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Background on Medicaid and CHIP during the pandemic
Normally, states regularly check to make sure that people who receive Medicaid coverage are still eligible to keep receiving services. This process, called Medicaid renewals or Medicaid redeterminations, was paused for several years because of the COVID-19 pandemic. This helped more people keep their Medicaid coverage during the COVID public health emergency.
Now, things are getting back to normal. As of April 2023, states are returning to the regular Medicaid renewal process. As a result, millions of people who no longer qualify for Medicaid will lose their Medicaid coverage.
The COVID-19 pandemic cast a spotlight on the importance of the various safety net systems that the U.S. has in place. Medicaid is a prime example: As of late 2022, enrollment in Medicaid/CHIP stood at nearly 91 million people, with more than 19 million new enrollees since early 2020.
This enrollment growth – more than 27% in a little over two and a half years – was initially tied to the widespread job and income losses that affected millions of Americans early in the COVID pandemic. Fortunately, Medicaid was able to step in and provide health coverage when people lost their income. Without it, millions of additional Americans would have joined the ranks of the uninsured. We didn’t see that happen in 2020, thanks in large part to the availability of Medicaid and CHIP.
But the continued enrollment growth in Medicaid is primarily due to the fact that the Families First Coronavirus Response Act (FFCRA), enacted in March 2020, has been providing states with additional federal funding for their Medicaid programs, as long as they don’t disenroll people from Medicaid during the COVID public health emergency (PHE) period. (As we’ll discuss in a moment, the Consolidated Appropriations Act, 2023, has changed this rule).
And all states accepted the additional federal Medicaid funding. It’s noteworthy that the additional federal Medicaid funding that states have received is more than double the extra cost that states have incurred to cover the FFCRA-related enrollment growth.
There is normally quite a bit of turnover in the Medicaid program, with some people losing eligibility each month. But enrollment has trended upward throughout the pandemic, without the normal disenrollments that previously stemmed from the regular Medicaid eligibility redetermination process. (Prior to the pandemic, states had to recheck each enrollee’s eligibility at least once per year, and disenroll people who were no longer eligible. That will resume in April 2023.)
Spending bill authorized states to resume Medicaid eligibility redeterminations
The PHE is expected to continue until mid-May 2023. But that’s no longer relevant in terms of the resumption of Medicaid eligibility redeterminations. The Consolidated Appropriations Act, 2023 (enacted in December 2022) has given states a specific date – April 1, 2023 – when they can begin terminating coverage for enrollees who are no longer eligible. This process, which is frequently referred to as “unwinding,” is resuming after three years of being paused, so many current Medicaid enrollees have never experienced routine eligibility redeterminations.
(Note that there are several terms that are used interchangeably: Eligibility redetermination, renewal, case review, recertification, and redetermination all mean the same thing, and refer to the process by which the state determines whether a Medicaid enrollee is eligible to continue to receive Medicaid.)
Under the previous rules, established by the Families First Coronavirus Response Act, states would have been allowed to start redetermining Medicaid eligibility after the end of the month that the PHE ended. That is now expected to happen in May 2023. Under the prior rules, that would have meant that Medicaid eligibility redeterminations (and terminations) could have resumed as of June 2023. But that was an uncertain and ever-changing date, as the PHE has continued to be extended. And although the Biden administration had promised states at least a 60-day notice before the end of the PHE, states had noted that it was still proving very difficult to plan for the resumption of Medicaid eligibility redeterminations given the uncertain timeframe.
One note about the Children’s Health Insurance Program (CHIP): States that operate a separate CHIP were not required to suspend CHIP disenrollments during the pandemic. But they could choose to do so, and could also choose to waive premiums for CHIP during that time. CMS is referring to the return to normal eligibility redeterminations and disenrollments as a “Medicaid and CHIP unwinding.”
Are there protections to ensure that enrollees who are eligible for Medicaid won't be disenrolled?
