May, 14, 2020

Medicaid/CHIP and Marketplace Interactions in COVID-19

Chiquita Brooks-LaSure, Manatt Health

The danger of being uninsured is more acute than ever for many Americans, as the unemployment rate continues to rise in the fallout from the coronavirus (COVID-19) public health and economic crisis. As of May 1, 33.5 million Americans applied for unemployment since the national public health emergency was declared.[1] Because of the Affordable Care Act (ACA), millions more Americans are eligible for assistance with health care costs as compared to the 2008 economic recession, and states have seen a significant increase in individuals seeking health care coverage through Medicaid/the Children’s Health Insurance Program (CHIP) and the ACA Marketplaces. But gaps in coverage remain and have widened over the past four years. Given the gravity of the economic downturn, Congress has passed several stimulus bills that provide a strong incentive for states to maintain current Medicaid coverage and create new coverage options for testing (but not treatment) for the uninsured.Nonetheless, with record unemployment rates, the numbers of uninsured are growing. Stopgap legislation does not fill the holes in coverage and creates misalignment in eligibility requirements across programs, which are confusing for individuals and result in programmatic disconnects for states.

The biggest coverage gap exposed (and exacerbated) by the COVID-19 crisis is that many U.S. residents are not enrolled in affordable, comprehensive health coverage that will cover COVID-19 testing and services and other health care costs. This gap exists for a variety of reasons: some states have not taken up the ACA Medicaid expansion, leaving millions of low-income adults without any affordable coverage option; others have used new federal flexibility to permit enrollment in non-ACA compliant plans, such as short-term limited duration plans, that are not required to cover free COVID-19 testing; and, due to a lack of affordable coverage options in some parts of the country, underinsured people are unable to afford deductibles when they need COVID-19 treatment, as well as preventive or chronic health care services.

Below, we provide an overview of strategies that states can consider to help address these gaps in coverage to ensure as many people as possible get access to comprehensive care as the country continues to respond and recover from the COVID-19 health and economic crisis. Policymakers may want to consider continuing and expanding these solutions to increase coverage once the nation recovers from the current health care crisis so that the health care system is better prepared to weather the next one.

Expand Medicaid. While Medicaid expansion remains a politically divisive issue in states that have not expanded to date, it also remains an effective and fiscally advantageous solution for providing comprehensive and affordable health coverage, including coverage for COVID-19 testing and treatment, for low-income adults who are particularly vulnerable to COVID-19 infection and death. With federal funding for expansion coverage set at 90 percent on a permanent basis, some states may reconsider expansion – especially in light of skyrocketing uncompensated care costs battering already financially fragile hospitals and health centers in rural communities throughout the country.

Enroll Eligible Uninsured in Comprehensive Coverage. Under the Families First Coronavirus Response Act, states have the option to expand Medicaid for COVID-19 testing and testing-related services (at 100 percent federal match) to the uninsured, regardless of income. Some states may pursue this option as a strategy to cover testing services quickly. However, this coverage is not comprehensive insurance coverage, and individuals with health care needs above and beyond COVID-19 testing (including COVID-19 treatment) would either have those needs go unmet or have to pay out-of-pocket for care and possibly drive up uncompensated care costs for providers. In states that opt to cover the new COVID-19 optional testing group, individuals who gain such coverage are still likely eligible for Marketplace coverage and APTCs because the Internal Revenue Service (IRS) has not treated limited coverage under Medicaid as minimum essential coverage. While the U.S. Department of Health and Human Services (HHS)/IRS may need to clarify this in subsequent guidance[2], is it likely that these individuals could get tested immediately for COVID-19 but enroll in Marketplace coverage with APTCs if they meet other qualifications. Whether these individuals have COVID-19 or not, this is a potential opportunity to raise awareness of the importance of health insurance and perhaps bring new enrollees into Marketplace coverage.

