Tuesday, March 24, 2020

Unemployed alert: When NOT to seek health insurance through the ACA marketplace

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The expected economic fallout from the coronavirus pandemic is shocking. Morgan Stanley forecasts that the unemployment rate will approach 13% next quarter. We're talking Depression.

That onrush will put enormous strain on the enrollment infrastructure established by the ACA for the private plan marketplace and Medicaid, at a time when our healthcare infrastructure will also be under tremendous strain and flux. Thank God the core ACA programs, Medicaid expansion and the subsidized marketplace, are intact and funded. But the enrollment machinery is balky.

I am particularly concerned about one complication that could flummox a lot of newly uninsured people: the mismatch between marketplace and Medicaid income assessments. While subsidy eligibility and subsidy size in the marketplace is determined on the basis of annual income, Medicaid eligibility is determined on the basis of monthly income.  While the HealthCare.gov application prompts applicants to report both estimated annual and current monthly income, and should find Medicaid eligibility on the basis of monthly income if it's below the threshold, several experienced enrollment assisters have told me that in this circumstance they prefer to apply directly through a state Medicaid office or website.*

It also suggests that some people may actually have a choice of marketplace or Medicaid, since a newly unemployed person, or a self-employed person whose income drops abruptly, has to estimate income for the year. Let's say you're a single adult whose job pays $4,000 per month,and you're laid off at the beginning of April, when you've earned $12,000 to date. Estimate your income for the full year at $17,000, and you're on Medicaid. Estimate it at $18,000, and you're in the marketplace, and eligible for the highest level of Cost Sharing Reduction, which will put your deductible in the $0-500 range. A benchmark silver plan will cost you $56 per month at that income.  At a $20,000 annual income, the benchmark premium will go to $77/month and the deductible (under the second strongest CSR level level) will probably be in the $500-1000 range.

Because the ACA Medicaid expansion established no asset test for Medicaid eligibility -- anyone in a household with income under 138% of the Federal Poverty Level qualifies -- high earners could become Medicaid-eligible even if their year-to-date income at the time of unemployment exceeds the threshold for subsidy eligibility in the marketplace (400% FPL, or $49,960 for an individual, $103,000 for a family of four). That assumes no unemployment insurance income, or a level below Medicaid eligibility.  High self-employed earners may find themselves in this category if their sources of income dissolve. [Update, 4/26: The CARES Act renders the self-employed and others not ordinarily eligible for unemployment benefits eligible -- and adds a $600/wk extra UI benefit for up to four months. See note at bottom.]

The experience of people I've helped apply for Medicaid suggests that enrollment is often slow and balky. State Medicaid offices and enrollment websites will likely be flooded with new applicants. A lot will depend on the prevailing attitude in a given state government. In a disaster, states can seek Medicaid waivers to streamline eligibility determinations -- essentially to enroll anyone who declares an income that renders them eligible, and suspending eligibility redeterminations for the duration of the crisis.* In recent years states have gone the other way, stepping up their technological ability to detect income increases that disqualify people from Medicaid.

So the question now for state governments is what do you want to do? Minimize your uninsured population during a pandemic, or minimize state expenditure on Medicaid?

In a pandemic, you want low income people on Medicaid.** No premium, no cost sharing, no balance billing, no muss no fuss once you've located providers who accept the insurance. In fact we should always want low income people on Medicaid -- say, to 200% FPL. But that's a tale for a different day, unless the pandemic changes our legislative dynamics beyond recognition.

Related: Uninsured in a pandemic? Seek help -- it's likely available
*  Update, 4/26: I had originally written that HealthCare.gov might not recognize Medicaid eligibility based on current monthly income if the actual or estimated annual income exceeded the annual eligibility threshold. That was an error -- though several experienced navigators told me that they prefer applying directly through state Medicaid departments in this circumstance.

One further complication: The CARES Act, the Covid-19 relief bill signed into law on March 27, provides a $600/week boost to ordinary unemployment income for up to four months, which comes to a maximum of $10,200. This income counts in the determination of marketplace subsidy eligibility but does not count toward Medicaid eligibility. While CMS has promised to enable HealthCare.gov to recognize the extra $600/week unemployment benefit as income for marketplace purposes while discounting it when determining Medicaid eligibility, that capability is not yet in place.

** On March 22, the president declared a national emergency under the Stafford Act. That clears the way for states to seek Section 1135 Medicaid waivers, which enables these measures, among others:
- Temporarily suspend prior authorization requirements;
- Extend existing authorizations for services through the end of the public health emergency;
- Modify certain timeline requirements for state fair hearings and appeals;
- Relax provider enrollment requirements to allow states to more quickly enroll out-of-state or other new providers to expand access to care, and
- Relax public notice and submission deadlines for certain COVID-19 focused Medicaid state plan amendments, enabling states to make changes faster and ensure they can be retroactive to the beginning of the emergency. 
 CMS has encouraged Section 1135 waivers, and in fact published blanket waivers available for the asking; 13 states have had such waivers approved.  But a different kind of waiver -- a Section 1115 waiver -- is required to ease eligibility procedures. Under a Section 1115 waiver, New York after 9/11 offered four months of Medicaid coverage to eligible New York City residents through a simplified application. After Hurricane Katrina, via a Section 1115 waiver, evacuees unable to provide documentation were allowed to self-attest to Medicaid eligibility criteria.


  1. Often, this kind of legislation provides that these dollars do not count for purposes of determining eligibility for public benefits and are not taxable income. Are we sure that no such provisions are included in the Senate bill?

    1. I was just wondering that -- in fact, just posed the question on Twitter. Will qualify above. Do you know whether bill text is out?