We recently wrote that the White House has announced that the public health emergency (PHE) will end on May 11th, 2023. This will surely impact group health plans as carriers and group health plans prepare to roll back certain no cost services related to COVID that will no longer be required by law. However, there is a lesser known impact as well discussed in this article we posted last year.
What’s new since the last IMA blog on this topic? The first update is that the expiration of the continuous coverage requirement no longer aligns with the end of the PHE. It is now March 31, 2023.
The second change is that CMS has announced a marketplace exchange Unwinding special enrollment period (SEP) for individuals losing coverage. Those individuals losing coverage from April 1, 2023 to July 31, 2024 will be able to enroll in the marketplace. Marketplace coverage will start the first day of the month after a plan is selected. CMS released relevant FAQs recently.
What does this mean for employers?
The federal Medicaid website calls the expiration of the continuous coverage requirement the “single largest health coverage transition event since the first open enrollment period of the Affordable Care Act”.
The impact won’t be the same for all employers and all industries. For example, an employer that employs lower wage earners may have had a significant number of employees waiving the group health plan in favor of continuing their state Medicaid enrollment.
Specifically, Medi-Cal in CA has a plan in place to stagger these eligibility reviews over 14 months across its participants enrolled in the program. If eligibility is lost, these participants will have the option to enroll in a group health plan (if applicable) or enroll in the individual exchange.
Bottom Line: Starting April 1, 2023, employers with benefit-eligible workers who are currently enrolled in a state Medicaid program could see an increase in enrollment staggered throughout the year.
Does an employee have to wait until open enrollment to join the employer group health plan? No. Loss of state Medicaid eligibility is a HIPAA special enrollment right that creates a qualifying event to join the employer’s group health plan mid-year.
Will employers that have a significant amount of benefit eligible workers enrolled in a state Medicaid program need to be prepared to increase their health care spending budget? In short, yes, employers are expected to feel the impact specifically in the 14 months following March 31, 2023.
Benefit eligible workers that lose state Medicaid eligibility can enroll in the group health plan, if applicable, or enroll in the individual exchange. If the worker has access to employer coverage that is affordable and minimum value, the employee will not be eligible for subsidies on the exchange. Thus, the employer is likely to see increased enrollment over the course of several months after the PHE expires. The increase in enrollment will be tied to the employee’s Medicaid renewal date.
Note: CMS has provided guidance for states to return to regular operations upon the expiration of the PHE. For specific details regarding other state Medicaid programs, visit each state’s program page.
What should employers do next? Consider how the state Medicaid renewal efforts will impact your benefit-eligible employees in 2023. Factors to consider for budgeting include:
- # of benefit eligible workers that are currently enrolled in a state Medicaid program
- Expected or known state Medicaid renewal date for those enrolled (employers probably won’t know this, but it would be helpful for budgeting purposes)
- whether an employer offers affordable and minimum value medical coverage (which impacts options for the employee other than employer coverage)
- whether the cost for an employee to add their family members is affordable for purposes of determining if family members are eligible for a subsidy on the individual exchange (which impacts whether employees will enroll their family members into the group health plan; however, employers will not have access to household income which is needed to determine if family members qualify for a subsidy on the exchange)
- Communication efforts with regards to potential options for family members (employers may find that some employees are unaware of the new final rule that fixed the family glitch)
For more information regarding employer impact, please contact your IMA Benefits representative.
IMA will continue to monitor regulator guidance and offer meaningful, practical, timely information.
This material should not be considered as a substitute for legal, tax and/or actuarial advice. Contact the appropriate professional counsel for such matters. These materials are not exhaustive and are subject to possible changes in applicable laws, rules, and regulations and their interpretations.