What People (and Policymakers) Can Do About Losing Coverage During the COVID-19 Crisis

In mid-March, a record 3.3 million Americans filed new claims for unemployment benefits.  Job loss can trigger loss of health insurance.  There are options for keeping or getting new coverage, but transitions can result in coverage gaps or changes in covered benefits and affordability.  Actions by policymakers could make transitions easier.

Medicaid

Medicaid offers free or low-cost comprehensive coverage for people when they have a spell of low income.  People used to having job based coverage and higher income may not realize Medicaid could be an option for them.  It’s time to take another look.

For consumers: In 37 states (including D.C.) that adopted the Affordable Care Act (ACA) Medicaid expansion, adults can qualify if their current income is up to 138% of the federal poverty level (FPL), or $1,467/month for individual, $3,013/month for a family of four. Unemployment compensation counts, but not the federal supplement just approved by Congress. Savings and other assets are not taken into account. In some of these states, adults with higher incomes qualify, and in all states eligibility levels are higher for children and pregnant women.  People can apply year-round, and services provided up to 3 months prior to application can be covered retroactively if you would have been eligible then. Nearly all hospitals and many doctors take Medicaid, though doctor participation rates vary by state.  In most states, Medicaid coverage is delivered by managed care plans.

For policymakers:  More than 2 million poor uninsured adults don’t qualify for Medicaid because they live in one of 14 states that have not yet adopted the ACA expansion.  Even more poor adults will fall into this coverage gap during the economic downturn.  Another estimated 6.7 million uninsured adults and children are eligible for Medicaid or CHIP, but not enrolled. States have options to make it easier for people to enroll and maintain coverage over time.

Also, during the emergency, States can offer free Medicaid coverage for COVID-19 testing to all uninsured residents.  States will also receive a temporary increase in the federal match for Medicaid as long as they do not enact more stringent enrollment criteria and provide continuous coverage for those on Medicaid during the emergency period.

A recent  proposal would let states add coverage of COVID-19 treatment under this option.  The same bill would also increase federal matching rates during this and future economic downturns, when Medicaid enrollment typically spikes.

Marketplace

The ACA established Marketplaces where people not eligible for job-based benefits or Medicaid can buy private coverage with financial assistance.  Citizens and documented immigrants can buy health insurance through the Marketplace.

For consumers: In most states, the Marketplace website is www.healthcare.gov.  Anyone can buy coverage during Open Enrollment.  During the COVID-19 outbreak, 12 states have created a special open enrollment period when anyone can buy Marketplace plans.

People who lose other coverage are eligible for a special enrollment period (SEP) in the Marketplace.  If you anticipate coverage loss, you can apply for an SEP up to 60 days in advance. Otherwise you have 60 days following loss of coverage to apply.  Healthcare.gov will ask for documentation of coverage loss before you can apply.  If you applied in advance, coverage can start under your new plan as the old coverage ends; otherwise it starts the first day of the month after you complete your application.

The Marketplace offers premium subsidies to those who expect 2020 income will be 100%-400% FPL: $12,490-$49,960/individual and $25,750-$103,000/family of 4.  This subsidy calculator can give you an idea of what you might have to pay.  You will have to provide your best estimate of your 2020 income when you apply (don’t forget unemployment benefits), and if your income changed substantially in the last year, you may be asked to submit additional documentation.  You can lose subsidies if you don’t submit that documentation on time.

Marketplace plans have high deductibles, though cost sharing subsidies are available to people with income 100%-250% FPL.  Most plans use narrow provider networks, so you may need to change doctors.

For policymakers:  An estimated 9.2 million uninsured Americans were eligible for Marketplace subsidies in 2018 but not enrolled.  Even with subsidies, the average person paid $87/month after tax credits and some paid much more.   Various bills have been proposed to enhance Marketplace subsidies and make more people eligible.  Meanwhile, the Administration has authority to relax up-front documentation required of applicants whose income has changed substantially.   Everyone is still required to reconcile subsidy eligibility at year end on their federal tax return.

The federal government also has authority to offer another open enrollment period when anyone could sign up for coverage.  And it has authority to streamline the SEP process.  During previous disasters, healthcare.gov waived documentation for SEPs and accepted people’s attestation they were eligible.

COBRA

People losing job-based plans have the option of continuing enrollment for up to 18 months, sometimes longer.  A law known as COBRA requires firms with at least 20 employees to offer this option. Most people don’t end up taking COBRA due to cost.  On average, the cost of job-based plans in 2019 was $7,188/$20,576 for family coverage, and employers don’t have to contribute toward COBRA premiums.

For consumers:  Your employer must notify you about your right to elect COBRA continuation.  Each covered family member has an independent right to elect COBRA.  Though the premium cost is high, some people take COBRA because it offers other advantages, especially for ongoing health needs.  COBRA coverage is seamless with no gaps, you keep access to the same network of doctors and hospitals, and don’t have to restart your deductible mid-year.

You have 60 days to elect COBRA and another 45 days to pay the first premium (covering the period dating back to your coverage loss).  Eligibility for COBRA does not affect eligibility for other subsidized coverage; so compare costs, covered benefits, and provider networks of other options and then choose.

For policymakers:  In the past, the federal government partially subsidized COBRA for certain people.   The Health Coverage Tax Credit, enacted in 2003, provided 65% COBRA premium subsidies for trade-dislocated workers.  In 2009, Congress expanded eligibility for HCTC and increased the subsidy to 80%.  That helped more people, though take up was still limited because most unemployed people couldn’t afford the unsubsidized portion of the premium.

Subsidizing COBRA premiums 100% during the emergency period would make this option more affordable to those out of work.  In addition, a full subsidy could reduce adverse selection.  The people most likely to elect unsubsidized COBRA tend to have costly health care needs; one survey estimated 4.8 million COBRA beneficiaries in 2008 cost their former employers more than $10 billion that year.