The PHE was extended another 90 days on October 15th, but many believe the federal government will let the PHE expire in mid-January. The Biden Administration indicated that it will provide a 60 day notice prior to letting the PHE expire which means we would receive notice by mid-November.
The anticipated end of the federal PHE will impact several provisions enacted during the height of the COVID-19 pandemic, and some of those provisions may be the lesser-known program flexibilities that were implemented for Medicaid programs which is jointly funded by the federal government and states.
One of these such provisions authorized additional federal funding for state Medicaid programs which were conditioned upon what is called Maintenance of Eligibility which prohibits disenrollment in most circumstances. This is commonly referred to as the continuous coverage requirement which effectively means that those enrolled in state Medicaid programs that accepted additional funding, such as Medi-Cal in CA, would not be subject to annual eligibility reviews during the PHE.
Those that became or become ineligible for state Medicaid in normal circumstances will not lose coverage while this “continuous coverage” requirement remains in place.
The end of the PHE means that up to an estimated 15 million state Medicaid beneficiaries could lose eligibility in these programs causing these individuals to seek coverage with their employer or on the individual exchange.
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 a significant number of employees waiving the group health plan in favor of continuing their state Medicaid enrollment.
Once the PHE ends, yearly coverage eligibility (redetermination) reviews will no longer be paused, and the good news is that Medicaid beneficiaries that lose coverage won’t be seeking to enroll elsewhere all at once.
Each state must develop a plan to unwind the “continuous coverage” process, and the majority have indicated they plan to take 12 months to complete all renewals. Georgetown University Health Policy Institute has published a 50-state unwinding tracker here.
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: Once the PHE expires, 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.
Note: For detailed information and guidance on how to apply these “Outbreak Period” extensions, visit our previous post post.
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 spending budget? In short, yes, employers are projected to feel the impact in the months following the expiration of the PHE.
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.
For example, if the PHE expires mid-January, Medi-Cal has published a plan to unwind that indicates it will start the redetermination/renewal process in February for those that have an April 2023 renewal date. Medi-Cal has stated that those who are no longer eligible will receive a notice of action no later than April 20, 2023 with a loss of eligibility date of April 30, 2023. To learn more about Medi-Cal’s plan for the end of the continuous coverage requirement, visit this website.
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.
Will the ACA final rule with regards to the Family Glitch affect employer impact from the above at all?
The family glitch has been fixed which will lead to greater number of family members qualifying for subsides on the exchange.
It certainly seems the new rule could help minimize employer cost if the employer contributes to dependent coverage as long as the cost of covering an employee’s family qualifies the family members for a subsidy on the exchange.
Bottom Line: The ACA final rule might result in less family members enrolled in a group health plan but shouldn’t impact the employee’s enrollment if the employer coverage is affordable and minimum value.
What should employers do next? Pay close attention to the expiration of the PHE and 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)
Let your IMA Benefits team know if you have any questions. We review affordability every year with our applicable large employer (ALE) clients and are happy to assist as you strategize for your plan year beginning in 2022.
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.