By Alliant Employee Benefits / March 30, 2023
Starting April 1, 2023, 5.3 to 14.2 million people could lose Medicaid coverage, according to the Kaiser Family Foundation. The reason is Medicaid Redetermination—the expiration of a provision of the Families First Coronavirus Response Act (FFCRA) requiring states to provide continuous Medicaid enrollment.
What happens next?
Employees and dependents losing coverage over the coming months may turn to their employer for coverage options. This in turn may create the potential for increased enrollment in employer-sponsored plans due to special enrollment events.
What employers are most at risk?
While many employers and their populations won’t be affected, certain factors may contribute to a higher rate of employees and dependents losing Medicaid coverage:
- Industry - Medicaid Redetermination will likely have a higher impact on industries such as Retail and Hospitality which typically have a lower paid population.
- Turnover - Employers in an at-risk industry with low turnover are more likely to be impacted due to the number of lower paid individuals at the company potentially losing coverage.
- Eligibility - Employer eligibility rules will determine how many employees and dependents who lose Medicaid coverage will be eligible to enroll in an employer plan.
- Individual state Medicaid eligibility requirements - Each state has different definitions of Medicaid eligibility.
- Contributions and the "family glitch" - Most companies offer at least one plan providing affordable Employee Only coverage. Employees that lose Medicaid coverage and are eligible to enroll in their employer plan may not be eligible for subsidized coverage in the public exchanges. However, due to recent fix of the “family glitch,” the employee’s dependents will likely be eligible for subsidized coverage through the public exchange with no penalty to the employer.
How can employers predict impact?
- Review non-enrolled population. As Medicaid eligibility is based on family income and family size, any insight into these aspects of the population will help understand potential risk.
- Review state Medicaid eligibility requirements. Analyze location data to determine the impact of each state’s Medicaid eligibility rules on the non-enrolled population likely to have been enrolled in Medicaid.
- Review eligibility rules. Review each plan’s eligibility requirements to determine how it impacts exposure to additional enrollment.
- Review turnover. Review monthly enrollment and turnover of low income employees to determine what percentage of the at-risk population would have to enroll to have a noticeable impact on financial results.
Finding a silver lining.
Aside from the statistics drawn from workforce demographic analysis, the real-life impact of Medicaid Redetermination is the number of people who are at risk of being uninsured because they don’t know their options. The related costs of being uninsured are high—from financial stress to higher rates of later stage disease and even death due to delayed medical care.
Working with your benefits advisor to identify potential healthcare cost increases due to higher enrollment can help you adapt your benefits strategy in real time. And tapping into resources to help impacted employees and dependents find alternate coverage can help your people and their families stay healthy and productive.
Disclaimer: This document is designed to provide general information and guidance. Please note that prior to implementation your legal counsel should review all details or policy information. Alliant Insurance Services does not provide legal or tax advice, or legal or tax opinions. If a legal or tax opinion is needed, please seek the services of your own legal or tax advisor. This document is provided on an “as is” basis without any warranty of any kind. Alliant Insurance Services disclaims any liability for any loss or damage from reliance on this document.
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