Tighten Oversight of Non-ACA Compliant Products; Require Free Access to COVID-19 Testing and Treatment. The Families First Coronavirus Response Act requiresgroup health plans (including insured and self-insured Employee Retirement Income Security Act of 1974 (ERISA) plans) and health insurance issuers in the individual and group markets (including grandfathered plans) to cover COVID-19 testing and items/services related to testing and screening furnished during provider office visits (whether conducted in-person or by telehealth), urgent care center visits, and emergency room visits that result in testing for COVID-19, without cost-sharing. This means that most people enrolled in group or individual coverage have access to these benefits. However, certain health plans, particularly short-term limited duration plans, are not required to comply with these requirements. States have authority to regulate short-term plans, and some states, including Arizona, North Dakota, and Washington, have already required or encouraged these plans to remove testing and/or treatment cost-sharing during the COVID-19 emergency.[3] Multiple states have already restricted the sale or duration of short-term plans and alerted consumers about deceptive sales tactics, but more may want to consider limiting or further regulating these plans, particularly if the public health crisis persists into the next open enrollment period for the Marketplaces.

Conducting ongoingpublic education on the benefits and availability of comprehensive health coverage, as well as providing materials and training for enrollment assisters on essential services required in qualified health plans (QHPs), can help encourage consumers to assess their needs when selecting health insurance.

Increase Outreach and Education About Enrollment in Medicaid/CHIP or Marketplace Coverage Throughout the Year. States that have expanded Medicaid and established their own state-based Marketplaces (SBMs) have flexibility to move quickly to raise awareness of coverage options for their residents. All states, regardless of their expansion or Marketplace status, can provide a welcome mat for consumers worried or impacted by the public health emergency and its economic repercussions by raising awareness of the coverage options that exist through Medicaid/CHIP, Basic Health plans, Marketplace and off Marketplace private plans. 

Given consumers’ limited understanding of the various program options and what may be right for them, messaging that emphasizes the availability of free, low-cost options and financial help are proven motivators to get individuals to see that there may be something for them and take action to learn more.

By coordinating efforts across state agencies, working with enrollment partners, and leveraging earned, paid, and social media tactics, states can raise awareness of coverage options, eligibility parameters, and enrollment directions. (For best practices to drive enrollment, see this SHVS COVID-19 Communication Best Practices for States Expert Perspective).

Under Medicaid/CHIP federal requirements, individuals can seek coverage and apply at any time during the calendar year. Marketplace enrollment, however, is only permitted at either annual open enrollment or under a SEP. This policy discourages people from only seeking insurance coverage when they are sick and need health care services. SEPs are normally provided for situations such as a loss of employer coverage, changes in household size from the birth of a child, marriage or divorce, or changes in residency. In addition, 12 of the 13 states (including Washington, D.C.) with SBMs have responded to the COVID-19 crisis by creating a new SEP specifically for the COVID-19 crisis, and as of this writing, several are still open.[4] The federally facilitated marketplace (FFM),, has not created one, and the Administration has stated it will not create a COVID-19-specific SEP. Nonetheless, consumers can still enroll in coverage (and receive APTC) through the FFM if they qualify for a traditional special enrollment circumstance (as described above) – even if that circumstance results from the COVID-19 crisis (for example, the loss of employer coverage).[5] And as always, individuals can apply and enroll (if eligible) in Medicaid at any time.

Also, individuals who are currently enrolled in APTCs can apply for their subsidy level or coverage program to be adjusted if their income has changed. Regardless of whether a state operates an SBM or relies on the FFM, all states should encourage currently uninsured people, those experiencing income fluctuations, and those losing employer-based health insurance as a result of COVID-19 to apply for coverage through the Marketplace or Medicaid. States are already starting to document success encouraging people to enroll using the SEPs. In Maryland, more than 21,500 residents have enrolled in coverage as of April 16 — 61 percent of whom qualified for Medicaid. California similarly reported that more than 58,000 people enrolled in coverage under the state’s SEP.