There is no doubt that some people currently enrolled in Medicaid are no longer eligible due to income increases since they enrolled in the program. It’s understandable that a primary goal of the redetermination process is to ensure that these individuals transition to other coverage, either from an employer or through the exchange/marketplace.
But there are very real concerns that many people who are actually still eligible for Medicaid might lose their coverage due to a lack of understanding of the process, onerous paper-based eligibility redetermination systems, unstable housing/communication situations, etc. HHS projects that nearly 8% of current Medicaid enrollees will lose their coverage – despite continuing to be eligible – once eligibility redeterminations resume.
So the Consolidated Appropriations Act, 2023 does require states to use the U.S. Post Office’s change of address database and/or state Department of Health and Human Services data to ensure that the state has updated contact information for people whose coverage eligibility is being redetermined. The law also prohibits states from disenrolling a person simply based on undelivered mail. The state has to make a good-faith effort to find the person first. Nearly every state has been conducting some type of outreach campaign around this, asking Medicaid enrollees to be sure that the state has their current contact information on file.
There are also monthly reporting rules included in the law, designed to ensure transparency and accountability throughout the unwinding of the FFCRA’s continuous coverage requirements.
We’re hopeful that states will work to make the redeterminations and renewals process as transparent, accurate, and simple as possible. But our goal today is to help you understand what you need to know in order to maintain coverage if you’re one of the millions of people who could potentially lose Medicaid eligibility in the coming months.
When will Medicaid eligibility redeterminations happen?
Under the Consolidation Appropriations Act, 2023, the resumption of Medicaid disenrollments is no longer linked to the end of the COVID public health emergency. March 31, 2023 is the last day that states have to maintain the continuous coverage rules that have been in place since March 2020.
The new rules give states a clear time frame: They can begin to initiate the renewal/redetermination process as early as February 1, 2023 (states can start this in February, March, or April), and disenrollments can be effective as early as April 1, 2023 if adequate notice is given to the enrollee. For everyone enrolled in Medicaid as of March 31, 2023, states must initiate the renewal process no later than March 31, 2024. And those renewals must be completed no later than May 31, 2024
This 12-month period to initiate renewals and 14-month period to complete them had already been the case under previous guidance that the Biden administration had issued. In a May 2022 letter to governors, HHS noted “We strongly encourage your state to use the entire 12-month unwinding period to put in place processes that will prevent terminations of coverage for individuals still eligible for Medicaid as your state works through its pending eligibility actions.”
And the Consolidated Appropriations Act, 2023 provides for the additional federal Medicaid funding to gradually decrease throughout 2023, instead of ending abruptly at the end of the quarter in which the PHE ends. If the PHE ends in April 2023, the FFCRA’s rules would have resulted in the additional federal Medicaid funding (6.2 percentage points added to a state’s regular federal Medicaid funding) ending altogether at the end of June 2023.
This would have incentivized some states to act as quickly as possible to disenroll people from Medicaid. But the Consolidated Appropriations Act, 2023 ensures that states continue to receive at least some additional federal Medicaid funding throughout 2023. For the first quarter of 2023, states will continue to get the 6.2 percentage point boost that they’ve been receiving throughout the pandemic. In the second quarter, that will drop to 5 percentage points. In the third quarter, it will drop to 2.5 percentage points, and in the fourth quarter of 2023, states will receive 1.5 percentage points in additional federal Medicaid funding.
For a person who is no longer Medicaid-eligible under normal rules, Medicaid coverage can end as early as April 1, 2023. But the overall pace of Medicaid eligibility redeterminations and disenrollments will vary considerably from one state to another.
How many will lose coverage when the Medicaid eligibility redeterminations resume?
HHS projects that approximately 15 million people will lose eligibility for Medicaid once the normal eligibility redetermination process resumes. But this will not happen all at once, as each state will have its own approach to the resumption of eligibility redeterminations.
