The American Recovery and Reinvestment Act of 2009 and Medicaid

 

For most people leaving employment without new employment, exercising COBRA coverage has been a financial impossibility. The continued coverage is premised upon the individual paying the entire health insurance premium, plus an allowable two percent administrative fee. This is simply not financially feasible for many people. Many will not qualify for Medicaid coverage and, thus, are uninsured. If they remain uninsured for more than 63 days, the next employer?s group health insurance may apply a pre-existing condition clause and deny coverage for medical expenses related to a pre-existing condition.

 

ARRA seeks to ameliorate the situation in this current economic crisis by providing an opportunity for individuals and families to continue group health insurance coverage after an insured worker loses his job. Group health coverage includes coverage provided by a former employer, a union or a multiemployer trust. See ARRA, § 3001(a)(1)(B).

 

Under the premium assistance provisions of ARRA, a person who is an ?assistance eligible individual? need only pay 35 percent of the premium, which she would otherwise need to pay to obtain COBRA coverage. Id. at § 3001(a)(1)(A). Employers receive the other 65 percent of the premium in the form of a credit or refund of payroll taxes. Id. (adding 26 U.S.C. § 6432(c)(1)). The reduced premium payment applies to premiums for a period of coverage beginning on or after February 17, 2009, the date of ARRA?s enactment. While ARRA discusses notice requirements, it does not require that a person receive notice before exercising her right to pay the reduced premium. Under the plain wording of ARRA, an eligible person could simply pay 35 percent of the premium amount on March 1 for the March health insurance premium, and she would be deemed to have paid the entire premium amount for the month. Alternatively, another person, other than the employer, may pay this amount on the COBRA beneficiary?s behalf. Id. Note that the 35 percent amount pertains to the total amount of the premium. ARRA does not discuss payment of the two percent administrative fee that the 

employer may charge the individual. Presumably, this fee would need to be paid by the individual in addition to the 35 percent of the normal premium amount. 

 

Premium assistance is available for up to nine months of extended coverage. See ARRA, § 3001(a)(2)(A)(ii). Premium assistance ends sooner if a person becomes eligible for other group coverage or if the individual?s coverage reaches the time limits under COBRA. Id. Since the period of coverage, according to ARRA, must begin on or after the date of enactment, the subsidy could not be applied retroactively or to a premium, which covers a period of time prior to February 17, 2009 and extends beyond that date.

 

An ?assistance eligible individual? is a person who was involuntarily terminated from her employment between September 1, 2008 and December 31, 2009, and who is eligible for and elects COBRA continuation coverage. ARRA, § 3001(a)(3). The continuation coverage is not available to an individual who has voluntarily left employment or became eligible through a qualifying event other than involuntary termination. If the individual did not elect COBRA coverage when it was first offered and the election period has run out, she can still take advantage of a new COBRA election period. See ARRA, § 3001(a)(4)(A). This new election period begins on February 17, 2009 and runs until 60 days after the individual receives notice of the new election period. Id. However, if the individual exercises COBRA coverage under this new election period, she can only get coverage beginning on or after February 17, 2009, and the COBRA coverage will last only as long as it would have had she elected COBRA coverage when she first became eligible. Id.

Moreover, if the employer offers health insurance options other than the one in which the assistance eligible individual was enrolled and the premium coststhe same or less, the employer can agree to allow the individual to enroll in the other health plan. Individuals would need to elect this option, if available, within 90 days of receiving the new COBRA notice. See ARRA, § 3001(a)(1)(B). However, the other plan option cannot be a flexible spending arrangement, coverage at an on-site medical facility maintained by the employer, or coverage that only covers dental, vision, counseling, or referral services (or any combination of those services). Id. This provision could be beneficial to individuals who had more expensive coverage while employed, but in order to stay insured at a more reasonable price, choose to switch to less expensive, yet still useful and comprehensive health coverage.

