Future Medicaid Eligibility Rules Raise Concerns - CQ HealthBeat

Future Medicaid Eligibility Rules Raise Concerns

By Rebecca Adams, CQ HealthBeat Associate Editor

Republicans are pouncing on a concern raised by the Medicare chief actuary that in 2014 middle-class early retirees may become eligible for Medicaid, the federal-state program for the poor, because of the way the program’s eligibility standards will change.
In 2014, Medicaid is scheduled to expand to cover more people, and all states will have to use a national eligibility standard. Currently the rules vary by state. The health care overhaul (PL 111-148, PL 111-152) says that starting in 2014 a person’s eligibility will be determined based on his or her modified adjusted gross income (MAGI) — a calculation that excludes some Social Security benefits. Applicants will be eligible if they earn 133 percent of the federal poverty level or less. This year, the federal poverty limit for a couple is $14,710.
As a result, Medicare Chief Actuary Richard Foster has said that hypothetically, a married couple could get Medicaid benefits if the pair each got Social Security benefits — say, $25,000 each, which they could leave out of the MAGI calculation — and the rest of their income was less than 133 percent of that year’s poverty limit. Even though the couple’s total income, including benefits, would be tens of thousands of dollars above the limit, they could still get Medicaid because those Social Security benefits wouldn’t count in the eligibility formula.
The Republican Governors Association released a statement Tuesday saying that the possibility “will boost Republican governors’ argument that Obamacare’s rules concerning Medicaid don’t make sense.” The group added that “Republican governors have long been advocating that the Medicaid provisions in Obamacare are in desperate need of reform.”
As word of this possible glitch in the new Medicaid rules spread, there appeared to be concern within the Department of Health and Human Services that some people not meant to get Medicaid benefits could wind up with them under the new law.
Richard Sorian, HHS assistant secretary for public affairs, posted a blog item explaining how the new rules will work. But in ending his item Sorian said: “However, we are concerned that, as a matter of law, some middle-income Americans may be receiving coverage through Medicaid, which is meant to serve only the neediest Americans. We are exploring options to address this issue, so that we can use taxpayer dollars responsibly while ensuring that all Americans have access to affordable, high quality health insurance coverage.”
Undert the health overhaul, the federal government will initially pay the Medicaid costs for newly eligible beneficiaries. The federal share will decline over time so that ultimately, it will pay 90 percent of the costs.
A spokeswoman for the Senate Finance Committee, the panel that wrote the provision, said that lawmakers used modified adjusted gross income as the standard for both Medicaid and the new exchange markets that will open in 2014, so that beneficiaries would face the same standards under both programs.
“Making eligibility for Medicaid and the health insurance exchange consistent will help millions of Americans connect with the affordable health care options they need,” said Finance Committee spokeswoman Erin Shields. “These changes don’t take effect until 2014, so we have time to review all possible cases to ensure Medicaid meets its mission of serving only the neediest Americans.”
Foster had estimated that as many as three million Social Security beneficiaries could be eligible even though their benefits, if counted, would have pushed them over the 133 percent-of-federal-poverty threshold.
However, a Centers for Medicare and Medicaid Services (CMS) spokesman said that when the new Medicaid eligibility guidelines take effect in 2014, there also might be some people who would currently be eligible for Medicaid who could not enroll in the program under the new rules. That’s because the MAGI formula does not allow the same income deductions to be considered that are allowed under states’ current Medicaid eligibility rules. Some people whose income had been lowered through deductions under the current rules and were therefore eligible for Medicaid might no longer qualify under the new formula. All states are required to allow beneficiaries to deduct some work-related expenses and child care costs. Other states might choose to allow more deductions, such as income that a student earned.
“When new health insurance exchanges open in 2014, there will be a simple set of rules that determines eligibility for both Medicaid and tax credits to help Americans afford coverage,” said CMS spokesman Brian T. Cook. “This simplification will stop people from falling into coverage gaps, and may cause some to be newly eligible for Medicaid and others to no longer qualify.”
Foster did not respond to an email seeking comment.