Slipping between Medicaid and marketplace coverage can leave consumers confused

January 18, 2016 by Michelle Andrews, Kaiser Health News

For people whose income changes shift them above or below the Medicaid threshold during the year, navigating their health insurance coverage can be confusing. Ditto for lower income people who live in states that may expand Medicaid this year.

Under the health law, states can expand Medicaid coverage to adults with incomes up to 138 percent of the federal (about $16,000 for an individual). Thirty states and the District of Columbia have done so.

This week I answered three questions from readers about how Medicaid interacts with plans on the marketplaces.

Q: In my state, if my income drops below 138 percent of the federal poverty level, I have to drop my marketplace plan and sign up for Medicaid. But if my income increases and I become eligible for a marketplace plan again, what happens to any payments I've made toward the deductible and out-of-pocket maximum for that plan? Do they reset to zero so I have to start all over again?

A: As long as you sign up for the same plan you were originally enrolled in when you return to the marketplace, any payments you've already made for medical care that year will still count toward reducing your deductible and your annual maximum out-of-pocket spending limit for the year, said Sarah Lueck, senior policy analyst at the Center On Budget And Policy Priorities. In 2016, that maximum out-of-pocket limit, after which the insurer generally picks up the whole tab for covered benefits, is $6,850 for an individual.

Your payments would count whether you re-enrolled in a marketplace plan from Medicaid or another type of coverage such as a job-based health plan.

Insurers have the option of letting consumers who switch to a different plan when they return to the marketplace carry over the amounts already paid toward the deductible and out-of-pocket maximum, but they're not required to do so, said Lueck.

Q: My state, Louisiana, has not yet implemented the Medicaid expansion, but with the new governor it may happen this year. My income is between 100 and 138 percent of the federal poverty level, and since I'm not eligible for Medicaid under the current rules, I've signed up for a marketplace plan. What happens if Medicaid eligibility expands and I become eligible during the year? Will the marketplace automatically enroll me in Medicaid? And if I don't enroll, do I face financial consequences for not cancelling my marketplace plan?

A: Your new governor, John Bel Edwards, has said that expanding Medicaid is a priority. If that happens this year, don't expect to be automatically enrolled in the program, says Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities.

Because your income is between 100 and 138 percent of the poverty level, you likely are receiving federal tax credits to help subsidize the cost of the premium for the marketplace plan you chose. If you stay in that plan instead of moving to Medicaid this year, you won't be responsible for repaying the tax credits. The Internal Revenue Service will accept that you were eligible for those premium tax credits based on the marketplace's decision earlier in the year, Solomon says.

Next year, however, if the marketplace determines that your income qualifies you for Medicaid, you'll have to sign up.

Q: I live in California. What happens if, at tax time, the income reconciliation shows that I should have been enrolled in Medi-Cal instead of a subsidized marketplace plan? Are there consequences? Will I be responsible for any of the benefits I received?

A: If your final income at year's end was less than 138 percent of the , you were likely eligible for the California version of the Medicaid program, called Medi-Cal. But if when you signed up for coverage earlier in the year the marketplace determined that your estimated made you eligible for a subsidized marketplace plan, you won't have to repay any tax credits you got to help pay the premiums.

You also won't be on the hook for any benefits you received while insured by your marketplace plan. However, you can't recoup any premiums you paid for that plan either.

Explore further: Medicaid expansion tops savings versus marketplace

Related Stories

Medicaid expansion tops savings versus marketplace

February 3, 2015
(HealthDay)—Medicaid expansion is associated with greater reductions in out-of-pocket spending for previously uninsured low-income adults than Marketplace exchange coverage with premium tax credits and generous benefits, ...

Five things young adults should know about buying health insurance

November 14, 2015
Imagine what you could do with $2,000. If you're between 18 and 34, you might travel somewhere fun. Maybe buy a big TV. But would you buy health insurance?

Health law tricky for parents of Medicaid kids

January 26, 2014
Parents shopping for health insurance through the new federal marketplace are running into trouble when their children might be eligible for Medicaid but they are not.

New Louisiana governor starting Medicaid expansion plan

January 12, 2016
On his first full day in office, Democratic Gov. John Bel Edwards reversed course from his Republican predecessor Tuesday and started the process of expanding Louisiana's Medicaid program.

Health care enrollments fall far short of white house estimates

November 14, 2013
(HealthDay)—The Obama administration late Wednesday released a report revealing a disappointing number of health plan enrollments through the new federal and state insurance exchanges. Just over 106,000 Americans enrolled ...

Last chance to enroll in obamacare for 2015

February 12, 2015
(HealthDay)—Americans eligible for health insurance under the Affordable Care Act (ACA) are facing an important deadline. This year's sign-up period ends Sunday, Feb. 15.

Recommended for you

Sugar not so sweet for mental health

July 27, 2017
Sugar may be bad not only for your teeth and your waistline, but also your mental health, claimed a study Thursday that was met with scepticism by other experts.

Could insufficient sleep be adding centimeters to your waistline?

July 27, 2017
Adults in the UK who have poor sleep patterns are more likely to be overweight and obese and have poorer metabolic health, according to a new study.

Vitamin E-deficient embryos are cognitively impaired even after diet improves

July 27, 2017
Zebrafish deficient in vitamin E produce offspring beset by behavioral impairment and metabolic problems, new research at Oregon State University shows.

The role of dosage in assessing risk of hormone therapy for menopause

July 27, 2017
When it comes to assessing the risk of estrogen therapy for menopause, how the therapy is delivered—taking a pill versus wearing a patch on one's skin—doesn't affect risk or benefit, researchers at UCLA and elsewhere ...

Blowing smoke? E-cigarettes might help smokers quit

July 26, 2017
People who used e-cigarettes were more likely to kick the habit than those who didn't, a new study found.

Brain disease seen in most football players in large report

July 25, 2017
Research on 202 former football players found evidence of a brain disease linked to repeated head blows in nearly all of them, from athletes in the National Football League, college and even high school.

1 comment

Adjust slider to filter visible comments by rank

Display comments: newest first

fey5
not rated yet Jan 19, 2016
Some people are in a doughnut hole where they have too low an income for marketplace and too much savings for Medicaid.

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.