Medicaid’s Role in the Health Benefits Exchange: A Road Map for States

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On March 23, 2010, President Obama signed into law the Affordable Care Act (ACA), sweeping federal legislation designed to bring about near universal coverage and transform how health care is paid for and delivered throughout the United States. Under federal health reform, 32 million Americans are expected to gain coverage through an expansion of Medicaid to 133 percent of the Federal Poverty Level (FPL); premium subsidies for individuals with incomes between 134 percent and 400 percent of the FPL; new insurance markets – Health Benefit Exchanges – through which individuals and small businesses may compare coverage options and purchase insurance; and reforms of private health insurance. Barely a year after passage, states are crafting Exchange legislation and designing and building the systems for individuals to secure a determination of their eligibility for a subsidy and enroll in coverage. This paper examines the issues that states will confront as they consider how best to integrate Medicaid into the administration and operation of the Exchange and into the continuum of coverage in the Exchange.

The pathway for coverage for adults and children eligible for subsidized coverage – Medicaid, the Children's Health Insurance Program (CHIP) or premium tax credits – will be new state Health Benefit Exchanges (Exchanges). The ACA requires state Exchanges to establish a single integrated process to determine consumer eligibility for the full range of subsidies and to facilitate enrollment into coverage. In designing a streamlined subsidy-eligibility process, states will require additional guidance from the federal government on a number of issues, including income counting rules under the statute's modified adjusted gross income standard, third-party verification of income, and identification of “newly eligible” Medicaid beneficiaries for which states will receive enhanced federal matching dollars. Other eligibility decisions are within the purview of states. These include establishing continuous eligibility, presumptive eligibility or waiting periods for CHIP programs. In all cases, states will need to compare state eligibility rules with federal law and regulations, evaluating both legal requirements and practical considerations as they build systems intended to facilitate subsidy eligibility determinations and enrollment in and retention of health insurance coverage.

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Manatt, Phelps & Phillips, LLP on:

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