BILL ANALYSIS Ó SENATE COMMITTEE ON HEALTH Senator Ed Hernandez, O.D., Chair BILL NO: SB 508 AUTHOR: Hernandez AMENDED: January 9, 2014 HEARING DATE: January 15, 2014 CONSULTANT: Bain SUBJECT : Medi-Cal: eligibility. SUMMARY : Codifies the Medi-Cal income eligibility thresholds for parents and caretaker relatives, children, and pregnant women whose income eligibility for Medi-Cal is determined based on modified adjusted gross income. Increases the income levels at which premiums are assessed for coverage in Medi-Cal for children. Eliminates the deprivation requirement for the Medically Needy Medi-Cal program. Clarifies that Medi-Cal eligibility for former foster youth expansion up to age 26 to include individuals who lost eligibility due to having reached the maximum age for foster care assistance. Existing law: 1.Establishes the Medi-Cal program, administered by the Department of Health Care Services (DHCS), under which low income individuals are eligible for medical coverage. 2.Requires DHCS to implement the Affordable Care Act (ACA) expansion of Medi-Cal coverage to adults and parents up to 133 percent of the federal poverty level (FPL) (adults without minor children are generally not eligible for Medi-Cal unless aged or disabled, and parents applying for Medi-Cal are eligible if they have family incomes at or below 100 percent of the FPL). 3.Requires DHCS to establish income eligibility thresholds for those Medi-Cal eligibility groups whose eligibility will be determined using MAGI-based financial methods. 4.Requires, effective January 1, 2014, when determining eligibility for Medi-Cal benefits for non-elderly non-disabled adults, an applicant's or beneficiary's income and resources to be determined, counted, and valued in accordance with the requirements of a provision of the ACA, which prohibits the use of an assets or resources test for individuals whose income eligibility is determined based on modified adjusted Continued--- SB 508 | Page 2 gross income (MAGI). 5.Implements the ACA requirement that a 5 percent income disregard applies to individuals whose income eligibility is determined based on MAGI, effectively making income eligibility 138 percent of the FPL ($15,856 for an individual and $26,951 for a family of 3 in 2013). This bill: 1.Establishes income eligibility thresholds for Medi-Cal coverage whose income is determined based on MAGI as follows: a. Parents and caretaker relatives:0-109 percent of the FPL; b. Pregnant women: 0-208 percent of the FPL; c. Children: 0-261 percent of the FPL. 2.Increases the income level at which premiums for Medi-Cal coverage for children are assessed, to apply premiums for children in families with incomes above 160 to 261 percent of the FPL, instead of children in families with incomes from 150 to 250 percent of the FPL. 3.Requires Medi-Cal income eligibility for coverage of tuberculosis-related services to be determined pursuant to MAGI-based financial methods effective January 1, 2014. 4.Eliminates the deprivation requirement for the medically needy Medi-Cal program by repealing the deprivation requirement from the medically needy family person definition. (Medically needy is a category of Medi-Cal eligibility that provides Medi-Cal coverage for individuals who fit into a federal benefit category [such as aged, blind or disabled] but whose income or resources are too high.) 5.Clarifies that former foster youth are eligible for Medi-Cal coverage up to age 26 if the individual lost his or her eligibility for foster care assistance due to having reached the maximum age for that assistance. 6.Deletes obsolete references to previous Medi-Cal income eligibility provisions. FISCAL EFFECT : This bill has not been analyzed by a fiscal SB 508 | Page 3 committee. COMMENTS : 1.Author's statement. According to the author, this bill is a follow-up bill to SB X1 1 (Hernandez and Steinberg), Chapter 4, Statutes of 2013 and AB X1 1 (J. Perez), Chapter 3, Statutes of 2013, the Medi-Cal ACA implementation bills. This bill would place into state law the MAGI converted Medi-Cal income eligibility standards for parents and caretaker relatives, children, and pregnant women, would eliminate the deprivation requirement in the medically needy Medi-Cal program, and would clarify eligibility for the former foster youth Medi-Cal expansion. When AB X1 1 and SB X1 1 were passed by the Legislature in June 2013, the MAGI-converted Medi-Cal income eligibility standards were not known but have subsequently been established administratively by DHCS. Placing these