Medicaid Eligibility: What Changes to Expect

Medicaid and the Children’s Health Insurance Program (CHIP) provide health insurance coverage to over 72 million Americans.

Please continue reading to understand the changes made in Medicaid coverage during the COVID-19 public health emergency, including the continuous enrollment provision. Learn what changes to expect in Medicaid eligibility with the current rules as the continuous enrollment provision winds down.

What is the highest income to qualify for Medicaid coverage?

The Affordable Care Act of 2010 allowed states to expand Medicaid coverage and provide low-cost health coverage to nearly all low-income Americans under the age of 65. Eligibility for children was extended to at least 133% of the federal poverty level (FPL) in every state (most states cover children at higher income levels). States were given the option to extend income eligibility for Medicaid benefits to adults with an income level at or below 133% of the FPL, and most states have done so.

The Affordable Care Act established a new method for determining income eligibility for Medicaid services based on the Modified Adjusted Gross Income (MAGI). The MAGI methodology considers a certain income level based on taxable income and tax filing relationships to determine financial eligibility for Medicaid. Therefore, MAGI is used to determine if low-income people are financially eligible for Medicaid and CHIP. It is also used to determine premium tax credits and cost-sharing reductions in the health insurance marketplace.

What was expanded Medicaid coverage during the COVID-19 pandemic?

Data on Medicaid and CHIP enrollment shows that between 2017 and 2019, there were declining enrollments in state Medicaid. However, during the pandemic, between February 2020 and December 2022, Medicaid/CHIP enrollment expanded to over 92 million. This is an increase of nearly 30%. More than 21 million low-income adults enrolled in Medicaid during this period.

These enrollment increases are due to changes in eligibility rules allowing expanded Medicaid and CHIP eligibility and the continuous enrollment provision created on a temporary basis by the Families First Coronavirus Response Act (FFCRA). Under this provision, states were not permitted to disenroll Medicaid enrollees while the provision was in effect. In exchange, the federal government gave states increased funds.

The continuous enrollment provision put a stop to churning, which refers to the periodic loss of coverage where enrollees disenroll and re-enroll within a short time. It also prevented the loss of Medicaid coverage during the pandemic.

However, the Consolidated Appropriations Act, signed into law in December 2022, ends the continuous enrollment provision on March 31, 2023. The federal government will phase out giving states enhanced federal funds through December 2023. Consequently, a state agency can resume disenrollments starting April 1, 2023, provided it meets certain requirements during the unwinding period.

How many people will lose Medicaid-based coverage?

The Department of Health and Human Services (HHS) estimates that approximately 9.5% of Medicaid enrollees (8.2 million people) will no longer be eligible for Medicaid and will need to transition to another source of health insurance coverage through the health insurance marketplace or employer-sponsored insurance.

Historical patterns suggest that 7.9% (6.8 million) will lose coverage due to administrative churning despite being within the eligibility rules.

Children and young adults are expected to be disproportionately impacted. The HHS predicts that 5.3 million children and 4.7 million young adults between the ages of 18 and 34 might lose Medicaid/CHIP coverage.

Almost a third (2.7 million) of those predicted to lose Medicaid eligibility may qualify for Marketplace premium tax credits, including 1.7 million people who may be eligible for zero-premium Marketplace plans under the American Rescue Plan (ARP). Another 5 million people may obtain health coverage through insurance sponsored by their employers.

Approximately 383,000 individuals are projected to lose eligibility for Medicaid in 12 states that have not expanded coverage. These individuals will have an income level that is too high for Medicaid but too low to qualify for Marketplace tax credits.

How are states approaching the unwinding process?

Whether individuals will be able to retain Medicaid coverage or will need to transition to other health coverage will vary from state to state. In general, most states are taking measures to prepare for the end of the continuous enrollment provision. They plan to complete renewals over a period of 12-14 months (some plan to do it in under 12 months). States are updating the contact information for all enrollees and following up with enrollees before Medicaid health coverage is terminated.

First expected month for disenrollment by state
April	Arizona, New Hampshire, Arkansas, South Dakota, Idaho
May	Connecticut, Pennsylvania, Ohio, Indiana, Virginia, West Virginia, Iowa, Nebraska, Kansas, Oklahoma, Wyoming, Utah, New Mexico, Florida
June	Maine, Vermont, Massachusetts, New Jersey, Maryland, Kentucky, Tennessee, Mississippi, Alabama, Georgia, South Carolina, Wisconsin, North Dakota, Montana, Washington, Nevada, Colorado, Alaska, Rhode Island, Hawaii
July	New York, Michigan, Minnesota, Delaware, North Carolina, Illinois, Missouri, Louisiana, Texas, California
October	Oregon

How can ex-parte renewal promote coverage continuity?

Under the ACA, states must complete “ex parte” or administrative renewals by verifying an enrollee’s eligibility through available data sources before sending a renewal notice or requesting eligibility documents from an enrollee. This makes it less burdensome for an enrollee to maintain coverage. However, in many states, the share of ex parte renewals remains low. Ex parte renewals are especially low for non-MAGI groups (those with eligibility based on age above 65 or disability).

States are promoting continuity of coverage among enrollees through these tactics:

Expanding data sources to verify ongoing eligibility.
Increasing renewals using ex parte processes.
Making it easier for enrollees to update information through the mail, in person, on the phone, and online.
Streamlining the enrollment and renewal processes through a proposed rule that will apply the same rules for MAGI and non-MAGI individuals.

What else is CMS doing to facilitate Medicaid renewals?

The Centers for Medicare and Medicaid Services (CMS) has issued temporary waivers on a time-limited basis to facilitate the Medicaid renewal process and minimize termination of health coverage due to administrative procedures. These waivers include allowing ex parte renewals for individuals with verified zero income in the past year; allowing ex parte renewals for individuals who have unverifiable assets through the asset verification system (AVS); allowing enrollee coverage based on SNAP and/or TANF eligibility; partnering with managed care organizations (MCOs) and extending automatic enrollment in MCO plans up to 120 days; extending the time period allowed for fair hearing requests; and using the US postal service (USPS) returned mail and National Change of Address (NCOA) database to ensure the contact information of enrollees is up to date.

Who is at the greatest risk of losing Medicaid coverage?

The following groups are at the greatest risk of losing Medicaid coverage:

People who have changed addresses may not receive renewal information, especially if they have not updated their contact information with the state Medicaid programs.
Immigrants and people with limited proficiency in English may encounter challenges during the renewal process due to a language barrier.
People with disabilities will be at increased risk of experiencing a gap in coverage due to hurdles in completing the renewal process even though they are eligible for Medicaid programs.
Children of all racial and ethnic groups are at risk, but Hispanic children are at especially high risk of losing coverage.

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