Medicaid Enrollment: Almost a Free Lunch for Employers and Employees

Guest Author, Robert Trobe of Crystal & Company

Summary

The expansion of Medicaid eligibility under the Affordable Care Act (ACA) offers a huge opportunity for employers to significantly contain their employee benefits costs, as well as provide enhanced benefits to employees and their families through a Medicaid enrollment program. These costs are already escalating with many organizations as uninsured individuals, faced with increasing tax penalties due to the ACA individual mandate, opt to enroll in their employer’s benefit plans. In addition, in 2015, employers with 100 or more employees will be required to offer affordable health coverage to their full-time employees (30 hours per week or more), further increasing costs for organizations not currently providing such coverage.

Successful implementation of a Medicaid enrollment program does not just happen; it depends on active outreach by skilled individuals knowledgeable about Medicaid policies, compliance requirements, and enrollment processes in each of the 27 states plus the District of Columbia that have opted for Medicaid expansion (see list at bottom of this article). Crystal & Company, a large privately owned insurance broker and consultant, has partnered with an experienced Medicaid enrollment vendor to implement such a program.

This article outlines the key benefits and savings from a Medicaid enrollment program sponsored by an employer, how it can be effectively executed, and whether it would be of value to a particular organization.

Eligibility

Individuals and their families are generally eligible for Medicaid in the expansion states if the combined income of the members of their household (not the family, but those who live at the dwelling of the applicant) earn less than the following:

• Household of Four: $32,913
• Household of Three: $27,310
• Household of Two: $21,707
• Household of One: $16,104

Benefits to the Employer

Employers benefit from each successful enrollment in two ways:

         
Employees Currently Participating in the Employer Plan—The employer cost for providing health, prescription, and dental benefits to their eligible employees can amount to $5,000 per year for an individual and $15,000 or more per year for a family. This compares with a Medicaid implementation cost (through our partner vendor) of $20 per month for each employee who is eligible and has applied for Medicaid (with the help of the vendor) plus $40 for each employee screened but found not eligible.

Employees not Currently Participating in the Employer Plan—For employees who have not enrolled in the employer’s benefit plans because they work less than the required hours, or because they could not afford the employer’s plan, the intangible benefits of Medicaid enrollment can be substantial in terms of increased morale and reduced absenteeism.

In virtually all cases where there are sufficient numbers of Medicaid eligible employees, the employer saves substantial dollars from an effective Medicaid enrollment program.  The return on investment can be 5:1 or more.

Benefits to Enrollees

Eligible individuals and their family members receive coverage for health, prescription, dental, and vision at no or very low cost. The Medicaid benefit is provided with no deductibles or co-insurance, and limited co-pays. In addition, successful enrollment in Medicaid affords employees the opportunity, if they wish, to obtain Food Stamps, which can increase individual income from 15-30%. The end result is a substantial savings for those currently enrolled in the employer’s benefit plans, who otherwise would be contributing to the cost of that plan and paying significant dollars for services provided.

For uninsured or underinsured individuals, the Medicaid benefit can literally be life-saving and prevent bankruptcy from medical claims. A study based on 2007 sample data (http://www.pnhp.org/new_bankruptcy_study/Bankruptcy-2009.pdf ) found that 62% of bankruptcies were attributable to uncovered medical costs.  Three quarters of the sampled individuals had health insurance.

It is true that Medicaid provider networks are historically less developed than commercial networks, which is why this program is not a completely free lunch.  However, recent federal and state initiatives are aimed at reducing that disparity.

Successful Implementation

Applying for Medicaid can be very complex.  It requires several components—most importantly a competent vendor with the following system and human resource capabilities:

• Staff intimately knowledgeable in Medicaid policy and processes in the applicable state.
• A system that can help workers collect the data they need with a pre-enrollment questionnaire.
• A telephonic and Web-based enrollment process, including pop-ups that explain confusing questions.
• Outcomes that are tracked for reporting back to the employer.
• A multilingual call center with Medicaid experts to assist workers every step of the way.

Will this Benefit My Company and What should I do if Interested?

Companies that have at least 20 employees (including part-time employees) who are paid $32,900 per year or less should consider implementing a Medicaid enrollment program. For an initial assessment of the feasibility and value of such a program or for questions on this article, please contact Robert Trobe (robert.trobe@crystalco.com or 212.504-5960)

States with Expanded Medicaid Programs

Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Hawaii, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, Vermont, Washington and West Virginia.