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
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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
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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.
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