Losing Medicaid Benefits? Short Term Medical Is an Affordable Coverage Alternative

Republicans in the Senate recently unveiled their health care legislation to replace Obamacare. Dubbed the Better Care Reconciliation Act (BCRA), the Senate bill changes or eliminates many Obamacare provisions. The bill’s provisions for phasing out federal funding for Obamacare’s Medicaid expansion, and changing the federal government’s funding structure for Medicaid, have many Medicaid recipients concerned. If the BCRA eventually becomes the law of the land, many low-income Americans may find themselves no longer eligible for Medicaid – and in need of affordable health care coverage, such as short term health insurance.

Short Term Medical – Affordable, Flexible Coverage

If you’re concerned that you might lose your Medicaid benefits, it’s understandable that you would be uncertain as to how you would be able to pay for health insurance. The good news is that short term medical coverage can be very affordable, with some plans available for under $50 per month. It helps provide you financial protection from costly medical emergencies until you find a more permanent health care coverage solution.

How Long Can I Keep Short Term Health Insurance?

Current federal regulations limit short term medical plans to a minimum of 30-days and up to 364-days under one certificate of insurance. You may choose a coverage start date anywhere from within 24 hours of applying, or up to 60 days after your application. Finally, there’s no penalty, should you choose to cancel your coverage at any time. This convenient application process can help you keep short term medical coverage for nearly a full year.

What Does Short Term Medical Cover?

With coverage for up to $1,000,000 in benefits per coverage period, short term medical health insurance features include:

  • Coverage for health care provider visits, hospitalizations, emergency care, lab tests, prescription drug costs and more.
  •  The freedom to visit any health care provider you want. There are no provider network restrictions.
  •  The flexibility to choose additional benefits based on your health care needs and budget, such as prescription drug coverage, low out-of-pocket maximums and deductible amounts.
  • Non-insurance benefits, such as access to vision care and product discounts, prescription drug savings, and 24/7 telemedicine consultations so you can skip the waiting room and speak with a doctor whenever and wherever it is convenient for you.

You’ll be required to pay a small monthly premium, and just like some states already impose with Medicaid coverage, you’ll be responsible for deductibles, coinsurance, copays and out-of-pocket coverage maximums. Overall, though, your costs for short term health insurance are significantly lower than your costs for a health insurance plan purchased on the Obamacare marketplace exchange.

Overview of the Proposed Senate Bill

Some of the Senate’s Better Care Reconciliation Act key features include imposing penalties on Americans who don’t maintain continuous health care coverage, changing the structure of premium tax credits for coverage, providing funds to help provide short-term financial stability to the Obamacare insurance markets, and offering grants to states to provide opioid substance abuse treatment and recovery support. These bill provisions have received mixed responses from politicians, industry experts, consumer health advocates, and American citizens.

The proposed BCRA changes to Medicaid have been particularly controversial. A health care benefits program which was established in 1965, Medicaid has historically operated through a state and federal partnership. The federal government establishes core eligibility requirements and provides states with some funding; the states administer and share in funding the program. Depending on its financial ability and policies, states have flexibility with their Medicaid programs. Many offer coverage to additional beneficiary groups, a broader range of benefits, higher reimbursement rates and different delivery systems than required by the federal government.

The following outlines the BCRA legislation changes for Medicaid:

Obamacare’s Medicaid expansion will be phased out over four years

The expansion program extended Medicaid enrollment eligibility to all low-income Americans making 100 – 138 percent of the Federal Poverty Level (FPL). Prior to the expansion, federal law required states to cover low-income families (usually earning under the FPL), qualified pregnant women and children, and individuals receiving Supplemental Security Income (people who are disabled, elderly or blind individuals with low incomes). Able-bodied, low-income individuals without dependents generally were not eligible for Medicaid before the Obamacare expansion. However, states had the option to offer Medicaid eligibility to additional groups, such as individuals receiving home and community-based services, children in foster care, etc.

The Senate bill states that no one will be allowed to enroll in Medicaid’s expansion program beginning in 2020. In addition, the bill decreases federal funding for the Medicaid expansion to 90 percent of its current level by 2020, with additional annual 5 percent decreases until 2023. At that point, all federal funding of the expansion program will be terminated and expansion enrollees will instead be provided tax credits to purchase health care coverage through the individual insurance market.

Medicaid program spending growth changes

Currently, federal Medicaid spending is based on the medical component of the Consumer Price index (CPI). After 2025, the BCRA shifts growth in Medicaid spending to align with the CPI for all goods, which is currently growing much more slowly than Medicaid costs are projected to grow. Consumer advocates fear that the lower growth funding rate will lead to deep Medicaid funding cuts.

Further, the legislation proposes a “per capita cap”, essentially giving each state a set amount of money per person, rather than continuing to match state Medicaid spending. The BCRA includes separate caps for different beneficiary groups (elderly, disabled, non-elderly adults, etc.), but within those groups, costs can vary significantly – costs for “younger” elderly recipients would probably be lower than costs for “older” elderly recipients. For states such as Florida, with a large senior population, a per capita cap might not be able to keep pace as costs rise within the elderly beneficiary group.

States can require able-bodied Medicaid enrollees to work

The Senate bill allows states to stipulate that to qualify for Medicaid benefits, program enrollees must be employed, for whatever length of time the state determines. Students, pregnant women and disabled individuals are exempt from the work requirement, but critics are concerned that states are given too much freedom to determine what counts as work and for how long someone must hold a job.