amounts into state law provides greater transparency regarding eligibility thresholds and updates current law to reflect current income eligibility standards. This bill also contains clean-up language to the former foster youth Medi-Cal expansion and eliminates the deprivation requirement in the medically needy Medi-Cal program in response to concerns raised by the federal Centers for Medicare and Medicaid Services (CMS) to DHCS. 2.MAGI income conversion eligibility thresholds. The ACA requires states to change the way they calculate income for purposes of determining Medicaid eligibility. Beginning January 1, 2014, eligibility for Medicaid (Medi-Cal in California) for most individuals, as well as for the Children's Health Insurance Program (CHIP, formerly the Healthy Families Program in California before children were shifted into Medi-Cal), is determined using methodologies based on MAGI, as defined in the Internal Revenue Code of 1986. Eligibility for advance premium tax credits for the purchase of private insurance coverage through states exchanges will also use MAGI. Under the ACA, previous state income disregards and asset or resource tests would no longer apply when calculating income eligibility for most non-elderly non-disabled adults (under income disregards, certain types of income is not counted or "disregarded" in determining Medi-Cal eligibility). To make the change from the prior income methodologies to MAGI-based methods without significantly changing current coverage SB 508 | Page 4 levels, the ACA requires states to establish income eligibility thresholds for populations that are not less than the effective income eligibility levels that applied under Medicaid on the date of enactment of the ACA. The intent of this provision was for states to establish MAGI-equivalent standards that protect individuals eligible for Medicaid from losing coverage after 2014. States must convert their current financial eligibility income standards from net standards (which include disregards) to an equivalent MAGI income standard. AB X1 1 directed DHCS to establish income eligibility thresholds for those Medi-Cal eligibility groups whose eligibility will be determined using MAGI-based financial methods. This bill codifies the new income eligibility thresholds. The chart below shows how these income eligibility levels differ from the prior income eligibility levels: ---------------------------------------------------- | | Previous | MAGI Converted | | | Income | Income Standard | | | Standard |(FPL)* | | | (FPL) | | | | | | |-----------------+--------------+-------------------| |Children | 0% - 200% |0% - 208% | |(Infants) | | | |-----------------+--------------+-------------------| |Former Healthy | 200% - 250% | 208% - 261% | |Families | | | |Program** | | | |Infants | | | |-----------------+--------------+-------------------| |Children age 1-5 | 0% - 133% | 0% - 142% | |-----------------+--------------+-------------------| |Former Healthy | 133% - 250% | 142% - 261% | |Families Program | | | |age 1-5 | | | |-----------------+--------------+-------------------| |Children age | 0% - 100% | 0% - 133% | |6-19 | | | |-----------------+--------------+-------------------| |Former Healthy | 100% - 250% | 133% - 261% | |Families Program | | | SB 508 | Page 5 |age 6-19 | | | |-----------------+--------------+-------------------| |Parents/Caretaker| 0% - 100% | 0% - 109%*** | | Relatives | | | |(1931b category) | | | |-----------------+--------------+-------------------| |Pregnant Women | 0% - 200% | 0% - 208% | |-----------------+--------------+-------------------| | | | | ---------------------------------------------------- ---------------------------------------------------- |*These FPL amounts do not include the ACA-required | |5% disregard. | |**former Healthy Families Program enrollees who are | |now in Medi-Cal are referred to as Optional | |Targeted Low Income Children (OTLIC). | |*** Coverage extends to 133% of the FPL under the | |Medi-Cal ACA expansion. | ---------------------------------------------------- 3.Repeal of deprivation requirement in medically needy program. Under the Medi-Cal 1931(b) program, Medi-Cal covers children up through age 18 (and up to age 19 if they are expected to graduate from school) who are "deprived" of full parental support, and parents and caretaker relatives. Deprivation means at least one parent in the family must be absent, deceased or disabled, or the principal wage earner must be unemployed or underemployed. The ACA allows states to eliminate