Tuesday, March 31, 2020

CARES Act may reduce ACA "coverage gap" in states that refused Medicaid expansion

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The enhanced unemployment benefits provided by the CARES Act, the emergency COVID-19 relief bill signed into law on March 27, count as income for those seeking subsidized health insurance in the ACA marketplace (the income does not count in consideration of Medicaid/CHIP eligibility).

As I noted last week, that's going to vastly reduce premium subsidies and likely wipe out Cost Sharing Reduction subsidies for many newly unemployed people who seek coverage.  On the plus side, however, the rush of temporary income should also narrow the "coverage gap" in states that have refused to enact the ACA Medicaid expansion, including Florida and Texas.

The CARES Act extends unemployment insurance to those usually not eligible, including the self-employed and those with limited work history, and adds a $600 per week extra benefit for anyone who qualifies for unemployment insurance for up to four months, through July 31. That's potentially up to $10,400 over and above the normal state unemployment benefit.

The ACA Medicaid expansion extends Medicaid eligibility to people in households with income up to 138% of the Federal Poverty Level -- $1468/month for an individual, $3,013 for a family of four. In the fourteen states that refused the expansion, eligibility for subsidies in the ACA private plan marketplace begins at 100% FPL -- $12,490 for an individual, $16,910 for a couple, $25,750 for a family of four. People in households with income below 100% FPL get no help at all. The Kaiser Family Foundation has estimated in January that 2.3 million people are in this coverage gap.

Imagine a single parent in Texas whose current norm is to work 30 hours per week at minimum wage. At 1500 hours per year, that's $10,875 -- far below 100% FPL ($16,910). If the person has earned this income consistently, the standard benefit in Texas would be $109/week . Now presume that this person gets that amount plus the $600/week bonus for 17 weeks. That's $12,053. If she'd earned her normal income in the first quarter, she'd be at $14,772 as of July 31. Right now, she can credibly estimate an income over the $16,910 line (with help from, say, broker Jenny Hogue).

At an estimated annual income of, say, $18,000, this person would pay 2% of income for a benchmark silver plan in the ACA marketplace. In Houston, she could get an Ambetter plan with a $0 deductible, free doctor visits, and a yearly out-of-pocket maximum of $1,050 for about $25/month.

It's hard to say how many currently uninsured people in nonexpansion states will seize the moment and estimate an income that qualifies them for subsidized marketplace coverage. The crisis may push some people in larger households below the 100% FPL threshold, even with enhanced unemployment benefits. But on net, the pandemic may reduce this particular coverage gap to some degree.

Related: Enhanced unemployment benefit will skew ACA marketplace/Medicaid enrollment

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