Years ago, when the Affordable Care Act was first implemented, our country saw high numbers of uninsured individuals, reaching around 42 million in 2013.6 The new health care reform law aimed to make health insurance more affordable and more accessible, and to hopefully lower that number. Several years into the Affordable Care Act, we have seen that astonishingly high number drop. However, there are still multiple reasons people don’t get health insurance. For some of those people, the reason is that they simply can’t.

One initial provision of the ACA was that every state would expand Medicaid to nearly all adults who had an annual income at or below 138% of poverty. For more information on the current federal poverty levels, please visit https://www.healthcare.gov/glossary/federal-poverty-level-FPL/. The Supreme Court ultimately ruled that this was to be only an option of states and not a requirement. For states that decided against the Medicaid Expansion, many of their residents fall into a coverage gap.1, 4

What is the Coverage Gap?

The coverage gap is where nearly 3 million individuals currently find themselves- they are not eligible to receive Medicaid and do not make enough money to be eligible for Marketplace premium tax credits.1, 5 For states that did expand Medicaid, subsidies (premium tax credits that lower premiums and cost-sharing reductions that lower out-of-pocket costs) begin at 138% of poverty, and for states that did not expand it, subsidies start at 100% of poverty. The 17 states that chose not to expand:2

  • Alabama
  • Florida
  • Georgia
  • Idaho
  • Kansas
  • Maine
  • Mississippi
  • Missouri
  • Nebraska
  • North Carolina
  • Oklahoma
  • South Carolina
  • Tennessee
  • Texas
  • Utah
  • Wisconsin
  • Wyoming

Two states with the adoption of the Medicaid Expansion under discussion:2

  • South Dakota
  • Virginia

Who Does the Coverage Gap Affect?

In states that opted not to expand Medicaid, the old-school rules of eligibility still apply. For many people, this means that Medicaid is only available to those with disabilities, low-income children and pregnant women, and parents with extremely low incomes.4 For example, Alabama did not expand. For low-income parents with a family of three, they are eligible for Medicaid up to 18% of poverty.2 Anything over 18% and under 100% puts them in the coverage gap. At 100% of poverty, they would be eligible for subsidies when purchasing a health plan on the Health Insurance Marketplace. What’s worse, those in Alabama who are not parents, are not eligible for Medicaid at all and their only option for health insurance is to purchase a Marketplace plan.

Of course everyone has access to health insurance, even if they don’t qualify for Medicaid or subsidies at 100% of poverty, but that doesn’t mean it’s affordable… In Montgomery county, Alabama, a 28 year old female with no children at 90% of poverty makes $10,692 per year.3 Because she is below 100% of poverty, she receives no subsidies. According to healthcare.gov, the price for the lowest cost Silver plan for her age, area, and no tobacco use is $243/month with a $5,000 deductible. This makes the price for her yearly premium nearly a third of her annual income! Who could possibly afford such steep prices?

Problems with the Coverage Gap

There are obvious problems that this coverage gap creates. The point of the AFFORDABLE Care Act was to make health care, uh, affordable. In states that don’t expand Medicaid, there is no feasible way for low-income Americans to afford a health plan. So what happens when they get sick and need care? One of two things: they seek care and are forced to pay completely out-of-pocket for it, considering a doctor even agrees to see them, or they forego care altogether and put their health in serious jeopardy.

More than half of those in the coverage gap are middle aged (35-54) or nearly elderly (55-64). Younger people aren’t as likely to have as many health issues, but these age groups are at much higher risk. Not being able to afford health insurance results in many of these people leaving their health problems untreated until they turn 65 and qualify for Medicare.1

For those in the coverage gap, when a Marketplace plan is not affordable at its full price, other options for health insurance are available. Though they are not considered “minimum essential coverage” and could result in a tax penalty, short-term medical and/or other supplemental plans could provide both health and financial protection in the event of sickness or injury.

Citations

  1. How to get or stay on a parent’s plan. Retrieved December 16, 2015 from healthcare.gov website http://kff.org/health-reform/issue-brief/the-coverage-gap-uninsured-poor-adults-in-states-th
    at-do-not-expand-medicaid-an-update/
  2. Medicaid income eligibility limits for adults as a percentage of the federal poverty level. (n.d.).
    Retrieved from The Kaiser Family Foundation website: http://kff.org/health-reform/
    state-indicator/
  3. Morgan, R. B. (2016, January 25). 2016 federal poverty level guidelines. Retrieved from
    National Conference of State Legislatures website: http://www.ncsl.org/research/health/
    2014-federal-poverty-level-standards.aspx
    medicaid-income-eligibility-limits-for-adults-as-a-percent-of-the-federal-poverty-level/
  4. Norris, L. (2015, November 3). What is the Medicaid ‘coverage gap’ and who does it affect?
    Retrieved from https://www.healthinsurance.org/faqs/what-is-the-medicaid-coverage-gap-and-who-does-it-affect/
  5. Norris, L. (2015, November 12). Is it possible to escape the coverage gap? Retrieved from https://www.healthinsurance.org/obamacare/is-it-possible-to-escape-the-coverage-gap/
  6. Smith, J. C., & Medalia, C. (2014, September). Health insurance coverage in the United States.
    Retrieved fromhttp://www.census.gov/content/dam/Census/library/publications/2014/demo/p60-250.pdf