Under the authority of PPACA, HHS approves the operation of state- based marketplaces that meet certain standards, such as the state-based marketplaces’ ability to carry out the required functions of a marketplace consistent with relevant HHS regulations. A state-based marketplace must be a governmental agency or nonprofit entity established by the state. A state may enter into agreements with an eligible entity, such as a state Medicaid agency, to carry out one or more responsibilities of the marketplace. The three state-based marketplaces we selected to examine—Idaho, Maryland, and Rhode Island—have the following structures: Idaho. Your Health Idaho is an independent entity in charge of managing the state-based marketplace for Idaho. The marketplace was established by the state in 2013 and began operating its own platform in plan year 2015. Prior to plan year 2015, the marketplace operated through the federally facilitated marketplace. Your Health Idaho established an agreement with Idaho’s Department of Health and Welfare to conduct eligibility determinations for all applicants seeking subsidized health care. Applicants who wish to receive subsidized health care can begin an application either through Your Health Idaho or through the Department of Health and Welfare. Once eligibility for a qualified health plan is determined, the applicant’s information and eligibility determination, including any subsidy amounts for which the applicant qualifies, are sent back to Your Health Idaho, the entity that manages plan enrollment. Maryland. Maryland Health Benefit Exchange is a public corporation and independent state agency that was established in 2011 and began operations in plan year 2014. The marketplace works with three state executive-branch agencies: the Department of Health and Mental Hygiene, the Department of Human Resources, and the Maryland Insurance Administration. In accordance with federal law, applicants can apply for health coverage through an online portal operated by the marketplace and through other methods such as broker enrollments. Maryland Health Benefit Exchange maintains eligibility and enrollment data for all individuals with qualified health- plan coverage. Rhode Island. Originally established through executive order in 2011, HealthSource RI was formally established in statute in 2015 and operates as a division of the Rhode Island Department of Administration. The marketplace began operations in plan year 2014. Applicants can apply for health coverage through a single online portal operated by the marketplace. HealthSource RI maintains eligibility and enrollment data for all individuals with qualified health- plan coverage. HealthSource RI is also the system of record for premium payment information, since applicants make premium payments directly to the marketplace. In plan year 2015, 14 states, including the District of Columbia, operated their own state-based marketplaces. The remaining 37 states relied on HealthCare.gov, the federally facilitated marketplace. CMS is responsible for operating HealthCare.gov and overseeing the marketplaces operated by the states. Combined, state-based marketplaces accounted for about 28 percent of the over 9.3 million enrollments in all marketplaces as of September 2015, or about 2.6 million enrollments. California and New York together made up about 64 percent of state-based marketplace enrollments, or about 1.7 million enrollments. Our selected state-based marketplaces made up about 9 percent, about 237,000 enrollments, of the total state- based marketplace enrollments. Figure 1 shows states operating their own marketplace platforms and their percentages of the total state-based marketplace enrollments as of September 2015. PPACA generally requires that individuals maintain minimum essential health-care coverage. Minimum essential health-care coverage can include eligible employer-sponsored minimum essential coverage, such as plans offered by an individual’s employer; and non-employer- sponsored coverage, such as individual health coverage purchased directly from an insurance company, a qualified health plan purchased through a state-based or federally facilitated health-insurance marketplace, or coverage received through government-sponsored programs. Under PPACA, to be eligible to enroll in a qualified health plan offered through a state-based or federally facilitated marketplace, an individual must be a U.S. citizen or national, or otherwise lawfully present in the United States; reside in the marketplace service area; and not be incarcerated (unless incarcerated while awaiting disposition of charges). Individuals must meet additional eligibility requirements to receive subsidies for qualified health plans, such as meeting certain household- income thresholds. State-based marketplaces, like the federally facilitated marketplace, are required by PPACA to verify applicant information to determine eligibility for enrollment and income-based subsidies, if applicable. Specifically, the marketplaces must check for Medicaid eligibility before determining eligibility for qualified health plans; validate an applicant’s SSN, if one is provided, by comparison to SSA’s records; verify citizenship or immigration status by comparison with SSA or Department of Homeland Security (DHS) records, respectively; and verify household income and family size by comparison against tax- return data from the Internal Revenue Service (IRS), as well as data on Social Security benefits from SSA. Additionally, marketplaces must