BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 508| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 508 Author: Hernandez (D) Amended: 8/18/14 Vote: 21 SENATE HEALTH COMMITTEE : 7-0, 1/15/14 AYES: Hernandez, Beall, De León, DeSaulnier, Monning, Pavley, Wolk NO VOTE RECORDED: Anderson, Nielsen SENATE APPROPRIATIONS COMMITTEE : 4-1, 1/21/14 AYES: De León, Hill, Padilla, Steinberg NOES: Gaines NO VOTE RECORDED: Walters, Lara SENATE FLOOR : 28-8, 1/27/14 AYES: Beall, Block, Calderon, Cannella, Corbett, Correa, De León, DeSaulnier, Evans, Galgiani, Hancock, Hernandez, Hill, Hueso, Jackson, Lara, Leno, Lieu, Liu, Mitchell, Monning, Padilla, Pavley, Roth, Steinberg, Torres, Wolk, Yee NOES: Berryhill, Fuller, Gaines, Huff, Knight, Vidak, Walters, Wyland NO VOTE RECORDED: Anderson, Nielsen, Wright, Vacancy ASSEMBLY FLOOR : 57-22, 8/25/14 - See last page for vote SUBJECT : Medi-Cal: eligibility SOURCE : Author CONTINUED SB 508 Page 2 DIGEST : This bill makes changes to the eligibility requirements for the Medi-Cal program, to codify existing eligibility levels or clarify changes made to the program's eligibility requirements when the state expanded eligibility under the federal Patient Protection and Affordable Care Act (ACA), in particular conforming existing law to the federal requirement to use modified adjusted gross income (MAGI) for eligibility determination. Assembly Amendments 1) require the Department of Health Care Services (DHCS) to extend Medi-Cal benefits to individuals under 21 years of age placed in foster homes or private institutions or for whom a specified adoption agreement is in effect, and require that all of the income considered when determining an individual's eligibility under these provisions be disregarded; and, 2) make various technical changes. ANALYSIS : Existing law: 1.Establishes the Medi-Cal program, administered by DHCS, under which low income individuals are eligible for medical coverage. 2.Requires DHCS to implement the ACA expansion of Medi-Cal coverage to adults and parents up to 133% 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% 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 MAGI. CONTINUED SB 508 Page 3 5.Implements the ACA requirement that a 5% income disregard applies to individuals whose income eligibility is determined based on MAGI, effectively making income eligibility 138% 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% of the FPL; B. Pregnant women: 0-208% of the FPL; C. Children: 0-261% of the FPL. 1.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% of the FPL, instead of children in families with incomes from 150 to 250% of the FPL. 2.Requires Medi-Cal income eligibility for coverage of tuberculosis-related services to be determined pursuant to MAGI-based financial methods effective January 1, 2014. 3.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.) 4.Clarifies that former foster youth are eligible for Medi-Cal coverage up to age 26 if the individual was in foster care on his/her 18th birthday or such higher age the state has elected under federal law. 5.Requires DHCS to exercise its option under federal law to extend Medi-Cal benefits to individuals under 21 years of age placed in foster homes or private institutions and individuals under 21 years of age for whom a specified adoption agreement is in effect. Further requires that all of the income considered when determining an individual's eligibility under CONTINUED SB 508 Page 4 these provisions be disregarded. 6.Deletes obsolete references to previous Medi-Cal income eligibility provisions. Comments 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. The ACA allows states to eliminate the deprivation requirement. Under the ACA, previous state income disregards and asset or resource tests 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 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. 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 CONTINUED SB 508 Page 5 underemployed. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes According to the Assembly Appropriations Committee, this bill has four main components. The first component, the specification in statute of income thresholds, codifies current administrative practice under existing authority. Therefore, placing these income thresholds in law is not expected to increase costs. Similarly, the component related to tuberculosis services conforms the income eligibility methodology for these services to that used for most other Medi-Cal categories, and should have a negligible cost impact. Two other components, namely, the elimination of the deprivation requirement in the medically needy program and the changes related to former foster youth eligibility, may have a minor fiscal impact. Both changes will potentially increase state costs by expanding the number of people eligible for Medi-Cal. Assuming average per-person costs in the medically needy program are $10,000 annually, average per-person costs for former foster youth are $2,000 annually, and 50 individuals enroll due to the deprivation changes and 10 new former foster youth enroll due to the foster youth program changes, costs would be $520,000 (50% General Fund, 50% federal). The former foster youth provisions appear to be necessary pursuant to federal maintenance of effort requirements in the ACA, under which states must maintain Medi-Cal eligibility rules in place for children until 2019. The deprivation change also appears to be required to maintain compliance with federal rules, but based on how the state has chosen to structure related programs. Since the state chose to eliminate the deprivation requirement for a separate eligibility category, the federal government has, according to the author, stated the deprivation requirement must be eliminated in the medically needy program as well. Written verification that these specific changes are federally required was unavailable at the time of this analysis. This bill is tagged as a potential state-reimbursable mandate because county eligibility workers conduct eligibility screenings on behalf of the state. But no increased CONTINUED SB 508 Page 6 administrative costs to counties are expected as a direct result of this bill, since changes should not significantly impact county workload and have already been incorporated into county eligibility operations. SUPPORT : (Verified 8/26/14) AFSCME, AFL-CIO Association of Regional Center Agencies California Council of Community Mental Health Agencies California Primary Care Association California State Association of Counties County Welfare Directors Association of California Western Center on Law & Poverty ARGUMENTS IN SUPPORT : According to the author, this bill is a follow-up bill to SB 1 1X and AB 1 1X, 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 1 1X and SB 1 1X 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 to DHCS. The 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 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. CONTINUED SB 508 Page 7 ASSEMBLY FLOOR : 57-22, 08/25/14 AYES: Achadjian, Alejo, Ammiano, Bloom, Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau, Chesbro, Cooley, Dababneh, Daly, Dickinson, Eggman, Fong, Fox, Frazier, Garcia, Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Hall, Roger Hernández, Holden, Jones-Sawyer, Levine, Lowenthal, Medina, Mullin, Muratsuchi, Nazarian, Pan, Perea, John A. Pérez, V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas, Rodriguez, Salas, Skinner, Stone, Ting, Weber, Wieckowski, Williams, Yamada, Atkins NOES: Allen, Bigelow, Chávez, Conway, Dahle, Donnelly, Beth Gaines, Grove, Hagman, Harkey, Jones, Linder, Logue, Maienschein, Mansoor, Melendez, Nestande, Olsen, Patterson, Wagner, Waldron, Wilk NO VOTE RECORDED: Vacancy JL:nl 8/26/14 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED