill mandates the outcome (stopping the subsidies), but the use of “appropriate actions” leaves some room for the Secretary to decide how that enforcement happens—for example, how much notice an individual gets before their subsidies are terminated. Given the high stakes—affordable healthcare—any administrative error or delay in notification could lead to serious consequences for the affected individuals, who are often the most vulnerable to sudden changes in healthcare costs.