CMS Announces Important Consumer Protection for People Losing Medicaid/CHIP

States will begin the process of redetermining Medicaid eligibility for over 80 million people across the country very soon, and some states may be starting the process today. People will not lose Medicaid coverage until April 1 at the earliest, but once disenrollments begin, the number of people losing Medicaid coverage could skyrocket overnight.

Some people who are found ineligible for Medicaid during this “unwinding” process may be eligible for Marketplace coverage, but successfully transitioning to such coverage can be difficult. (Note that children who are found ineligible for Medicaid are more likely to be eligible for CHIP, which can also be a difficult transition to make depending on whether the state has a separate state CHIP program or CHIP-funded Medicaid coverage.) Thankfully, CMS made an important announcement that will help make transitions from Medicaid to the Marketplace easier.

On January 27, 2023 the Center for Consumer Information and Insurance Oversight (CCIIO) issued a Frequently Asked Questions (FAQ) document outlining a temporary special enrollment period (SEP) for people losing Medicaid/CHIP coverage due to the unwinding of the Medicaid continuous coverage requirement in states with a federal Marketplace (or in states that use the federal Marketplace platform for their eligibility and enrollment). SEPs allow people to enroll in Marketplace coverage outside of the annual open enrollment period, but people must have certain “qualifying life events” to be eligible for them. Limiting enrollment to certain time periods is meant to encourage people to have health insurance year-round, rather than only enrolling once sick, which helps keep the cost of coverage down for everyone. Common qualifying life events are things such as moving to a new state, experiencing a change in household size (getting married, having a baby), or losing health insurance.

Before the new unwinding SEP was announced, people losing Medicaid/CHIP coverage would be eligible for a standard SEP based on simply losing their health insurance. However, the standard SEPs are limited to only 60 days, meaning that someone losing Medicaid/CHIP coverage must immediately apply for and enroll in Marketplace coverage to qualify. (Individuals with income below 150 percent of the federal poverty line, however, are eligible for a SEP under which they can enroll in the federal Marketplace at any time.)  Under normal circumstances, 60 days may be sufficient time to make this transition. However, the Medicaid unwinding is not a normal circumstance.

First, the workload for state Medicaid agencies and enrollment assisters is unprecedented. Even assuming a good faith effort to process all renewals accurately, it will be incredibly difficult for state workers and systems to keep up. Notices to beneficiaries about possibly losing Medicaid coverage may be late, confusing, or both. When people call to ask questions, call centers may be overloaded and experience excessive wait times.

Second, many Medicaid beneficiaries haven’t had to complete a renewal in almost three years, and some have never had to do so (if they enrolled for the first time on or after March 18, 2020). The process will be unfamiliar at best. Families may have moved in the last couple of years too, so state notices may arrive at an outdated address.

These are among the reasons CCIIO announced the temporary unwinding SEP. Between March 31, 2023 and July 31, 2024, people who submit a new application (or updating an existing one) for coverage through the federal Marketplace and attest to losing Medicaid/CHIP can qualify for the unwinding SEP and enroll in coverage, even if it is outside the open enrollment period and their Medicaid/CHIP coverage ended more than 60 days prior. After submitting an application, people will have 60 days to select a Marketplace plan and coverage will begin on the first day of the month following plan selection. Here’s a hypothetical example of how this could help reduce coverage losses during unwinding:

Sarah and her daughter have had Medicaid coverage since 2021. During that time, Sarah hasn’t had to complete paperwork to keep her family covered; her coverage has been protected by federal law. In April 2023, Sarah receives a confusing notice saying that she may no longer be eligible for Medicaid because her income is too high. She tries calling the state’s call center for help understanding what she needs to do, but has to hang up after waiting for over an hour. After a few attempts, she is finally able to speak to an application assister. She learns that she is no longer eligible for Medicaid but could be eligible for coverage through the federal Marketplace in her state. She also learns that her daughter isn’t eligible for Medicaid anymore either, but she is eligible for CHIP.

Sarah focuses on making sure her daughter is covered first, and she is able to successfully enroll her in CHIP after completing some paperwork, selecting a managed care plan, and paying a premium. By the time Sarah tries to enroll herself in Marketplace coverage, more than 60 days have passed since she lost Medicaid.

 Under prior policy, if she now had income above 150 percent of the federal poverty level, Sarah would have had to wait until the next open enrollment period in November to enroll in Marketplace coverage that would take effect January 1, 2024, leaving Sarah without health coverage and exposing her to health and financial risks for 6 months. However, under the new, temporary unwinding SEP, Sarah is able to enroll in a Marketplace plan with just a short gap in coverage.

It’s easy to see how providing this extra flexibility to enroll in Marketplace plans will help mitigate coverage losses during the Medicaid unwinding, at least in states that use the federal eligibility and enrollment platform. States that operate their own, state-based Marketplaces (SBMs) with their own eligibility and enrollment platforms may also offer this flexibility, but they don’t have to do so. Advocates in 18 states (CA, CO, CT, DC, ID, KY, ME, MD, MA, MN, NV, NJ, NM, NY, PA, RI, VT, and WA) should encourage their state Marketplace to follow CCIIO’s example and take this important step to protect consumers.

Kelly Whitener is an Associate Professor of the Practice at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.