What rules do states have to follow when they resume Medicaid eligibility redeterminations?
HHS has laid out some basic guidelines, and states have four general options in terms of how they handle the unwinding of the continuous coverage protocols and the return to regular eligibility redeterminations for the entire Medicaid population:
- Population-based: Under this approach, a state will prioritize (ie, conduct first) eligibility redeterminations for enrollees that the state believes are most likely to no longer be eligible for Medicaid. This would include, for example, people who were enrolled under Medicaid expansion but have since turned 65, and people who have reported an income increase during the PHE. States can also use claims data to identify people who have not had recent claims, which might indicate that they now have coverage elsewhere (with Medicaid serving as secondary coverage). Texas is an example of a state taking this approach.
- Time-based: Under this approach, a state will either prioritize enrollees whose renewals have been pended for the longest time during the PHE (ie, start by processing enrollments that were due for renewal in 2020), or simply keep each enrollee’s existing renewal month (ie, if an enrollee was initially scheduled for renewal in October 2020, their renewal month will now be October 2023). Virginia is an example of a state taking this approach.
- Hybrid: This is a combination of the population-based and time-based approaches. A state might initially prioritize redeterminations for certain enrollees who are considered most likely to be ineligible for Medicaid, and then use the time-based approach for the rest of its Medicaid population. Tennessee is an example of a state taking this approach.
- State-developed: This option allows states to create their own protocol for handling and prioritizing the eligibility redeterminations, but states are limited by various federal rules (for example, states cannot prioritize or deprioritize redeterminations based on the portion of the enrollees’ costs that are covered by the federal government, nor can states violate anti-discrimination laws). Georgia is an example of a state taking this approach.
How might the Medicaid redeterminations affect enrollees?
If you’re still eligible for Medicaid under your state’s rules, you’ll be able to keep your coverage. You may have to submit documentation to the state to prove your ongoing eligibility, so pay close attention to any requests for information that you receive.
Many states have continued to send out these renewal notifications and information requests throughout the pandemic (nearly all states have been conducting automatic (ex parte) renewals when possible, and more than half the states have also been sending renewal forms to enrollees). If you’ve recently submitted renewal information to your state and it’s clear that you’re still eligible, your coverage will continue as usual until your next renewal period.
If you no longer meet your state’s Medicaid eligibility guidelines, it’s a good idea to understand what your options will be when your state begins disenrolling people who are no longer eligible.
Can you appeal your state's decision to disenroll you from Medicaid?
If your state notifies you that you’re no longer eligible for Medicaid and you believe that you are still eligible, you can appeal the state’s decision. (Be prepared to provide proof of your ongoing eligibility under your state’s Medicaid rules.)
What are your options if you're no longer eligible for Medicaid?
What if your income has increased to a level that’s no longer Medicaid-eligible? Or maybe your circumstances have changed – perhaps your income is the same but you have fewer people in your household and your income now puts you at a higher percentage of the poverty level. There are millions of people who became eligible for Medicaid at some point since March 2020, and are still enrolled in Medicaid even though they would not be determined eligible if they were to apply today.
For those individuals, there will generally be two primary options for post-Medicaid coverage: An employer-sponsored plan, or a plan obtained in the health insurance exchange/marketplace. According to an Urban Institute analysis, about a third of the people losing Medicaid will be eligible for premium tax credits (subsidies) in the marketplace, while about two-thirds will be eligible for employer-sponsored coverage that meets the ACA’s definition of affordable. (Note that the Biden administration has implemented a fix for the family glitch, making some employees’ family members newly eligible for marketplace subsidies in 2023 even with an offer of employer-sponsored coverage.)
Most of the people who will become eligible for marketplace subsidies will be adults, as children are always much less likely than adults to qualify for marketplace subsidies. That’s because Medicaid and CHIP eligibility for children extend to significantly higher income ranges, and marketplace subsidies are never available if a person is eligible for Medicaid or CHIP.
