The long-awaited assessment of whether certain Medicaid coverage categories meet minimum essential coverage (MEC) standards is out. Why is this important? This list serves two purposes:
- Individuals eligible for non-MEC Medicaid can qualify for premium tax credits and cost-sharing reductions.
- Individuals with non-MEC Medicaid coverage know whether they need to secure MEC to avoid the penalty or need to file an exemption application.
Generally individuals are not eligible to receive premium tax credits if they are considered eligible for MEC. This means that most people eligible for Medicaid or CHIP are ineligible to get financial assistance to purchase a Marketplace plan. However, certain Medicaid coverage for low-income pregnant women, “medically-needy” individuals, and individuals covered under some waiver programs may or may not meet MEC standards.
The second key aspect of this issue relates to the tax penalty and possible exemption from the individual mandate. Individuals who are eligible for non-MEC Medicaid could be subject to the individual mandate and tax penalty if they are not otherwise exempt. However, CMS has taken care of this by specifying that individuals who are eligible for specific non-MEC Medicaid categories (pregnant women’s coverage, coverage under the CHIP unborn child option, and spend-down programs) will qualify for a hardship exemption and are therefore not subject to a tax penalty.
This exemption does not apply to other non-MEC Medicaid including family planning services, coverage for tuberculosis-related services, or emergency only services for non-qualified non-citizens. These programs do not meet MEC standards and individuals receiving those benefits are still bound by the requirement to have MEC unless otherwise exempt from the individual mandate.
It’s important to note that neither the hardship exemption types posted on healthcare.gov nor the hardship exemption application explicitly lists non-MEC Medicaid eligibility as a qualifying reasons. Individuals who qualify for the exemption should apply based on the directions for #14 – other hardship. Hopefully, with release of the MEC designation list, the website and application can be updated so consumers don’t overlook this key protection.
A special thanks to the Robert Wood Johnson Foundation for its support of our work on providing feedback to HHS and highlighting how ACA implementation is impacting consumers.