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Benefits and Cost-Sharing for Working People with Disabilities in Medicaid and the Marketplace

Key Themes

Some common themes emerge from the analysis of Susan, John, and Mary’s potential experiences as working people with disabilities seeking coverage under Medicaid and the Marketplace in selected states. As background, when analyzing the scope of benefits available through Medicaid in various states, it is important to remember that differences between Medicaid state plan and new adult ABP benefits reflect state choices about which optional Medicaid benefits to cover in their state plans and about whether to fully align their new adult ABP and their state plan benefits. In addition, determining the specifics about coverage of particular services in Marketplace QHPs is difficult without actually submitting a claim to the plan, as little detailed information is readily available from public sources. The key themes in this analysis include the following:

Mental Health and Substance Use Disorder Treatment Services

  • Because mental health parity requirements apply to Medicaid new adult ABPs, these plans may offer more extensive coverage of mental health and substance use treatment services than Medicaid state plan benefits do, unless states also modify their Medicaid state plan benefits to reflect the full extent of new adult ABP coverage (and unless state plan benefits are delivered through Medicaid MCOs, which must provide parity if both physical and mental health benefits are covered).
Example: Susan’s Potential Experience in California and New Jersey

Susan might seek mental health diagnostic and treatment services for possible depression and/or anxiety stemming from the bullying she experienced as a result of her physical disabilities. If Susan lives in California, she has access to the same package of Medicaid mental health services regardless of whether she receives state plan benefits as a previously eligible adult or the ABP as a newly eligible adult. This is because California has elected to align its new adult ABP with its state plan benefits, both of which include outpatient mental health services, such as evaluation, therapy, and psychological testing. (Table 4)

Even though New Jersey has chosen not to align its Medicaid state plan benefits and its new adult ABP, Susan should be able to access the outpatient mental health services or mental health clinic services she might need through both the Medicaid state plan benefits package and the new adult ABP. Due to the mental health parity rules that apply to ABPs, New Jersey’s new adult ABP has more extensive mental health and substance use treatment services than are covered in the Medicaid state plan. However, the additional services included in New Jersey’s new adult ABP, such as behavioral health homes, mental health adult rehabilitation services (group homes), and program of assertive community treatment services, appear to be beyond what Susan might need at this time. (Table 8)

Once Susan accepts the position as a bookkeeper and her income increases, she would have access to outpatient mental health services through a Marketplace QHP. Based on the available information about QHP benefits, it is difficult to determine whether, in California and New Jersey, Marketplace coverage of mental health services would be more or less generous than, or comparable to, Medicaid coverage. California requires QHPs to cover outpatient mental health services for “severe mental illness” (Table 4), and a New Jersey state mandate requires insurers to cover services for “biologically based mental illness.” (Table 8)

Example: John’s Potential Experience in New Jersey and Ohio

Given John’s primary diagnosis of clinical depression, mental health treatment services will be important to support his ability to work. In contrast to Susan, John will likely be affected by the benefit differences between New Jersey’s Medicaid state plan and its new adult ABP, because his mental health treatment needs are more intensive. As noted earlier, New Jersey has chosen not to align its Medicaid state plan benefits with its new adult ABP, with the result that the new adult ABP has more extensive mental health and substance use treatment services (due to the mental health parity requirements). Outpatient mental health, clinic, and case management services are available under both New Jersey’s Medicaid state plan and the new adult ABP. In addition, New Jersey’s ABP includes more intensive care coordination and treatment services, such behavioral health homes and program of assertive community treatment services, which might be appropriate for John, depending on his needs. (Table 8)

If John lived in Ohio, he would have access to the same categories of mental health treatment services regardless of his Medicaid coverage group because the state has chosen to include all of its Medicaid state plan services in its new adult ABP. The mental health benefits in both packages include psychologist services, psychiatric clinical nurse specialists, behavioral health clinic services (including counseling, therapy, mental health assessment, pharmacologic management, partial hospitalization, crisis intervention, community psychiatric supportive treatment), and case management services. Ohio also has opted to include behavioral health home services for people with serious mental illness in both Medicaid packages. However, due to the mental health parity rules that apply to ABPs, Ohio has removed the Medicaid state plan utilization limits on mental health services from the ABP. Examples of utilization limits under Ohio’s state plan Medicaid benefits that do not apply to the ABP include a maximum of 52 hours per year of behavioral health counseling and therapy and a maximum of 30 cumulative hours per week of group and individual counseling and medical/somatic services. (Table 10)