 

Individuals who use the COBRA premium assistance subsidy also receive additional protection from application of pre-existing condition exclusions. ARRA, § 3001(a)(4)(C).

Currently, an individual who loses group health insurance and obtains new group health insurance within 63 days is protected from application of pre-existing condition exclusions in the new group health insurance policy. ARRA essentially adds the time from the qualifying event, i.e. the involuntary termination, until the end of the coverage allowed under ARRA to the 63-day period. Thus, even if an individual did not elect COBRA coverage when it first became available but does elect COBRA coverage under ARRA, at the end of his coverage period, he would have a new 63-day period in which to obtain new insurance without the application of a pre-existing condition exclusion.

 

Finally, if a group health plan denies an individual?s request to be treated as eligible for the COBRA premium assistance made available through ARRA, the individual is entitled to an expedited review of the denial. ARRA, § 3001(a)(5). The appeal is made to the Secretary of Labor, or in the case of non-ERISA plans, to the Secretary of Health and Human Services. The appropriate Secretary must make a de novo determination within 15 business days of receipt of the request for review. That determination may be appealed, though the court must grant deference to the Secretary?s determination. Id.

 

Medicaid State Fiscal Relief
 

Title V of ARRA concerns Medicaid. Besides providing ?fiscal relief to States in a period of economic downturn[,]? the Medicaid funding authorized by ARRA should serve to 

?protect and maintain State Medicaid programs ?, including by helping to avert cuts to provider payment rates and benefits or services, and to prevent constrictions of income eligibility requirements for such programs, but not to promote increases in such requirements.? ARRA, § 5000. 

 

While there are a number of Medicaid provisions in ARRA, the House of Representatives included a couple of provisions in its bill, H.R. 1, that were not included in the final bill: (1) a temporary option allowing states to extend Medicaid coverage to certain unemployed and uninsured adults and their dependents, with a 100 percent federal match; and (2) an option allowing states to extend Medicaid coverage of family planning services to women who would otherwise not qualify.

The increased FMAP does not apply to Medicaid payments attributable to:

 

ARRA, § 5001(e)
 

States will not receive the enhanced FMAP ifthey do not pay providers promptly as current Medicaid law requires. Under Medicaid, states must ensure that 90 percent of completed claims are paid within 30 days of receipt; 99 percent, within 90 days of receipt. See 42 U.S.C. § 1396a(a)(37)(A). To be eligible for the increased FMAP, a state must be in compliance with this law for claims made for most covered services after February 17, 2009. However, for purposes of the increased FMAP, states have until June 1, 2009 to have prompt payments in place for nursing facility and hospital claims. See ARRA, § 5001(f)(2). This requirement is the only prerequisite to obtaining the increased FMAP, which the Secretary may waive, and then only in exigent circumstances. 

 

States may not shift the cost of Medicaid expenditures onto cities and counties and still claim the increased FMAP. If a state requires cities or counties to contribute toward the nonfederal portion of Medicaid expenditures, the state is not entitled to the increased FMAP if it has increased the cities? or counties? share after September 30, 2008. ARRA, § 5001(g)(2).

 

ARRA?s clear intent is to assist states with maintaining their Medicaid programs as those programs were in effect on July 1, 2008. This is further emphasized by a provision that denies increased FMAP if any amounts attributable, directly or indirectly, to the increased FMAP are deposited or credited into any reserve or rainy day fund of the state. ARRA, § 5001(f)(3). Please contact NHeLP if you learn of any abuses of this provision or of instances where your state is using the enhanced FMAP for non-Medicaid purposes, such as highway, prison or other infrastructure projects. 

 

State Maintenance of Effort Requirements
 

The enhanced FMAP period runs from October 1, 2008 through December 31, 2010. However, to qualify for any enhanced FMAP, states and territories must maintain the ?eligibility standards, methodologies, and procedures? in effect on July 1, 2008. ARRA, § 5001(f)(1)(A). The Secretary of DHHS cannot waive this provision. Id. at § 5001(f)(4).