Supporting Continuity of Coverage from Medicaid into the Marketplace: Unwinding Considerations for States
Jason Levitis, Urban Institute, and Sabrina Corlette, Georgetown Center on Health Insurance Reforms
This expert perspective has been updated to reflect the passage of the Consolidated Appropriations Act.
The 2023 Consolidated Appropriations Act provides March 31, 2023 as the end date for the Medicaid continuous coverage guarantee under the Families First Coronavirus Response Act (FFCRA), setting in motion the long-awaited “unwinding” process. Unwinding will generally follow the previously planned rules and 14-month timeline, but with the addition of a phase-down of the enhanced federal match rate and new conditions, reporting requirements, and enforcement mechanisms to prioritize coverage retention.
The unwinding will trigger the largest coverage transition since the Affordable Care Act (ACA) took effect. More people are projected to leave Medicaid than currently have marketplace coverage, creating a great risk of coverage loss but also a huge enrollment opportunity for marketplaces.
States have made tremendous efforts to prepare for unwinding, focusing on key tasks like using data to automate Medicaid redeterminations (“ex parte renewals”), improving the transfer of enrollee information from Medicaid to the marketplace (“account transfers”), and encouraging consumers to update their contact information. Some states—primarily those with state-based marketplaces (SBMs) that integrate both marketplace and Medicaid eligibility functions (“integrated eligibility systems”)—have undertaken even more ambitious efforts, like automatic enrollment, subsidies for initial months of coverage, or both.
One area of ongoing attention is supporting continuity of coverage for consumers who need to shift to the marketplace. Transitions from Medicaid to marketplace coverage have historically been marred by administrative burdens and coverage gaps. MACPAC found that in 2018, only 3% of people losing Medicaid in a state using the federally facilitated marketplace (FFM) successfully transitioned to a marketplace plan within 12 months. And over 70% of those who did successfully transition experienced a coverage gap. This is partially because consumers losing Medicaid may have an extremely short runway to complete the marketplace application without experiencing a gap—or losing coverage altogether.
Fortunately, states have options to support continuity of coverage. This piece highlights state strategies to maximize continuity of coverage for consumers coming off Medicaid and needing to transition to the marketplace. It focuses both on minimizing gaps in coverage and on maximizing successful enrollment overall. Some of the ideas require modest changes or adjustments, while others are a heavier lift, especially given healthcare officials’ already long to-do lists. State policymakers should consider them in light of their specific capacity and goals.
This piece is part of a series on unwinding strategies for states. Other papers have addressed issues like continuity of care, health equity implications, communications planning, reporting requirements, retroactive marketplace enrollment, continuity of coverage for high-need individuals, and text messaging. This piece highlights ideas from these earlier works and offers new ones for states to consider.
Consumers’ Short Runway to Transition from Medicaid to Marketplace without a Gap
In many states, consumers losing Medicaid coverage and needing to enroll in the marketplace may have only a very short window—as little as ten days after termination—to complete marketplace enrollment to avoid a gap in coverage. Not surprisingly, coverage gaps are common. Even a short gap can have negative health and financial consequences for consumers, especially those requiring ongoing care. Fortunately, states have options to improve the consumer experience and reduce these gaps.
The short runway for avoiding a coverage gap may not be readily apparent. Medicaid agencies must notify consumers that redetermination is occurring and give them a reasonable opportunity (often 60 days) to provide requested information. Every marketplace offers a special enrollment period (SEP) permitting consumers losing Medicaid (or other coverage) to enroll in the marketplace beginning 60 days before (and up to 60 days after) Medicaid terminates. This “loss-of-coverage” SEP makes coverage effective on the 1st of the month following Medicaid termination, so long as plan selection occurs before termination. This appears to give consumers 60 days or more before Medicaid terminates to enroll without a gap.
But in practice, consumers’ window to avoid a gap is far shorter. That’s because consumers generally don’t apply for marketplace coverage until they are notified Medicaid is ending. CMS regulations require Medicaid agencies to notify consumers of a negative Medicaid redetermination only 10 days before coverage ends. Many states delay termination until the end of a month following the 10-day notification period. But depending on when in the month the negative determination occurs, this still leaves consumers with as little as 10 days—or less if they don’t receive or read the notice immediately—to complete the complex marketplace application and enrollment process.
For example, suppose on May 20 a state determines a Medicaid enrollee ineligible and sends them a notification that Medicaid will end May 31. If the enrollee receives and reads the notification immediately, they have 11 days to complete the marketplace application and choose a plan to avoid a coverage gap. Any delay in seeing the notice—for example because it’s sent via paper mail or the consumer is busy during the work week—will further diminish this window.
Given these rules, it is not surprising that MACPAC found that coverage gaps are common. Some SBMs may do better, especially those where integrated eligibility systems simplify transitions. And efforts to prepare for the unwinding may have improved matters. But this experience indicates a lot of room for improvement.
Coverage gaps harm consumers in several ways. Many consumers require uninterrupted care due to chronic health conditions, ongoing acute episodes, pregnancy, or the need for regular prescriptions or contraception. Consumers with coverage gaps may put off important treatments, causing worse illness and greater expense later. Research from Sommers et al. ties coverage gaps to medication disruption, needing to change doctors, and health decline. MACPAC found that consumers with serious health conditions are more likely to be hospitalized in the aftermath of a coverage gap. Even consumers without ongoing healthcare needs may have an emergency at any time, risking financial hardship if it falls during the gap.
Consumers who experience a lapse in coverage may also be more likely to remain uninsured due to inertia and the cessation of regular communications from public programs. Or if the gap falls late in the year, consumers may fall out of the normal year-end automatic re-enrollment process and need to actively re-apply in order to enroll for the following year, greatly reducing the likelihood of successful retention.
Measures to Give Consumers More Time to Enroll
SBMs and Medicaid agencies have several options to give consumers more time to switch to marketplace coverage without a gap—or to shorten gaps that do occur. The window may be extended at either the front end (by providing more notice before Medicaid termination) or the back end (by pushing back the deadline for marketplace enrollment). States may:
- Provide longer notice before Medicaid coverage ends. Medicaid regulations require states to provide enrollees with a minimum of 10 days’ notice before termination or other adverse actions. But no maximum is specified, which permits longer notice prior to the adverse action taking place, so long as other requirements are satisfied. Extending the notice period during the unwinding period may be logistically challenging, but if feasible it could directly address the concern here.
States must generally initiate and complete renewals of eligibility, including terminations of coverage, by the end of a consumer’s eligibility period. Because states have been unable to complete terminations for enrollees as a condition of receiving a temporary increase in federal funding during the PHE, CMS laid out timelines for states to restore eligibility and enrollment operations in a March 2022 State Health Official (SHO) letter. It requires that all redetermination actions be initiated within 12 months—and completed within 14 months—of the end of the PHE (and encourages states to spread renewals out across the period). While the notification process can’t extend this timeline to initiate and complete renewals overall or for a specific enrollee, a state could design their renewal process to allow time for a longer notification period in case of a negative finding, which could give individuals more time to provide additional information between the notification and the adverse action.
Oregon is adopting an approach like this as part of its unwinding plan. It will conduct eligibility determinations so as to provide notice of termination no less than 60 days in advance. This has several benefits: it gives consumers more time to complete marketplace enrollment without experiencing a gap, gives the marketplace more time to perform outreach with account information transferred from Medicaid, and allows for the state to continue Medicaid without interruption if the consumer provides information demonstrating eligibility during the 60-day window. Similarly, Massachusetts customarily extends Medicaid through the end of the month following the determination if the consumer instead qualifies for subsidized marketplace coverage. States could also consider coordinating termination with other administrative processes, for example by providing a minimum amount of notice after account transfer is complete to ensure consumers have a meaningful opportunity to enroll.
States could also provide more notice by sending Medicaid termination notices at a time in the month that avoids the shortest timelines to act. If Medicaid coverage lasts until the end of the month following the 10-day notice period, sending notices within the last 10 days of the month would give consumers at least one month to complete marketplace enrollment. For example, sending notices on May 22 would give consumers until the end of June to complete marketplace enrollment without a gap.
- Require issuers to permit retroactive marketplace enrollment to avoid gaps. As discussed in an earlier piece, states can extend the window to enroll without a gap by requiring carriers (or asking them voluntarily) to make marketplace coverage effective retroactively in connection with unwinding. For example, if Medicaid coverage ends May 31 and the consumer completes marketplace enrollment June 10, consumers could have the option to have the marketplace coverage effective June 1 to avoid a gap. Variations on this policy could include capping how far back in time enrollment can go and mitigating adverse selection by making retroactive coverage the default option for consumers enrolling after Medicaid has terminated.
- Warn consumers undergoing Medicaid redeterminations to be prepared to apply quickly. Medicaid agencies can proactively notify consumers undergoing redetermination to be prepared to immediately apply for marketplace coverage in the event of a termination notice. CMS has also recommended that these notices include instructions on how to apply for marketplace subsidies and a contact list for Navigators and assisters.
- Communicate about terminations though multiple channels—including electronically—to help ensure prompt receipt. With a window of as little as 10 days to avoid a gap, every day counts. The time it takes for paper mail to arrive is meaningful. Consumers are more likely to receive and see termination notices quickly if they are contacted through multiple channels, including electronic methods like email and text messaging.
- Make late-month marketplace enrollments effective the first of the following month even if Medicaid has already terminated. To shorten gaps that do occur, marketplaces can effectuate enrollments as quickly as possible. The loss-of-coverage SEP requires marketplaces to make coverage effective at the start of the next month if the person enrolls in the marketplace prior to Medicaid termination. However, if Medicaid has expired, marketplaces have the option to delay enrollment for applications submitted in the second half of a month until two months hence. Many marketplaces—including the federal marketplace—instead opt to make coverage effective the next month regardless of when other coverage ended. Others SBMs can do the same.
- Extend the 60-day deadline for marketplace enrollment after Medicaid ends. The loss-of-coverage SEP generally permits consumers to enroll up to 60 days after other coverage ends. But this may be too little time, especially for consumers who don’t receive termination notices. For example, consumers with outdated contact information may not learn that Medicaid has ended until they attempt to use services months later. SBMs could use “exceptional circumstances” SEP authority to extend the 60-day window, as Pennsylvania is doing. Or they could provide more time under rules for consumers who did not receive timely notice of the event triggering a SEP.
Measures to Streamline the Enrollment Process
Concerns about a brief enrollment window are exacerbated if the marketplace application process is long and burdensome. SBMs have substantial authority over the process based on long-standing rules and new flexibilities provided by CMS. Some states have already used this authority to make substantial improvements. States may:
- Use account transfer and other available information to pre-populate marketplace applications. As discussed in our previous works, states can speed the marketplace application process by deploying information collected for Medicaid eligibility, including eligibility information like income and household members. This information should be readily available for SBM states with integrated eligibility systems, and other SBMs can share it as part of account transfer. States may also be able to leverage other available information, such as administrative data collected from other state programs.
- Reduce administrative burdens related to data matching issues (DMIs), as discussed in a March 2022 CMS presentation. DMIs may occur when an applicant’s attested income is significantly different than the income in their prior-year tax data or other third-party data source—a common occurrence given fluctuations in income over time. Resolving DMIs requires applicants to provide additional information in a given time period or have APTCs terminated. To reduce burdens associated with DMIs, SBMs can:
- Expand the income inconsistency threshold to trigger fewer DMIs;
- Accept verbal attestations of household income to resolve DMIs;
- Extend DMI resolution deadlines.
- Streamline SEP eligibility determinations. As with DMIs, SBMs can reduce administrative burdens related to verifying eligibility for SEPs, for example by relying on attestation.
- Prepare calls centers and assisters to help with quick transitions. Many SBMs are planning to hire or contract with additional enrollment staff to assist with the unwinding. Trainings can include information about enrollment timelines and the importance of avoiding gaps. SBMs can also actively partner with community-based organizations, health plans, and providers to ensure consumers have help navigating the transition.
