Thursday, March 26, 2020

Enhanced unemployment benefit will skew ACA marketplace/Medicaid enrollment

The enhanced unemployment benefits provided in the CARES Act, the massive COVID-19 response bill that passed the Senate 96-0 last night, looks likely to create some strange incentives for the newly uninsured seeking health insurance.

For anyone who qualifies for unemployment insurance, the bill adds an extra $600 week to the normal benefit for four months. That's $10,400 for anyone who stays unemployed for that long (as millions likely will: a staggering 3.3 million new jobless claims were entered this week).  For the first time, UI benefits are available to the "self-employed, independent contractors, those with limited work history, and others who are unable to work as a direct result of the coronavirus public health emergency."

As noted last night by the Brookings Institute's Loren Adler, the extra $600 per week will not be counted for the purposes of determining eligibility for Medicaid and CHIP, but will be counted for determining subsidy eligibility for private plans in the ACA marketplace. If that holds, some fairly high earners will likely end up eligible for Medicaid but not for subsidized marketplace coverage.  That's all the more likely because while Medicaid eligibility is determined on a monthly basis, marketplace subsidies are determined on the basis of annual income -- so income earned up to the time of layoff counts along with the enhanced UI benefit.*

Other may be eligible both for Medicaid and for weak marketplace subsidies. In that case, Medicaid should be the clear choice for most. Let's look at the math.

In the 36 states that have enacted the ACA Medicaid expansion, people in households with income up to 138% of the Federal Poverty Level are eligible. That's $1,468/month for an individual and $3,013/month for a family of four.  Marketplace subsidies are available on a sliding scale for incomes ranging from 138-400% FPL (up to $49,960/year for an individual, $103,000 for a family of four).

In the marketplace, Strong Cost Sharing Reduction (CSR) is available up to 200% FPL ($24,980 individual, $51,500 for four).  The marketplace value proposition is much weaker for people with incomes over 200% FPL. Silver plan deductibles average over $4,000 for enrollees over this threshold (slightly less at 200-250% FPL, where weak CSR is available). Below 200% FPL, silver plan deductibles range from $0-1000.

Perhaps more importantly with the possibility of hospitalization for COVID-19 looming large, the annual out-of-pocket maximum can be no higher than $2,700 for a silver plan at income up to 200% FPL. At 200-250% FPL the OOP max can be $6,500, and at incomes above 250% FPL, as high as $8,150.

The enhanced unemployment benefit will prevent a lot of marketplace applicants from accessing CSR. Medicaid, for its part, generally has no out-of-pocket costs, or minimal ones.

Let's say a single person has been earning $2,500 per month and has earned $10,000 at the time of layoff. Her ordinary monthly unemployment allowance (which varies by state) is $1,250, qualifying her for Medicaid. For marketplace purposes, however, her monthly income is $3,650, more than she was making before. On a marketplace application, she will have to estimate annual income, and it would be implausible to get it below the $24,980 cutoff for strong CSR. She will probably pay about $200/month for a silver plan with a deductible in the $3-4,000 range. On the monthly basis, however, she is eligible for Medicaid, which costs nothing and has little if any out-of-pocket costs.

While the ACA exchanges can determine Medicaid eligibility in expansion states, they do so on the basis of annual income. Therefore (as noted here and here), those whose monthly income qualifies them for Medicaid but whose estimated annual income exceeds 138% FPL should avoid the ACA marketplace -- that is, HealthCare.gov for 38 states, state-based exchanges for 12 others plus D.C. Instead they should apply directly through their state Medicaid department or its website.

Perhaps it's best that those who lose employer-sponsored insurance in a pandemic end up in Medicaid, which will shield them from high in-network out-of-pocket costs and balance billing. In fact it would make best sense either to render the unemployed presumptively eligible for Medicaid or to simply cover all COVID-19 testing and treatment via Medicare.  Meanwhile, given our current Rube Goldberg infrastructure, how will people navigate? Millions who go through the marketplace may get the false impression that they're ineligible for Medicaid. Many may reject marketplace coverage offered with weak subsidies or no subsidies.  A further fix is needed.

P.S. In the 14 states that have refused to expand Medicaid, the MAGI bump-up caused by adding the $600/week extra benefit could be a boon. In nonexpansion states, eligibility for ACA marketplace subsidies begins at 100% FPL; people below that threshold get no help from the law. Four months at $600/week gets you mostly there.

---
* Update, 3/27: ACA enrollment assisters I've spoken to are unanimous that if a person has already earned substantial income at the time of layoff but now has a Medicaid-eligible monthly income, it is faster/easier/surer to apply for Medicaid through the state Medicaid department or website. It is theoretically possible, if you've already earned to much to qualify for Medicaid on an annual basis at the time of layoff, to "attest" on HealthCare.gov that your income going forward qualifies you for Medicaid. But a) it's difficult to navigate to that outcome, and b) HealthCare.gov is less likely to accept the attestation than the state Medicaid agency is (though I can't vouch that that's true for all SBEs). Update, 3/28: Healthsherpa, a commercial online brokerage with an "enhanced direct enrollment platform integrated with HealthCare.gov, tells me that their platform will in fact place an applicant in Medicaid if current monthly incomes so qualifies her, regardless of income earned YTD, and that that is likely to be the case on HealthCare.gov as well. Four highly experienced enrollment assisters have told me that they wold not try this. 

13 comments:

  1. One correction: CSR eligibility is up to 250% FPL. Also, do you know if the $1,200 stimulus checks are going to "count" as MAGI?

    ReplyDelete
  2. True, Kevin -- that's why I refer to "strong" CSR up to 200% FPL, as CSR is negligible at 200-250% FPL. That problem has bedeviled me for years, like having to say "50 states plus D.C." Back-door, I acknowledged the weaker CSR at the top income level, but maybe need to spell it out more clearly, though it take space when you're trying to get to the point. Sometimes I put it in a footnote.

    ReplyDelete
    Replies
    1. Got it - thanks! Any word on if the stimulus checks are going to count as MAGI?

      Delete
  3. They do not count in either program, according to Loren Adler at Brookings.

    ReplyDelete
  4. I will follow him on Twitter - thanks! I've been a Navigator since 2013, so trying to keep up for the benefit of my clients.

    ReplyDelete
  5. Where do you navigate? Also, have you encountered the problem of people who have earned over 138% FPL before losing a job but currently qualify for Medicaid based on current low income? Do you generally enroll people in that position in Medicaid through the state Medicaid dept. or website -- that is, if you're in an expansion state?

    ReplyDelete
  6. Do you know where the $10,400 figure comes from? Other sources state that it's an additional $600 per week for 13 weeks which would only be $7,800 and I've seen some sources state 4 months which would be $9,600.

    ReplyDelete
  7. It's four months. I did ($600 X 52)/3

    ReplyDelete
  8. Are you using $12,760 as your poverty line basis for a single person? I get a slightly different figure--$1414/ mo.

    ReplyDelete
    Replies
    1. Hi Christina: Yes, $12,760 x 1.38/12 - this time I get $1,467.40. Louise Norris gave me the $1,468 figure (correcting a draft on HIO, where I'd used 2019).

      Delete
    2. I operate on the convenient and never yet disproved theory that Louise is never wrong about anything.

      Delete
    3. A sounds philosophy indeed. I found and fixed the error in my math. Getting the same as you (and Louise) now. Thanks!!

      Delete
  9. I'd tell Louise that she appears to be 11 cents off, but I suspect there's an explanation and a month isn't exactly a month.

    ReplyDelete

Share