Benefits and Cost-Sharing for Working People with Disabilities in Medicaid and the Marketplace

Access to affordable health insurance with adequate coverage of key benefits is essential to the ability of people with disabilities to seek and maintain employment. As their income fluctuates, people may migrate between Medicaid and Marketplace coverage, and because different rules apply in these two programs, they may face changes in their benefits and out-of-pocket responsibilities as a consequence. This issue brief uses hypothetical examples of working people with disabilities to illustrate the experiences they might have with Medicaid and Marketplace coverage in four states (California, Kentucky, New Jersey, and Ohio), with a focus on benefits that are typically important to people with disabilities.

The profiles include:

• Susan, a 21 year old woman, with mild cerebral palsy (CP) who is working part-time while completing her Bachelor’s degree;
• John, a 35 year old construction worker, with clinical depression; and
• Mary, a 40 year old woman who works at a fast food restaurant and recently was diagnosed with multiple sclerosis.

Key themes emerging from this analysis include the following:

• Due to mental health parity requirements, Medicaid benefits for newly eligible adults may include more extensive mental health and substance use treatment services, unless states also modify their Medicaid state plan benefits to reflect the full extent of required coverage for new adults. These differences are likely to affect John as he seeks treatment for clinical depression. For example, while outpatient mental health, clinic, and case management services are available under both New Jersey’s Medicaid state plan and its new adult alternative benefit plan (ABP), New Jersey’s ABP also has more extensive mental health and substance use treatment services and includes more intensive care coordination and treatment services, such behavioral health homes and program of assertive community treatment services, which might be appropriate for John, depending on his needs.
• Prescription drug coverage is likely to vary between Medicaid and Marketplace Qualified Health Plans (QHPs) as well as among QHPs within a state. Because Susan takes prescription drugs to control the muscle spasticity resulting from CP, she will want to carefully evaluate the different Marketplace QHP formularies to see if the drugs that she currently is prescribed are covered when she takes a higher paying job and transitions from Medicaid to Marketplace coverage.
• Within a benefit category, Marketplace QHP coverage of specific services, such as rehabilitative and habilitative services, may differ from Medicaid coverage and may be subject to different utilization limits than apply in Medicaid in some states. Coverage of specific services also may vary among QHPs within a state. For example, if Mary seeks physical therapy services to address the effects of MS, she would have similar coverage under Ohio’s new adult ABP and state plan benefits, which both cover 30 physical therapy visits per year, with additional visits approved through prior authorization. After Mary transitions to Marketplace coverage when her earnings increase, she would have somewhat less generous coverage under the Ohio benchmark QHP, which covers 20 physical therapy visits per year.
• Coverage of long-term services and supports may be more extensive in Medicaid than in Marketplace QHPs. For example, while personal care services are optional in Medicaid, New Jersey includes them in its Medicaid state plan and new adult ABP. Once Susan transitions to Marketplace coverage, personal care services are not included in New Jersey’s benchmark QHP.
• Provider networks may differ between Medicaid and Marketplace QHPs.  If it is important for John to remain with the same psychiatrist who has been treating him, then he will want to choose a QHP in which that physician participates when he moves from Medicaid to Marketplace coverage.
• Beneficiaries are likely to experience higher out-of-pocket costs in Marketplace QHPs than in Medicaid. While Medicaid premiums and cost-sharing are imposed at state option and limited to certain populations, Marketplace QHPs have premiums that are limited based on income, ranging from 2% of income for those with incomes up to 133% FPL to 9.5% of income for those with incomes from 300-400% FPL in 2014. California has standardized cost-sharing amounts for all its Marketplace plans in the same metal tier, while cost-sharing varies among QHPs in the other states in this analysis.

Looking ahead, Medicaid is likely to remain an important source of coverage for working people with disabilities, and the ACA’s Medicaid expansion and new Marketplace QHPs will provide greater access to affordable coverage for this population as their incomes increase. Understanding experiences that working people with various disabilities are likely to encounter can help inform policymakers’ choices in designing Medicaid and Marketplace benefit packages and cost-sharing rules.