Kentucky Medicaid enrollees who work now have the option to enroll in their employer’s health plan — with Medicaid picking up the tab for premiums. State officials say the voluntary program will save Kentucky money, but some health advocates say it has the potential to limit options and add a financial burden for Medicaid recipients.
“It allows them to get access into their employer-sponsored insurance,” said Carol Steckel, Commissioner of Kentucky’s Department for Medicaid Services. “And the biggest thing is, it helps the Medicaid budget so that we’re more financially stable.”
Steckel said the state estimates it will save about $40,000 a month by not having to cover the full cost of a Medicaid enrollee’s health care bills.
It works like this: a Medicaid enrollee will first find out if the state will pay for them to enroll in an employer’s health plan. Steckel said the state has a formula for figuring out which is cheaper – keeping them in Medicaid, or paying for the enrollee to go into an employer plan.
If it’ll save the state money, then an enrollee can sign up for employer-sponsored coverage. That employee will have to pay any premiums up front, or the upfront cost to get that coverage. Then, they’ll have to submit paperwork to get reimbursed.
Emily Beauregard, the executive director of advocacy group Kentucky Voices for Health, said this program won’t work for everyone.
“So that just adds a lot of burden to an individual’s life to keep track of that and do it,” Beauregard said. “Some people may be able to if you’re very organized and if you can float the money between the time that [the premium is] taken out of your paycheck and you get reimbursed.”
Medicaid enrollees will still pay the same amount for doctor’s visits, which could be up to a four dollar copay.
The state says this new program will give enrollees access to a broader range of doctors and health providers through private insurance than Medicaid does. But there’s a catch: if an enrollee goes to a doctor who doesn’t accept Medicaid, the state won’t pay those bills.
“You can only really see Medicaid providers unless you’re able to pay large out-of-pocket costs,” Beauregard said.
An analysis from the Kaiser Family Foundation of these premium-assistance programs noted that it’s likely enrollees will have to find a doctor that accepts both their private insurance and Medicaid, which “further restricts their provider options rather than expanding them.”
Beauregard also noted that enrolling in this program could end up putting a person in a bind financially if they get a raise or more hours at work and their income goes over the Medicaid income limit.
“Let’s say you get an extra five hours a week at work, and you’re no longer eligible for Medicaid: if you’re enrolled in this program, you may be stuck paying the premium yourself,” Beauregard said. “And you might not be able to afford it with just that extra few dollars that you get every week.”
But one potential benefit to an enrollee is that their family members could gain health insurance. For instance, there are many households in Kentucky where kids are covered by Medicaid, but parents aren’t. That’s because the income threshold for kids to qualify is higher than the threshold for adults. If the parent has access to employer coverage, but doesn’t buy it because of the cost, the state could determine that it’d be cheaper for the child to go onto their parent’s employer plan than stay on Medicaid. In that case, the state would pay for the premium for the parent, as well as the child.
“As long as that employer insurance is less than what we would spend under Medicaid, we’ll approve it, and that’s where the savings are,” Steckel said. “Everybody else in that family would have to pay for their own services — the copays, deductibles they’d have to pay for, but at least it buys them into an umbrella of coverage in that insurance policy.”
Gov. Matt Bevin’s proposed Medicaid changes that have been tied up in court includes a program similar to this new state initiative. But the difference is that this new state plan is voluntary, and under the Medicaid waiver, it would be mandatory for Medicaid enrollees who are in the program for at least a year to take employer coverage if they have access.
Alex Shekhdar, founder of Sycamore Creek Healthcare Advisors, said this optional program is a step toward that mandatory program.
“They are seeking to keep Medicaid limited to traditional categories of eligibility, like [the] medically indigent, moms and kids,” he said.
Several other states have programs that give Medicaid enrollees the option to go into an employer plan. But according to the 2015 analysis from the Kaiser Family Foundation, only a small group of Medicaid enrollees actually have access to employer coverage — they may not work enough hours. According to a University of Pennsylvania review of Kentucky Medicaid data in 2018, about 57,981 enrollees worked 20 or more hours a week. That’s about 17 percent of the state’s Medicaid population.