Like Susan, when John moves from the new adult ABP to Marketplace coverage, he would continue to have access to mental health outpatient services through a QHP in Ohio. However, he would be subject to different utilization limits, as the benchmark plan for Ohio’s QHPs limits outpatient mental health services to 30 visits per year. (Table 10)

Prescription Drugs

  • Prescription drug coverage is likely to differ between Medicaid and Marketplace plans. State Medicaid programs must cover must cover all FDA-approved drugs whose manufacturers have entered into a rebate agreement with the state. By contrast, the EHB provisions of the ACA only require Marketplace QHPs’ formularies to include at least one drug per class. All four states included in this analysis chose to use the same prescription drug formulary for their Medicaid state plan and new adult ABP. It is likely that QHPs will cover fewer drugs than Medicaid because of the different rules for QHPs. In addition, QHPs may have different preferred drug lists than state Medicaid programs do. Finally, prescription drug coverage is likely to vary among QHPs.
Example: Susan, John and Mary’s Potential Experiences

Prescription drug coverage is important to all three representative people with disabilities, as Susan takes medication to help control the muscle spasticity that results from her cerebral palsy, John takes medication to treat his depression, and Mary relies on medication to address the effects of MS. California, Kentucky, New Jersey, and Ohio all have chosen to cover the same prescription drugs in their Medicaid state plan and new adult ABP, so if beneficiaries transition between Medicaid coverage groups in these states, their prescription drug coverage should not change. Kentucky and Ohio’s Medicaid programs use a preferred drug list, and some drugs may require prior authorization. (Tables 4, 6, 8, 10)

When Susan, John, or Mary transitions to a Marketplace QHP, they will want to carefully evaluate the different plan formularies to see if the drugs that they are currently prescribed are covered. Prescription drug coverage is likely to be an area of difference between Medicaid and the Marketplace because state Medicaid programs must cover must cover all FDA-approved drugs whose manufacturers have entered into a rebate agreement, while Marketplace QHPs must cover at least one drug per class. In addition, coverage of specific drugs may vary among QHPs. As long as one drug per class is covered, not all drugs may be covered by a particular QHP. In addition, QHPs may assign drugs to different formulary tiers (e.g., preferred vs. non-preferred brand), which could affect out-of-pocket cost-sharing. (Tables 4, 6, 8, 10)

Rehabilitative and Habilitative Services and Devices

  • Marketplace QHP coverage of specific benefits within an EHB category, such as rehabilitative and habilitative services, may differ from Medicaid coverage of these services and may be subject to different utilization limits than under Medicaid in some states. Coverage of specific services also may vary among QHPs in the same state.
Example: Susan’s Potential Experience in California and New Jersey
Durable Medical Equipment

Because Susan relies on crutches to ambulate short distances and a power scooter for longer distances as a result of cerebral palsy, her plan’s coverage of durable medical equipment will be important. As noted above, California has chosen to align its Medicaid state plan benefits with its new adult ABP, and durable medical equipment is covered under both, subject to prior authorization. Susan would need to look into whether the specific equipment that she needs would be covered, likely by submitting a claim. (Table 4)

By contrast, New Jersey’s Medicaid state plan benefits include durable medical equipment, but New Jersey’s new adult ABP does not, so this would be an area of difference in coverage for Susan, if she was eligible for Medicaid as a new adult, unless she meets the definition of “medically frail” in which case she could access the state plan benefits as a newly eligible adult. (Table 8)

Marketplace QHPs in both California and New Jersey cover durable medical equipment, subject to prior authorization (durable medical equipment also is a state mandated benefit for insurers in New Jersey). Again, Susan would need to submit a claim to determine whether the specific equipment she needs would be covered by her particular QHP. (Tables 4 and 8)

Physical and occupational therapy

If Susan decides to continue or increase the physical and/or occupational therapy recommended by her doctor to address the effects of cerebral palsy, it appears that she would have access to these services in Medicaid and the Marketplace in both California and New Jersey, although perhaps subject to different utilization limits. Again, California’s Medicaid state plan and new adult ABP services are aligned, and both include physical and occupational therapy services. In New Jersey, the Medicaid state plan benefit package includes physical and occupational therapy as rehabilitative services, while the new adult ABP covers these services for both rehabilitative and habilitative purposes. (Tables 4 and 8)

