The latest round of proposed Medicaid regulations has a number of helpful provisions but we couldn’t help be disappointed that the proposed rules allow states to continue to impose CHIP waiting periods on children who have recently been covered by group health insurance. Simply put…waiting periods make no sense in a post-ACA universe in which everyone is expected to enroll in coverage and, indeed, can face penalties for failing to do so.
While CHIP does require that states protect against crowd-out or substitution of public coverage for private group coverage, it does NOT require waiting periods. Unfortunately, waiting periods have become the most prevalent way that states operationalize this policy. Currently 38 states impose waiting periods in CHIP, including four states (AR, MD, MN and NM) that have 1115 waiver approval to impose a waiting period on some portion of their CHIP-funded Medicaid expansion programs.
Granted, the proposed regulations establish a maximum waiting period of 90 days, so 18 states will need to reduce their waiting periods. The rule also provides very specific circumstances under which a waiting period MUST be waived, although a number of states already have many of these in place. These exceptions include:
- Cost of private group coverage for the child exceeds 5% of household income.
- Cost of family coverage that includes the child exceeds 9.5% of household income.
- The employer stopped offering coverage for dependents or dropped coverage entirely.
- A change in employment even if COBRA is available.
- The child has special health care needs.
- The child lost coverage due to the death or divorce of a parent.
That said, given the ACA’s intent to promote continuous coverage, along with the coordination issues and administrative burden of temporarily enrolling these children in the exchange and then having them reapply for CHIP in 90 days, does it make sense to continue CHIP waiting periods at all? On top of that, some (if not many) CHIP families may not qualify for subsidies in the exchange if their employer offers coverage for one parent that costs less than 9.5% of household income without regard to the cost of coverage for the entire family (if the proposed interpretation of access to affordable employer based coverage is not amended in final regulations).
New Hampshire and Vermont dropped their waiting periods this year and Minnesota raised the income level at which its waiting period applies. The Colorado Legislature is currently considering legislation to eliminate its waiting period. We had hoped the proposed regulations would accelerate this trend, or at the very least provide states with some alternative effective strategies to monitor and protect against crowd-out rather than maintain waiting periods. There’s still a chance for CMS to fix this by amending the final rule.