Biden Administration Extends Obamacare Eligibility to DACA by Regulation

HHS estimates that the rule may cost taxpayers $305 million per year by fiscal year 2026

By Elizabeth Jacobs on May 7, 2024

The U.S. Department of Health and Human Services (HHS) is amending its regulations to allow beneficiaries of the Deferred Action for Childhood Arrivals (DACA) program1 to be eligible to receive benefits under the Patient Protection and Affordable Care Act (ACA, also known as Obamacare) — including government subsidized health insurance. HHS estimates that the rule may cost taxpayers $305 million per year by fiscal year 2026.

The ACA generally requires that in order to enroll in a qualified health plan through an exchange, an individual must be either a citizen or national of the United States or be “lawfully present” in the United States. The ACA also generally requires that individuals be “lawfully present” to be eligible for insurance affordability programs such as premium tax credits, advance payments of the premium tax credit, cost sharing reductions, and Basic Health Program (BHP) enrollment. While the ACA does not specifically define “lawfully present”, it does specify that an alien must be “reasonably expected to be lawfully present for the period of their enrollment”.

When HHS issued regulations governing eligibility to enroll in a Qualified Health Plan through an Exchange in August 2012, HHS explicitly excluded DACA recipients from the definition of “lawfully present”. HHS reasoned that considering DACA recipients eligible for insurance affordability programs was “inconsistent with the relief that the DACA program afforded”, i.e., temporary protection from removal proceedings. The agency, however, included Temporary Protected Status (TPS), Deferred Enforced Departure (DED), parole, and other deferred action recipients as “lawfully present” for the purpose of the statute. HHS also excluded DACA recipients from the definition of “lawfully residing” for purposes of Medicaid or Children’s Health Insurance Programs (CHIP) eligibility under section 214 of the Children's Health Insurance Program Reauthorization Act of 2009 (CHIPRA 214 option). In 2014, HHS issued regulations establishing the framework governing a BHP, which also aligned the definition of “lawfully present” with that issued for Exchanges, Medicaid, and CHIP.

Under this final rule, DACA recipients will specifically gain eligibility for enrollment in a Qualified Health Plan through an Exchange and a BHP for states that elect to operate a BHP. The definition of “lawfully present” used in determining eligibility for Medicaid and CHIPs under the CHIPRA 214 option continues to apply. DACA recipients, however, will continue to remain eligible for limited Medicaid coverage for emergency medical condition treatment consistent with 8 U.S.C. § 1611(b)(1)(A) and 42 C.F.R. § 435.406(b).

HHS has justified this change in policy by stating that, after “further review and consideration, it is clear that the DACA policy is intended to provide recipients with a degree of stability and assurance that would allow them to obtain education and lawful employment, including because recipients remain lower priorities for removal. Extending eligibility to these individuals is consistent with those goals.” Of course, the ACA was enacted by Congress before the Obama administration created the DACA program in June 2012. Congress never contemplated providing subsidized health insurance to DACA, and, perhaps more importantly, Congress has never authorized DACA.

USCIS reports estimated the DACA population to stand at about 545,000 individuals as of September 30, 2023 (more than 800,000 aliens have had DACA at one time or another since the program’s creation in 2012). Given that estimate, this rule may benefit as many as 147,000 DACA recipients, although HHS predicts that 100,000 DACA recipients are likely to enroll for the Exchanges and BHP. Most DACA recipients (73 percent) are already covered by health insurance through employer-based plans.

CIS submitted a public comment opposing HHS’s proposal to allow DACA recipients to receive ACA benefits in June 2023. In our comment, CIS argued that HHS should continue to exclude DACA from this definition because DACA has been determined by federal courts to be substantively invalid under federal law.

Additionally, CIS argued that HHS must also exclude TPS, DED, parole, and deferred action recipients (including DACA), generally, from the definition of “lawfully present” for ACA benefit purposes because these categories of aliens may not be “reasonably expected to be lawfully present for the duration of their enrollment”. TPS, DED, parole, and deferred action recipients have all received temporary forms of forbearance or permission to enter the United States, have no lawful immigration status, and no legal right to remain in the United States. As a result, they do not meet the standard Congress set to determine whether an alien should be eligible for benefits under the ACA.

Status of the DACA Litigation

On September 13, 2023, the U.S. District Court for the Southern District of Texas ruled that the Biden administration’s 2022 DACA regulation, like the original 2012 DACA policy created by an Obama administration memorandum, was unlawful and an abuse of executive branch authority. The ruling allows current DACA recipients to maintain and renew their DACA status and work authorization until they expire. DHS, however, is prohibited from approving new (or “initial”) DACA applications. The Fifth Circuit is currently reviewing the case against DACA — but the court’s prior ruling on the unlawfulness of the 2012 DACA memorandum suggests that the court is likely to reject the Biden administration’s arguments that the program is now somehow legal. Experts expect the case to make its way to the Supreme Court for a final resolution.

End Note

1 The Obama administration, through issuance of a three-page policy memorandum, created the DACA program on June 15, 2012. DACA provides immigration benefits, including employment authorization and forbearance from deportation, to certain aliens who are in the United States illegally. In addition to other eligibility criteria, beneficiaries must have been under the age of 31 on or before June 15, 2012 and have entered United States prior to 2007, thus the DACA-eligible population is now between the ages of 27 to 43 years old.