determine whether an applicant is eligible for minimum essential coverage through eligible employer-sponsored or non-employer-sponsored plans by using any available HHS-approved data source. HHS regulations permit marketplaces to accept applicant attestation as verification of meeting certain eligibility standards, such as incarceration status, residency, and minimum essential coverage, if a data source is unavailable, unless the attestation is not reasonably compatible with other information obtained by the marketplace. Finally, marketplaces are required to perform periodic examinations of data sources to identify changes to applicant information, such as an applicant’s death. If any of the applicant’s self-attested information does not match the information contained in the data source, or if a data source is not available to verify the information, a data-matching inconsistency is generated. For those inconsistencies that cannot be resolved through a reasonable effort to identify and address the cause of the inconsistency, the marketplaces must send out a notification to the applicant, who generally has 90 days to present satisfactory documentary evidence to resolve the inconsistency. During this time, applicants will receive conditional eligibility. If the inconsistency is not resolved within 90 days, unless an extension is granted, the applicant’s eligibility is determined based on the available information. Depending on the type of inconsistency and the availability of the data sources, the applicant’s eligibility may be terminated, or the applicant’s subsidy amount may be recalculated. Figure 2 shows the marketplace application eligibility- determination and enrollment process for subsidized qualified health plans according to HHS regulations. For eligible applicants, PPACA provides two possible forms of subsidies for consumers enrolling in individual health plans, both of which are generally paid directly to insurers on consumers’ behalf. The premium tax credit is a federal income-tax credit, which reduces a consumer’s monthly premium payment. The other form, known as cost-sharing reduction, is a discount that lowers the amount consumers pay for out-of-pocket charges for deductibles, coinsurance, and copayments. Eligible applicants may use these subsidies to help make their health insurance more affordable. Both state-based and federally facilitated marketplaces use applicants’ reported household income and family size at their time of application to calculate the maximum allowable premium tax-credit amount. Applicants can choose to have some, all, or none of the premium tax credit paid in advance to their insurance issuer. Applicants who choose to have all or some of the credit paid in advance, known as an advance premium tax credit (APTC), must reconcile the amount paid to insurers on their behalf with the amount for which the applicants qualify based on the actual household income and family size reported on their tax returns. Applicants do not have to reconcile any cost-sharing reductions paid on their behalf. The marketplaces are required to provide IRS, through HHS, with information on enrolled individuals on a monthly basis. These data include information on the individuals enrolled in a qualified health plan through the marketplace, the coverage start and end dates, the monthly premium amounts, and the amount of APTC paid to the insurer on behalf of the taxpayer. Marketplaces also provide an annual summary of this information in the Form 1095-A, Health Insurance Marketplace Statement, to applicants who were enrolled in health insurance through the marketplace in the plan year and to IRS. Each of the selected state-based marketplaces’ key processes to verify applicant eligibility for subsidized coverage used various electronic data sources in plan year 2015. PPACA requires marketplaces to verify applicant eligibility using data sources and methods approved by HHS. As shown in table 1, the data sources included various federal data, some of which were accessed via the federal data services hub (data hub), and various state data, among other sources. As reflected in the table above for plan year 2015, two of the selected state-based marketplaces—Maryland and Rhode Island—used the data hub to perform much of their verification process. The third selected state- based marketplace—Idaho—opted to use the state’s existing benefit- eligibility system and leveraged many of its existing eligibility-verification processes, adding or modifying processes where needed, to meet the verification requirements for subsidized qualified health plans. Because Idaho used the same eligibility system for many other benefits programs, Idaho officials noted that they may have preexisting relationships with applicants applying for qualified health plans. For example, an applicant may also participate in other state-administered programs such as Medicaid or the Supplemental Nutrition Assistance Program. In such cases, Idaho leveraged this known relationship to expedite certain steps of the eligibility-determination process, such as the verification of SSN, citizenship, and lawful presence. Officials from our selected state-based marketplaces cited inherent limitations or challenges with using certain third-party data to verify eligibility, such as the age of the data, unreliable results, or limited availability. As noted above, the selected state-based marketplaces had access to local data sources, some of which may have been more current than the data sources used by the data hub.