DACA news: 100,000 Dreamers become eligible for Marketplace health insurance

Under a Biden administration rule change, DACA (Deferred Action for Childhood Arrivals) recipients will be eligible to enroll through the health insurance Marketplace and apply for tax credits starting Nov. 1, 2024. The federal government estimates that 100,000 people will be newly eligible for Marketplace coverage under the rule.

Ever since the ACA Marketplaces opened for business in the fall of 2013, they could be used by American citizens as well as lawfully present immigrants. But although DACA recipients are considered lawfully present for some purposes, they have never been allowed to enroll in coverage through the federally run HealthCare.gov Marketplace platform or most of the state-run health insurance Marketplaces.

The change in federal rules will allow DACA recipients in some states to shift from state-funded Medicaid or state-funded subsidy programs onto an ACA Marketplace plan with federal subsidies. For example, California, Colorado, and Washington already offer state-funded enrollment opportunities for DACA recipients. In most states, the new rules will make DACA recipients newly eligible for income-based financial assistance with their health coverage.

Lawsuit challenges new rule regarding DACA health insurance eligibility

In August 2024, 15 states filed a lawsuit challenging the Biden administration’s decision to allow DACA recipients to enroll in Marketplace health coverage. Two of these states (Idaho and Virginia) run their own health insurance Marketplaces, while the other 13 use the federally run HealthCare.gov platform. The lawsuit – which cites the 2023 proposed rule’s estimate of 200,000 newly eligible individuals instead of the final rule’s 100,000 estimate – asks the federal court to postpone the effective date of the DACA health insurance Marketplace access rule.

The plaintiff states have also asked the court to vacate the rule on the grounds that the definition of “lawfully present” it proposes is “contrary to law and unreasonable, arbitrary, and capricious,” and enjoin the Centers for Medicare & Medicaid Services from enforcing the rule. So the implementation of the DACA health insurance Marketplace access rule could potentially change, pending the outcome of the litigation.

Who are DACA recipients?

The Deferred Action for Childhood Arrivals program was created in 2012 to protect young people who had arrived in the United States as children without proper immigration paperwork. The program temporarily protects them from deportation and allows them to work in the U.S. but does not grant them lawful status in the U.S. DACA recipients must renew their DACA status every two years.

As a result of a 2023 court order, U.S. Citizenship and Immigration Services is no longer processing new DACA applications. But the agency is continuing to process renewal applications for people who received their DACA status before July 16, 2021.

All DACA recipients – commonly referred to as “Dreamers” – are undocumented immigrants who came to the United States when they were children. But most Dreamers are not enrolled in DACA. Although an estimated 3.6 million Dreamers are living in the U.S., only about 530,000 of them are DACA recipients. Dreamers who are not enrolled in DACA will continue to be ineligible to enroll in Marketplace coverage in most of the country. (Washington does allow undocumented immigrants to use its Marketplace; Colorado has a separate platform, alongside the state-run Marketplace, that undocumented immigrants can use).

The term Dreamers comes from the DREAM Act (Development, Relief and Education for Alien Minors Act), which would have given legal status to all eligible individuals who arrived in the U.S. as children without documentation. This legislation was first introduced in Congress in 2001 and has been reintroduced numerous times since then, but has never passed.

Can DACA recipients enroll in Basic Health Program coverage?

Under the ACA, states have the option to create a Basic Health Program (BHP), although only three have done so (New York, Minnesota, and Oregon). A BHP provides coverage, with zero or low premiums, to people who don’t qualify for Medicaid and whose household income is up to 200% of the federal poverty level. (New York recently received federal permission to extend its BHP to 250% of the federal poverty level.)

The new federal rules allow DACA recipients to enroll in BHP coverage starting in November 2024, and the administration projects that roughly 1,000 DACA recipients will qualify for BHP coverage under the new rule.

But from a consumer perspective, Oregon is the only state where DACA health insurance eligibility rules for BHP coverage will change in November 2024:

Minnesota has allowed DACA recipients to enroll in BHP coverage since 2017, using state funds to provide the coverage. The federal rule change means that the state will no longer need to fully fund BHP coverage for DACA recipients, but it won’t change anything about enrollees’ eligibility for coverage.

New York began allowing DACA recipients to enroll in BHP coverage in August 2024, under the terms of a 1332 waiver amendment.

But Oregon’s BHP, which became operational in July 2024, does not currently allow DACA recipients to enroll. That will change in November 2024 due to the new federal rule, and DACA recipients will be eligible for 2025 coverage through Oregon’s BHP.

If any other states choose to create a BHP in the future, coverage under those programs would be available to DACA recipients under the new federal rules.

Can DACA recipients enroll in Medicaid?

DACA recipients can only enroll in Medicaid if a state opts to allow this and uses state funds to provide the coverage, which a few states do. State Medicaid programs are typically funded with a combination of state and federal funds, but federal funds cannot be used to provide Medicaid to DACA recipients.

The initially proposed federal rule change would have allowed DACA recipients to enroll in Medicaid and the Children’s Health Insurance Program (CHIP) but that change was not finalized. Instead, the Centers for Medicare & Medicaid Services (CMS) notes that “we are taking more time to evaluate and carefully consider the comments regarding our proposal with respect to Medicaid and CHIP.”

However, DACA recipients will be able to qualify for income-based subsidies for Marketplace plan premiums even with income below the federal poverty level, as is the case for lawfully present immigrants who have been in the U.S. for under five years and are thus ineligible for Medicaid in most states.

For U.S. citizens and immigrants who have been lawfully present in the U.S. for more than five years, premium subsidies are not available if their income is below the federal poverty level, as the ACA called for these applicants to be eligible for Medicaid instead.)

Can undocumented immigrants get health insurance?

The DACA health insurance rule change allows DACA recipients to enroll in Marketplace health coverage and qualify for federal premium subsidies. (As noted above, DACA recipients do not have lawful status in the U.S., but they are considered lawfully present for some purposes.)

But beyond that, federal funding cannot be used to provide health insurance for undocumented immigrants. And undocumented immigrants cannot enroll in coverage through the Marketplace unless a state has obtained federal permission to allow this. (Washington has done so, and Colorado established a separate enrollment platform that undocumented immigrants can use. Maryland intends to seek federal approval to allow undocumented immigrants to use its state-run Marketplace, albeit without any subsidies.

Undocumented immigrants can obtain health coverage outside the Marketplace, either from an employer or directly purchased from an insurance company. And in some states, they can be eligible for state-funded Medicaid coverage. But about half of all undocumented immigrants in the U.S. are uninsured.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.