the deprivation requirement. AB X1 1 adopted this option because there was no longer a need for an administratively burdensome and outdated welfare-based rule when individuals are subject to an individual mandate and are eligible for Medi-Cal coverage. This bill would also repeal the medically needy deprivation requirement from the medically needy family person category in response to CMS indicating that if California eliminates the deprivation requirement in the 1931(b) program, it must also eliminate the deprivation requirement in the medically needy program as well. 4.Medi-Cal coverage for former foster youth until age 26. SB X1 1 requires DHCS, to the extent federal financial participation is available, to implement the ACA requirement to provide Medi-Cal benefits to an individual who is in foster care on SB 508 | Page 6 his or her 18th birthday until his or her 26th birthday. Prior to the enactment of SB X1 1, Medi-Cal provided coverage to former foster youth up to age 21 under a federal option. SB X1 1 sunset the optional expansion provision and enacted one section providing the ACA-required coverage up to age 26. DHCS indicates that CMS informed it that replacing the former optional foster care program with the mandatory care program is a violation of the federal ACA maintenance of effort, and that the state needs to keep both programs operational because there are additional former foster care adolescents eligible under the prior optional program who are not eligible under the new expanded mandatory program. This bill addresses that issue, and clarifies that children who age out of foster care after age 18 are eligible for Medi-Cal coverage up to age 26. 5.Prior legislation. AB X1 1 implemented specified Medicaid provisions of the ACA, including the expansion of federal Medicaid coverage to low-income adults with incomes between 0 and 138 percent of the federal poverty level. AB X1 1 also implemented a number of the Medicaid ACA provisions to simplify the eligibility, enrollment and renewal processes for Medi-Cal. SB X1 1 established the existing Medi-Cal benefit package as the benefit package for the expansion population eligible under the ACA and expanded the Medi-Cal benefit package for the existing population and newly eligible under the ACA to include mental health services and substance use disorder services required under the essential health benefit legislation adopted in 2012 that were not currently covered by Medi-Cal. SB X1 1 also implemented a number of the Medicaid ACA-related provisions to simplify the eligibility, enrollment and renewal processes for Medi-Cal. 6.Support. Western Center on Law and Poverty (WCLP) supports this bill to codify the new income levels for Medi-Cal under the ACA. WCLP states that much of the Medi-Cal ACA compliance was achieved last year in SB X1 1 and AB X1 1, but there are a few remaining issues that need to be addressed in state statute this year, including codifying the new rules for counting income as well as new income levels under MAGI. Under the MAGI standard, most income deductions have been abolished but states had to modify their Medi-Cal income levels under MAGI. California has received its MAGI conversion levels from the federal government and now state statute needs to be SB 508 | Page 7 changed to accurately reflect the new income levels. SB 508 achieves this so that California law will have the current income levels. WCLP also states this bill finishes the job started in the special session Medi-Cal bills of eliminating the deprivation requirement in Medi-Cal. The deprivation test is an old welfare rules test whereby only parents of a deprived child qualify for Medi-Cal including when a parent is deceased, disabled, unemployed, or underemployed. This complicated rule is no longer needed when all low-income adults will be eligible for Medi-Cal. SB 508 eliminates deprivation for a remaining Medi-Cal program. Finally, WCLP concludes that this bill makes some technical changes regarding the Medi-Cal program for former foster youth to ensure that California complies with federal law and provides this vulnerable population with the health care benefits to which they are entitled. 7.Amendments. Additional amendments are needed to this measure to establish the new MAGI income eligibility levels for the Access for Infants and Mothers Program and the County Health Initiative Matching Program. SUPPORT AND OPPOSITION : Support: California Primary Care Association Western Center on Law and Poverty Oppose: None received. -- END --