States can take action to minimize the number of people who become uninsured due to Medicaid eligibility redeterminations after the PHE. For example, California and Rhode Island are planning to automatically enroll some people who lose Medicaid eligibility into a marketplace plan in their area (although they would still have the normal 60-day window to select a different plan or opt-out if they don’t want marketplace coverage).
Some people who will lose Medicaid eligibility are now eligible for Medicare instead. This will be the case, for example, for someone who was enrolled under Medicaid expansion guidelines (which only apply through age 64) and has turned 65 during the PHE. Under normal circumstances, they would have lost their Medicaid eligibility upon turning 65, as the Medicaid eligibility rules are much different (and include asset tests) for people 65 and older. But during the PHE, these individuals have not had their Medicaid coverage terminated. So HHS has finalized a rule change that allows for a six-month special enrollment period during which a Medicare-eligible person who loses Medicaid coverage can transition to Medicare without a late enrollment penalty. People using this window can elect to have their Medicare coverage retroactive to the day after their Medicaid ended, although any back premiums would have to be paid in that case.
What should you do if you currently have Medicaid coverage?
If you’re currently enrolled in Medicaid, it’s a good idea to familiarize yourself with your state’s eligibility rules, and figure out whether you’d be eligible if you were to apply today, with your current circumstances and income.
If the answer is yes, be sure you pay close attention to any requests for additional information from your state’s Medicaid office, as they may need that in order to keep your coverage in force. And if you’ve moved or your contact information has changed since you first enrolled in Medicaid, make sure the state has your current contact information on file. This should include an email address and cell phone number if you have them, as states are increasingly using email and text messages, as well as regular mail, to contact enrollees.
But if the answer is no, be prepared for a coverage termination notice at some point after the end of March 2023.
What are my options if I receive a coverage termination letter?
- If you have access to an employer-sponsored health plan, your loss of Medicaid coverage will trigger a special enrollment period that will allow you to enroll in the employer-sponsored plan. This window is only required to be 60 days, so don’t put this off (note that during the COVID national emergency, this deadline has not been applicable. But it will start to apply again as of June 10, 2023, which is 60 days after the national emergency ends).
- If you do not have access to an employer-sponsored health plan, you can apply for a premium tax credit (subsidy) to offset the cost of coverage in the health insurance marketplace in your state. Depending on your income, you might also qualify for cost-sharing reductions (CSR), which will make your out-of-pocket costs more affordable as long as you select a Silver-level plan (you can use premium subsidies with plans at any metal level, but CSR benefits only come with Silver plans).
- The window to enroll in a marketplace plan will start 60 days before your Medicaid coverage ends, and if you’re in a state that uses HealthCare.gov, it will continue until July 31, 2024 (the end of the 14-month “unwinding period” for states that start the process the month after the end of the continuous coverage rule). This is a new special enrollment period that the federal government announced in January 2023. Anyone who attests to a loss of Medicaid between March 31, 2023 and July 31, 2024 can sign up for a plan through HealthCare.gov anytime in that window (this is a more lenient approach than the normal rules, under which the special enrollment period ends 60 days after the loss of coverage). State-run exchanges have the option to offer this special enrollment period, or they can use their normal protocols of offering a window that starts 60 days before the loss of coverage and ends 60 days after it. But in any case, you’ll need to submit your application before your Medicaid ends if you want to have seamless coverage or a minimal gap in coverage. Your new marketplace plan cannot have a retroactive effective date and won’t take effect until at least the first of the month after you apply. So you’ll have a gap in coverage if you submit your marketplace application after your Medicaid coverage has terminated.
- The subsidies that are currently available in the marketplace are particularly generous, thanks to the American Rescue Plan, and you might be pleasantly surprised to see how affordable the coverage will be. And the enhanced subsidies (ie, even better than the Affordable Care Act’s original subsidies) will remain in place through the end of 2025, thanks to an extension granted by the Inflation Reduction Act.