Other Measures to Support Successful Transitions to the Marketplace
In addition to extending the enrollment window and streamlining the application process, states wishing to support continuity of coverage can:
- Protect continuity of care to support the marketplace value proposition. Consumers are more likely to spend time and money to transition to marketplace coverage if it allows them to continue receiving needed benefits. Our earlier piece highlighted strategies for providing continuity of care for consumers switching from Medicaid to the marketplace. Strategies include ensuring ongoing access to providers, carrying over prior authorizations for services, and seeking to prorate or otherwise reduce deductibles for part-year coverage.
- Ensure marketplace batch re-enrollment processes pick up late-year enrollees. As noted above, coverage gaps create the risk of marketplace enrollees being missed when the marketplace runs annual batch re-enrollment. For example, if the batch run is typically based on September enrollment, a consumer who loses Medicaid in August and starts on the marketplace in October may be missed. Marketplaces can mitigate this risk by re-running the auto-enrollment process for anyone newly enrolling afterwards.
- Sequence Medicaid redeterminations to maximize successful transitions. The March SHO letter gives states flexibility around the order in which they redetermine enrollees during unwinding. Sequencing may account for considerations like maximizing successful transitions, responding to enrollee-reported income changes, and reducing churn. An earlier piece highlighted how this flexibility could support successful transitions for high-need enrollees. This flexibility could also be an important tool to support continuity of coverage more broadly. Oregon is making extensive use of this authority. Potential strategies include:
- Enrollees for whom complete information is available could be redetermined earlier, as they are more likely to remain eligible for Medicaid and also more likely to be able to successfully transition to other coverage.
- Enrollees with special health needs or who are likely to have the greatest challenges navigating the redetermination process could be redetermined later or spread out across several months to ensure they receive the help they need.
- Enrollees identified as likely eligible for subsidized marketplace or employer coverage could be timed earlier in a calendar year to avoid subjecting them to an unaffordable deductible (as discussed above) and to needing to re-enroll quickly for the following calendar year. In addition, front-loading this group in the spring of 2023 could both save the state money and focus early redetermination on those who may be better-equipped than others to successfully navigate the coverage transition.
- Families likely to be split between marketplace and Medicaid or CHIP could be redetermined around year’s end so that future annual Medicaid/CHIP redeterminations align with the marketplace enrollment cycle.
- States working on bridging programs (e.g., premium support) could delay redetermining consumers who will likely be eligible until these programs are ready. Oregon is adopting this approach in concert with its planned bridge program.
Transitions from Medicaid to the marketplace have historically presented challenges for consumers, with too little time to act and too many administrative burdens. Unwinding will accentuate these issues, creating risks for consumers but also a rare opportunity to consider improvements that will pay dividends during unwinding and for years to come.
 This piece focuses on post-unwinding transitions to the marketplace. But forecasts suggest as many or more consumers coming off Medicaid will be eligible for employer-sponsored coverage. Many of the strategies discussed here could also be helpful to those transitions. For example, providing longer notice before Medicaid ends could increase the chances of switching to employer coverage without a gap.
 MACPAC’s data are from states that use HealthCare.gov, including the FFM and state-based marketplaces that rely on the federal platform (SBM-FPs). For simplicity, we refer to these marketplaces collectively as the FFM.
 If a state does not delay termination until the end of the month following the 10-day notice period, it may be literally impossible to avoid a gap. For example, if a termination notice were sent May 5 and Medicaid terminated May 15, even a consumer who completed the marketplace application the day they received the notice (May 5) would experience a 15-day coverage gap before marketplace coverage took effect June 1. Terminating Medicaid mid-month could create additional problems if a marketplace did not make coverage effective on the first of the following month when Medicaid had already terminated, as permitted under 45 CFR 155.420(b)(2)(iv). For example, if a termination notice were sent May 5 and Medicaid terminated May 15, a consumer who submitted an application May 17 could have a gap of a month and a half. (In the federal marketplace, coverage is effective on the first of the following month after plan selection even if Medicaid has already ended.)
 For other requirements regarding notices prior to termination, see 42 CFR §§ 435.917-18, 431.206, and 431.210. Such requirements include providing the notices accessibly to individuals with disabilities and those with limited English proficiency, providing the date of the action, and rationale, and fair hearing rights as appropriate.
 In addition, any states that currently do not extend Medicaid coverage to the end of the month after the 10-day notice period could reconsider that policy.