Affordability for Families with Split Coverage

It is early on in ACA implementation and states are just beginning to gain experience with how well new and reformed coverage options will work for families. In all states, the coverage options include qualified health plans (QHP) through the marketplace, traditional Medicaid, and the Children’s Health Insurance Program (CHIP); and in some states, premium assistance Medicaid. Together, these options should help more members of more families gain coverage. The multiple coverage options, however, also mean that many parents and children will be split between different insurance affordability programs (IAPs). Researchers at the Urban Institute haveestimated that 75 percent of parents eligible for coverage through the marketplace will have a child eligible for Medicaid or CHIP.
Medicaid and CHIP programs are subject to statutory maximums on cost sharing.  Marketplaces also must limit out of pocket costs, as well as provide financial subsidies in the form of advanced premium tax credits (APTC) and cost-sharing reductions (CSR) on a sliding scale based on income. Families with split coverage may pay premiums to more than one IAP, but whencalculating the amount of APTC or CSR an individual qualifies for in the marketplace, the premiums paid for coverage of family members in other programs are not considered. This“premium stacking” could make coverage for all family members less affordable.
Split coverage is not really a new phenomenon. Even prior to passage of the ACA, many families had members with different sources of coverage with requirements for premium payments to multiple programs. And states, like Iowa, have experience minimizing the negative financial effects of split coverage on families.
Iowa’s Experience
From 2005 through 2013, Iowa operated a Medicaid Section 1115 waiver program called IowaCare, which covered adults, including parents with incomes at or below 200 percent of the federal poverty level (FPL). Children in Iowa with incomes below 133 percent FPL were covered in Medicaid, and children with higher incomes from 134 to 300 percent of FPL were covered inhawk-i, the state’s separate CHIP program. Thus, families with income between 134 and 200 percent FPL experienced split coverage and could have had multiple premium payment requirements if parents were covered by IowaCare and children by hawk-i. To assist with affordability, under IowaCare, the state determined whether an applicant was already paying premiums for family members in another state program. If so, the state reduced the amount of the IowaCare premium by the amount paid for the other program.
The premiums for Iowa’s hawk-i program, which were set well before ACA implementation, are low and could help with affordability for some families as new ACA coverage options are implemented. For families with incomes between 134 and 300 percent FPL, split coverage could occur, with parents qualifying for marketplace subsidies and most children for the state’s separate CHIP program, hawk-i. These families will have to pay both QHP and hawk-i premiums. However,hawk-i premiums are relatively modest and capped at $40 per month regardless of the number of children covered. Although families in Iowa with coverage split across the marketplace and hawk-iare likely to be subject to premium stacking, the state’s policy on limiting CHIP cost-sharing could help to minimize the financial burden on families.
As families enroll in new IAPs, states will have an opportunity to monitor and learn more about the type and volume of questions that are raised by families with split coverage, including through Medicaid, CHIP and marketplace call centers. Understanding the extent of premium stacking can inform states’ efforts to help families obtain affordable coverage.
What is your state doing around issue of split coverage for families? Does your state have any protections in place to limit the extent of premium stacking? Let us know in a comment below.