- If you’re in a state that hasn’t expanded Medicaid under the ACA and your income is below the poverty level, you may find yourself in the coverage gap that these states have created by refusing to expand Medicaid. HHS projects that 383,000 people who will lose Medicaid will be in the coverage gap. If you’re applying for a plan in the exchange and are being told that you don’t qualify for any financial assistance despite a low income, read this article about strategies for avoiding the coverage gap. And familiarize yourself with the income levels that will make you eligible for premium and cost-sharing assistance in the exchange.
- If you’re eligible for Medicare, you’ll have a six-month window during which you can transition to Medicare without any late enrollment penalties.
The main point to keep in mind is that the opportunity to transition to new coverage, from an employer, Medicare, or through the marketplace, is time-limited, although the “unwinding SEP” described above (announced in late January 2023) gives people significantly more flexibility in terms of being able to enroll in a plan through HealthCare.gov after losing Medicaid during the 16-month window that starts March 31, 2023. Other than that, if you miss the special enrollment period for your particular coverage, you’ll have to wait until the Medicare Fall Open Enrollment to sign up for coverage (employers set their own annual enrollment windows; Medicare’s general enrollment period is January – March each year).
Special enrollment period for low-income enrollees
There is a relatively new special enrollment period that allows people with household income up to 150% of the poverty level to enroll in coverage year-round, for as long as the enhanced subsidies remain in place (so at least through the end of 2025, and possibly longer if Congress grants another extension). And some states that also offer additional state-funded subsidies allow people with higher incomes to enroll year-round.
For people whose income has increased enough to make them ineligible for Medicaid, but still eligible for this special enrollment period, there will be more flexibility in terms of access to coverage. But even if you’re eligible for this ongoing special enrollment period, it’s still in your best interest to submit an application as soon as possible if you find out that you’ll be losing your Medicaid coverage. Free or nearly free coverage will be available in the marketplace for people eligible for this special enrollment period (this is a result of the American Rescue Plan’s subsidy enhancements). And since coverage cannot be backdated, it’s essential to ensure that you’re covered before any medical needs arise.
If you don’t have access to an employer-sponsored plan and you are eligible for marketplace subsidies (most people are), the best course of action is to enroll in a marketplace plan as soon as you know that your Medicaid coverage will be terminated, in order to avoid or minimize a gap in coverage. This is true regardless of whether you’ll qualify for the new low-income special enrollment period, since you’ll have a normal loss-of-coverage special enrollment period when your Medicaid ends, and you can take advantage of it right away.
Don’t panic: Coverage is almost certainly available.
The impending termination of FFCRA’s continuous coverage rules and return to business as usual for Medicaid can be a nerve-wracking prospect for some enrollees. Many people who enrolled in Medicaid since early 2020 have never experienced the regular eligibility redeterminations and renewal processes that have long been a part of Medicaid, and those will resume in April 2023 (some enrollees won’t receive a renewal notification for several months after that, depending on the approach that their state uses).
The primary things to keep in mind: Your Medicaid coverage will continue if you continue to meet the eligibility guidelines and submit any necessary documentation as soon as it’s requested by the state. And if you’re no longer eligible for Medicaid, you’re almost certainly eligible for an employer-sponsored plan, Medicare, or a subsidized plan in the marketplace. Don’t panic, but also don’t delay, as your opportunity to enroll in new coverage will likely be time-limited.
EDITOR’S NOTE: This article was first posted in March 2022 but has been updated to reflect the passage of the Consolidated Appropriations Act, 2023 (the omnibus spending bill). The COVID public health emergency (PHE) will end on May 11, 2023, but the omnibus bill de-links the resumption of Medicaid eligibility redeterminations from the PHE, and allows states to start processing eligibility determinations as of April 1, 2023.
This article has also been updated to note that the American Rescue Plan’s subsidy enhancements have been extended by the Inflation Reduction Act.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.