States may also consider highlighting small employer coverage and making it easier for eligible employees and family members to apply for group coverage. States could actively advertise that spouses and other family members can enroll in small group coverage if those family members have lost employer-based coverage. The Washington, D.C. Marketplace, for example, is taking the extra step of allowing a SEP for currently participating employers to enroll employees who did not enroll during the normal open enrollment season.

Educate Assisters About Navigating Complex Income Counting Rules. Medicaid eligibility is determined based on a household’s monthly income, whereas APTCs are determined based on projected annual income. To account for this difference, federal regulations require Medicaid eligibility to be determined first before determining eligibility for APTCs. As an operational issue, though, it is possible that individuals screening for their eligibility might appear to qualify for APTCs rather than Medicaid based on their income at the start of the year, which may deter them from submitting a full application. Income fluctuations are a common issue for families with modest incomes, but with the widespread effects on COVID-19 on unemployment, the issues are heightened. Individuals who might have earned incomes above APTC levels may find themselves eligible for Medicaid due to unemployment, with no certainty about when they will return to work and what their incomes will be for the rest of the year. Further, a number of these individuals will be coming from years of coverage through employer sponsored coverage and less familiar with Medicaid and Marketplace coverage. States will want to make sure that consumer assistors understand the different methods of looking at income for Medicaid and Marketplace programs and can provide tools and decision-making help to consumers. States may want to think about emphasizing free or low-cost coverage options being available rather than focusing on the distinctions between Medicaid and subsidized coverage. 

The stimulus legislation included two significant funding streams targeted to individuals: an economic stimulus check and an increase in unemployment benefits. While stimulus checks do not count as income for determining eligibility for either Medicaid/CHIP or APTC[6], the two programs treat the increase in unemployment payments in the CARES Act inconsistently (base unemployment benefits do count as income for both programs). Increased unemployment insurance payments do not count as income for Medicaid but do count as income for APTC determinations. This disconnect may create confusion and also means that Medicaid is substantially more generous than APTC near the income cut-off. States will want to make certain that families understand these differences by developing Frequently Asked Questions and directing consumers to assisters, as well as considering the strategies outlined here.

Tailor Messages to Different Audiences to Address Health Inequities. Importantly, given the significant racial and health inequity issues revealed by COVID-19, states should consider strategies to reach various communities, especially those hardest hit. This could include creating messages and materials in multiple languages as well as targeting paid and earned media efforts to ensure breakthroughs in impacted communities. It may also include partnering with trusted community leaders to better understand the barriers to enrollment, developing strategies to overcome those barriers, and disseminating information. BeWellNM, New Mexico’s exchange, developed a suite of outreach materials targeted to Native Americans, including a rack card, fact sheet, brochure, one-pager, and a slide deck.


State and federal policymakers have acted quickly to address today’s public health crisis, and it has become increasingly clear that the pandemic is far from over. The country is expected to ensure multiple surges of uncertain severity in the months and years to come until a vaccine for the virus is developed. During that time, we can expect broad, public health testing, tracing, isolation, and treatment to become the new normal in our health care system. The current and ongoing realities of COVID-19 has shed a light on coverage gaps in our health care system and underscores how addressing a major public health emergency is doubly challenging as a result. State and federal policy makers, as well as leaders of health care providers and plans, must work together now to address these gaps in health coverage to prepare for the next phase of the COVID-19 pandemic and economic downturn.

[1] Department of Labor. Unemployment Data Dashboard.  

[2] Coverage of limited services under Medicaid has not disqualified individuals from qualifying for APTCs.

[3] The Commonwealth Fund.

[4] California, Colorado, Connecticut, Maryland, Massachusetts, Minnesota, Nevada, New York, Rhode Island, Vermont, Washington, and Washington, D.C.

[5] Furloughed employees should check with their employer about whether their health care coverage is continuing or not.

[6] CMS. Frequently Asked Questions.