How Will Your Medicaid Eligibility Be Affected by the Senate Bill?

If the BCRA eventually becomes signed into law, where Medicaid enrollees live will be a key factor in determining how they are impacted.

Medicaid Expansion States

States with Medicaid Expansion
Alaska Arizona Arkansas
California Colorado Connecticut
Delaware District of Columbia Hawaii
Illinois Indiana Iowa
Kentucky Louisiana Maryland
Massachusetts Michigan Minnesota
Montana Nevada New Hampshire
New Jersey New Mexico New York
North Dakota Ohio Oregon
Pennsylvania Rhode Island Vermont
Washington West Virginia

To date, 26 states and the District of Columbia have adopted the Obamacare Medicaid expansion as outlined in the Affordable Care Act. Six states – Arkansas, Indiana, Iowa, Michigan, Montana and New Hampshire – also expanded Medicaid through a state-specific program with an approved Section 1115 Waiver. Under this waiver, the six states have received federal funding to test a range of new Medicaid expansion policies, including providing services not typically covered by Medicaid, experimenting with cost sharing and other payment reforms, and changing the health care delivery system. In early 2017, North Carolina’s Governor Roy Cooper announced plans to expand Medicaid through executive action in his state, although a federal judge has put a temporary stay on Governor Cooper’s request.

By 2020, federal funding for the Obamacare Medicaid expansion will begin to decrease, with final termination of funding occurring in 2023. All remaining expansion enrollees will then be rolled off Medicaid, and receive tax credits to purchase health care coverage through the individual insurance market, or need to find other health insurance options. Opponents of the bill estimate that this change will deny Medicaid coverage to millions of Americans who have gained access to the program due to the Obamacare expansion.

Non-Expansion States

Medicaid enrollees living in the 18 states (and North Carolina – which has not yet received expansion approval), won’t be affected by the elimination of the Medicaid expansion. However, concerns remain about the BCRA’s proposed changes to the federal government’s funding structure of Medicaid. Reduced federal funds, based on the per capita cap design, as well as using the CPI rate (which grows at a slower rate than Medicaid costs increase), may result in a tightening of Medicaid enrollment restrictions for many states.

This may result in a loss of benefits and services for individuals who don’t meet federal Medicaid eligibility guidelines, but for whom many states currently provide coverage. Advocates for disabled citizens have voiced such fears for low-income enrollees who receive Medicaid benefits for home- and community-based services.

States Most Challenged to Compensate for Federal Medicaid Funding Cuts

A recent Kaiser Family Foundation study assessed characteristics that may make it more difficult for states to be able to cover funding gaps for their state Medicaid programs, if the proposed funding cuts and per capita cap be passed into legislation. These factors include:

Medicaid Policy Choices – Beyond the issue of whether a state adopted the Obamacare Medicaid expansion, this factor considers the state’s Medicaid eligibility requirements, the level of benefits paid, the structure of the state’s Medicaid health care delivery systems, and the rate of reimbursement for Medicaid providers. States that offer more generous Medicaid benefits may need to cut back their programs once the federal funding structure changes. But states that already have restrictive Medicaid policies, such as Alabama, Hawaii, Mississippi and Missouri, will be particularly hard-pressed to fund their Medicaid programs, even for enrollees who meet the federal Medicaid eligibility requirements.

Demographics – This factor looks more closely at the state’s population. What is the overall poverty rate, average citizen age, unemployment rate? Do people live primarily in rural areas or urban areas? Alabama, Arkansas, Louisiana, Mississippi and West Virginia have populations with higher Medicaid needs (high poverty and unemployment rates, aging citizens, greater rural population, etc.).

Health Status – What is the state’s overall health ranking? Does it have higher rates of citizens with disabilities, mental health issues, opioid death rates? The greater the state’s health needs, the more likely that many of its citizens are dependent on Medicaid for its health care services. Alabama, Arkansas, Louisiana, Mississippi and West Virginia report significant health needs for its citizens (high rates of poor health status, disabilities, poor mental health, opioid deaths and/or new HIV cases). Further, the highest opioid-related drug overdose rates are reported in Ohio, New Hampshire and West Virginia.

Revenue and Budget Choices – A state’s revenue stream and governmental policies play a significant role in how it administers its Medicaid program. What is the average income of its citizens? What does the state collect in taxes? How much of its state dollars does it spend on its Medicaid program? Alabama, Arizona, Idaho, Mississippi, New Mexico, South Carolina, Tennessee and West Virginia all struggle with tax capacity issues, such as low personal income rates, low total taxable resources and collection, high Medicaid match rates and low state/local spending per capita, which will affect their ability to pay more for their programs, as they begin receiving lower levels of federal funding.

Health Care Costs/Access – Health care costs can vary greatly within different areas of the country. Further, there are significant populations in many states with challenges accessing health care providers. Alaska, Alabama, Florida, Louisiana, Massachusetts, Mississippi and New York face expensive health care costs, a high rate of people who don’t seek care because of cost, lower Medicaid physician participation rates, and a high rate of its population that lives in an area with a shortage of health care providers.

What Should You Do Today?

Although the Trump administration has not yet signed a new health care law, it’s clear from legislation drafted by both the House of Representatives and the Senate – changes are in the works for the Medicaid program. Whether you live in an expansion state, or a state that is at higher risk for being able to support its Medicaid program once federal funding cuts take effect, this is a good time to begin exploring alternative insurance options. Short term medical offers health care coverage with the flexibility to choose plan features that meet your needs and budget.