Christopher O’Shea is an employee benefits consultant for Sentinel Group.
If your company’s health plan gained sudden popularity among your employees over the past few months, you aren’t alone. The public health emergency brought many changes to employer-sponsored health plans — and consequently, many of those changes are now fading from existence. If you are an employer, you may feel an impact on your enrollment numbers.
To better understand why these changes are occurring, we must first look at Medicaid. Medicaid (often confused with Medicare) is a federal program for which many low-income individuals are eligible. Historically, there has been an eligibility process to ensure someone qualifies for the program; however, lawmakers eliminated this eligibility process at the start of the public health emergency.
Over the past few years, enrollment in the Medicaid program has increased dramatically, and many individuals who joined the program are set to lose coverage with the end of the public health emergency.
Plan sponsors will feel the impact of this change, and they must become well-versed in the Medicaid redetermination process to prepare for what is coming and understand what has already begun.
What is changing?
Eligibility reviews for Medicaid were suspended when the pandemic started in March 2020. As of April 2023, Medicaid has begun resuming annual eligibility rules for coverage. Consequently, many people enrolled in the program during the public health emergency will lose their healthcare coverage and turn to their employer-sponsored plans for support.
Losing Medicaid coverage is a qualifying event, meaning individuals can move to their employer’s plan regardless of when it is set to renew. This sudden influx of participants could come as a shock to employers who typically only see new participants joining their plan as new hires or during open enrollment season.
When are these changes happening?
You have probably already seen changes in employee enrollment habits for your health plan. While implementation of the changes varies from state to state, renewals will be issued by states, with terminations following suit.
Individuals receiving a renewal packet must respond by the due date. Otherwise, they may lose Medicaid coverage, even if they are eligible for the federal program. Some states are choosing to simply auto-renew employees. Employers will likely have to cross-reference participants to verify whether an employee is ineligible for Medicaid or still qualifies for the program despite changing regulations.
Why is this important for plan sponsors?
Employees will turn to their plan sponsor for health coverage if they lose access to Medicaid. This potential increase in participants needing coverage will consequently increase the company’s enrollment count and spending on premiums.
Since losing Medicaid coverage is a qualifying event, these enrollments will not be isolated to open enrollment — as is standard for a typical year.
You may want to consider informing your employees of these changes regarding Medicaid coverage, so they are aware that the employer-sponsored plan is an option for them.
What industries are affected?
All industries will potentially be impacted by changing Medicaid regulations; however, those with employees on the lower end of the wage scale will especially feel the change.
Medicaid qualification is mainly based on income, meaning industries with lower wages will likely find a larger population of their workforce needing coverage because of changing regulations. These industries should be especially prepared for how a widespread loss of Medicaid coverage may impact them.
Not everyone who participates in Medicaid will be affected, but the number of people who will lose coverage may surprise people. Regardless of where your company falls on the wage scale, plan sponsors will likely still feel the effect of these changes to a certain degree and should prepare for increased enrollment in their company’s health plan.
How can employers help?
This situation is still evolving, and timelines are often in flux as the government sorts out the exact details of how to move forward with Medicaid regulations. Changes vary by state, which employers should consider when planning for how their specific company will be impacted.
Regardless of the size of your organization or the number of participants you have, this huge potential loss of coverage will affect your company in some way or another. As a plan sponsor, it is crucial that you become well-versed in the changes and prepare to support your employees through this transition.