California Marketplace QHPs cover physical and occupational therapy as outpatient rehabilitative services, and they also cover habilitative services (which also are a state-mandated benefit in California). The New Jersey Marketplace benchmark QHP used in this analysis covers physical and occupational therapy for both rehabilitative and habilitative purposes but also includes a utilization limit of 30 visits per year. The coverage of physical and occupational therapy for habilitative purposes, as distinct from rehabilitative purposes, may be significant for Susan as rehabilitative services generally are provided to help people regain lost skills, while habilitative services focus on the acquisition of skills which are missing due to a disabling condition. (Tables 4 and 8)

Example: Mary’s Potential Experience in Kentucky and Ohio

Mary may seek physical therapy services to address the effects of MS. Kentucky has opted to align its new adult ABP with its Medicaid state plan benefits. Physical therapy is covered under both, limited to 20 visits per year, with prior authorization. In Ohio, Mary would have similar physical therapy coverage under that state’s Medicaid program under the state plan or new adult ABP, although with different utilization limits as compared to Kentucky. Ohio’s Medicaid state plan and new adult ABP both cover physical therapy at 30 visits per year, with additional visits approved through prior authorization. (Tables 6 and 10)

After Mary transitions to the Marketplace, Kentucky’s QHP benchmark coverage for physical therapy is the same as under its Medicaid program, limited to 20 outpatient visits per year. The benchmark QHP plan for Ohio covers 20 physical therapy visits per year, so under that plan in the Marketplace, Mary would have somewhat less generous coverage than under Ohio Medicaid. (Tables 6 and 10)

Long-term Services and Supports

  • Coverage of LTSS may be more extensive in Medicaid than in Marketplace QHPs.
Example: Susan’s Potential Experience in California and New Jersey

If Susan decides to pursue personal care services for assistance with dressing and household activities once she is living alone, she might encounter coverage differences when she moves from Medicaid to the Marketplace. Personal care services are optional in Medicaid, but both California and New Jersey have chosen to include them in their Medicaid state plans and their new adult ABPs, along with the option for beneficiaries to self-direct these services. As with any other Medicaid service, Susan will have to meet each state’s medical necessity criteria to qualify for personal care services. In addition, in California, Susan also will have to meet the medically frail criteria to qualify for personal care services in the new adult ABP. California’s Medicaid program also covers attendant care services and supports through the ACA’s new Community First Choice state plan option. Once Susan transitions to Marketplace coverage, personal care services are not included in either state’s benchmark QHP, although both cover home health care services. (Tables 4 and 8)

Provider Networks

  • Provider networks may differ between Medicaid and Marketplace coverage. Medicaid beneficiaries are limited to the providers who choose to participate in a state’s Medicaid program, while QHP enrollees are limited to the providers included in the plan’s network.
Example: Susan, John, and Mary’s experiences

Susan, John, and Mary all will need to see a primary care doctor for preventive care as well as specialists (an orthopedist for Susan, a psychiatrist for John, and a neurologist for Mary). In Medicaid, they will be limited to the providers who choose to participate in each state’s program, and in the Marketplace, they will be limited to the network of physicians covered by the QHP that they select. If it is important for Susan to remain with the same orthopedist who has cared for her throughout her life, then she will want to choose a QHP in which that physician participates. John and Mary also will want to consider which providers participate in each QHP’s network when selecting a plan.

Cost-sharing

  • Beneficiaries are likely to experience higher out-of-pocket costs in Marketplace QHPs than in Medicaid. Premiums are generally not permitted in Medicaid for people with incomes below 150% FPL. None of the states used in this analysis included premiums for people above 150% FPL or deductibles, and some included limited co-payments in their Medicaid programs. By contrast, Marketplace QHP enrollees with incomes between 100-133% FPL will have premium costs of 2% of income in 2014, as well as deductibles, co-insurance, and/or co-payments; those from 133-150% FPL will have premium costs of 3% of income in 2014. While Marketplace cost-sharing reductions contribute to making coverage more affordable, as illustrated in Kentucky, the deductibles and co-payments in QHPs still exceed the limits in Medicaid. In addition, Marketplace premium and cost-sharing amounts vary among states, as the ACA allows variation based on geographic region.
Example: Susan’s Potential Experience in California and New Jersey

Medicaid premiums and cost-sharing are imposed at state option, and it does not appear that Susan will be subject to any out-of-pocket costs when she is covered by the Medicaid state plan or the new adult ABP in California or New Jersey. (Tables 5 and 9)

When Susan transitions to Marketplace coverage, her income will have increased, but her out-of-pocket health care costs will increase as well. Marketplace plans have premiums that are limited to 2% of enrollee income for those from 100-133% FPL and 3% of income for those from 133-150% FPL in 2014. Pursuant to the ACA’s community rating provision, plans can vary premiums based only on age, geographic area, tobacco use, and number of family members. In the QHP selected for this analysis, Susan will pay $108 per month in premiums and receive a premium subsidy of $137 per month if she is earning 145% FPL. California has chosen to standardize cost-sharing amounts for all Marketplace plans in the same metal tier. For the representative California silver level plan used in this analysis, Susan will have an annual deductible of $1,500 for medical services and $250 for prescription drugs, and her out-of-pocket costs will be capped at $5,200. She also will have co-payments, such as $40 for a primary care visit, $50 for a specialist visit, and $19 for a generic drug. These amounts include the ACA’s cost-sharing reductions. (Table 5)

Premiums and cost-sharing vary among QHPs in New Jersey’s FFM. In the representative QHP selected for this analysis, with earnings of 145% FPL, Susan will have monthly premiums of $48 and qualify for a premium subsidy of $256 per month. She also would have a $100 annual deductible, with out-of-pocket costs limited to $750. And, she would have co-payments, such as $15 for a primary care visit and $30 for a specialist visit after her deductible is met, and $7 for a generic drug. These amounts include the ACA’s cost-sharing reductions. (Table 9)

Example: John’s Potential Experience in Ohio

Like Susan, John’s out-of-pocket costs will vary depending on his coverage source. Ohio’s Medicaid program has co-payments for prescription drugs ($3 for non-preferred drugs and $2 for selected single-source drugs) that apply in its Medicaid state plan and new adult ABP.

When John transitions to Marketplace coverage in Ohio, he will have additional out-of-pocket costs. The representative QHP in Ohio has an annual deductible of $100, with an out-of-pocket maximum of $2,250. After the plan deductible is met, primary care and specialists visits are subject to 5% coinsurance, and there are $5 co-payments for generic drugs. At 145% FPL, John would have monthly QHP premiums of $49, with a premium subsidy of $186 in Ohio. These amounts include the ACA’s cost-sharing reductions. (Table 11)

Example: Mary’s Potential Experience in Kentucky

As in other states, Mary’s out-of-pocket costs will differ as she moves between Medicaid and Marketplace coverage in Kentucky. Kentucky’s Medicaid program does not charge premiums, but it does include co-payments for certain services under both its state plan and the new adult ABP. For example, Mary would have to pay $3 for a doctor’s office visit or a physical therapy session, $1 for generic drugs, $4 for preferred brand-name drugs, and $8 for non-preferred brand name drugs.

Once Mary transitions to a Marketplace QHP in Kentucky, she would qualify for cost-sharing reductions wither her income of 145% FPL. The information available about Kentucky’s representative QHP illustrates the significant role that the ACA’s cost-sharing reductions play in helping make Marketplace coverage more affordable for people with incomes between 100-250% FPL. For example, Mary’s annual deductible in the representative Kentucky QHP in 2014 is $200 with cost-sharing reductions but $2,500 without cost-sharing reductions. Similarly, her out-of-pocket maximum is $600 with cost-sharing reductions but $6,350 without cost-sharing reductions. Mary’s co-payments for certain services also would vary in the representative Kentucky QHP with and without cost-sharing reductions. For example, with cost-sharing reductions, a primary care doctor’s visit has a $10 co-payment for the first three visits, which are not subject to the deductible. After the deductible is met, Mary’s co-insurance is 10% for additional visits. Without cost-sharing reductions, the co-payment for the first three doctor’s visits is $40. Generic drug co-payments are $10 with cost-sharing reductions and $15 without cost-sharing reductions. (Table 7)

Hypothetical Experiences of Working People with Disabilities Looking Ahead

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