The Transition to Health Choices
The New Affordable Care Act Expansion in PA
by Anthony Marone, Esq.
McAndrews Law Offices, P.C.
Beginning on March 19, 2015, the Wolf Administration has slowly and deliberately terminated Healthy PA and made the new Affordable Care Act (“ACA”) expansion program known as “Health Choices” available to Pennsylvania’s residents. Healthy PA was Pennsylvania’s first attempt to extend health care coverage to the over one-half million uninsured Pennsylvania residents who do not qualify for medical insurance on the Health Care Exchange or through traditional Medical Assistance. Healthy PA was designed to cover those uninsured, non-disabled Pennsylvania residents between the ages of 22 and 64 whose income is less than 138% of the federal poverty level (“FPL”).
Healthy PA, which began accepting applications in December, 2014, was beset with problems during its short existence. Only about one-quarter of the eligible persons enrolled in the program. Some persons who were receiving mental health and drug and alcohol treatment prior to enrollment in Healthy PA had their treatment restricted or terminated. Many others found it difficult to navigate the new Private Coverage Options (“PCOs”). The PCOs were private insurers, paid by the Department of Human Services (“DHS”), who provided health care coverage to qualified persons. Health care coverage through a PCO was similar to purchasing an individual plan on the Exchange.
At this time, the Healthy PA program is essentially defunct. On July 28, 2015 the Department of Human Services (“DHS”) transitioned the remaining 79,272 persons from Healthy PA to Health Choices. The final PCO transition also began on July 28, 2015. On August 31, 2015 all PCOs were scheduled to be terminated and all health care coverage will be provided by Managed Care Organizations (“MCOs”) through Health Choices. MCOs are more commonly known as Health Maintenance Organizations (“HMOs”) or Preferred Provider Networks (“PPOs”) where a primary care doctor coordinates your care within a network of other providers.
Health Choices is the full ACA expansion of the Medicaid program, known as Medical Assistance (“MA”) in Pennsylvania. Health Choices eliminated some of Healthy PA’s limits on coverage. For example, Health Choices removed the Healthy PA six-drug-per-month limit on prescription drug coverage. Health Choices also removed the limits on psychiatric and drug and alcohol treatment, the inpatient psychiatric hospital limit of 30 days per year, and the inpatient rehabilitation limit of one admission per year. Health Choices provides the same level of coverage for all enrolled, eligible adults.
Health Choices created new categories of Medical Assistance eligibility while eliminating the categories related to Healthy PA. The new categories include adults up to age 64, pregnant women, and certain women with breast or cervical cancer. Although the transition for eligible persons is near completion, The DHS is still in the process of writing the regulations and policies that will govern Health Choices.
The New MAGI Adult Category
Because Health Choices is full ACA Medicaid expansion, many of the eligibility criteria will be dictated by the Federal government through the ACA. Persons who qualify in the new MAGI adult category will get the same broad coverage provided by traditional Medical Assistance. However, make no mistake, the eligibility criteria for Health Choices is very different than traditional Medical Assistance.
Traditional Medical Assistance is a needs-based program. Therefore, to qualify a person must have a medical need and a financial need. With some exceptions, persons under age 65 qualified for traditional Medical Assistance coverage only if they had disabilities or were blind and their income and resources did not exceed the limits set by the Social Security Administration (“SSA”). According to the SSA, some portions of a person’s income could be disregarded for purposes of eligibility for Medical Assistance. Resources were generally limited to $2,400.00.
Eligibility for the new Health Choices MAGI adult category is not based on need. You do not need to prove you are a person with a disability or a person who is blind to qualify for Health Choices. Although Health Choices is still Medical Assistance, the eligibility criteria related for resources and income have all changed for persons applying for coverage in this category. The criteria for the new Health Choices adult category is based on taxable income, specifically, a person’s Modified Adjusted Gross Income (“MAGI”).
To qualify in the new MAGI adult category, a person’s MAGI cannot exceed 138% of the FPL. The MAGI limit is based on the size of the person’s family. For example, the combined MAGI for a two person household cannot exceed $21,984.00. The below chart illustrates the current FPL yearly household income levels for eligibility:
Persons in Medicaid eligibility*
Household threshold 138% FPL
Each Additional $5,741
The MAGI calculation is a three step process. The first step in the calculation to determine your MAGI is to add up all your household income. Income is basically anything that is taxable on Form 1040. Income includes, but is not limited to, wages and salaries, unemployment compensation, alimony, interest income, Social Security Disability payments, and retirement and pension income. Certain payments are not considered income. For example, child support, Supplemental Security Income (“SSI”), and Worker’s compensation payments not considered income. For more information about what constitutes income for purposes of your MAGI calculation, please see the website: https://www.healthcare.gov/income-and-household-information/income/.
The second step is to subtract certain household expenses from your income. Some of the deductions include IRA contributions, alimony payments, health savings account deductions, and student loan interest. The final step in the MAGI calculation is to add back certain rare deductions. To calculate your MAGI add back your Tax-exempt foreign income, Tax-exempt Social Security benefits (including tier 1 railroad retirement benefits), and Tax-exempt interest. Don’t add back any SSI payments. For more information about what expenses can be deducted from your income for purposes of your MAGI calculation, please see the website: https://www.healthcare.gov/reporting-deductions/.
Depending on your circumstances, this calculation may be very complex. You may want to spare yourself a headache and contact an accountant or tax preparer. You may wish to contact your local County Assistance Office and request their help as well.
The new adult category is a drastic departure from traditional Medical Assistance eligibility in another key respect: resources are not counted in the new MAGI adult category. An adult with disabilities who owned resources greater than $2,400.00 was generally not eligible for traditional Medical Assistance. Resources are anything that can be converted to cash to pay for medical care such as bank accounts, stocks and bonds, certain whole life insurance policies, etc. MAGI does not consider the value of any of a person’s resources. However, some resources will produce taxable income, such as interest from a savings account or dividends from stock.
How do you access the new Health Choices coverage?
If you think you qualify for Health Choices, we recommend that you apply by submitting your application on paper or in person to your local County Assistance Office. Applications can also be submitted online at www.COMPASS.state.pa.us or through a phone call to the Consumer Service Center at 1-866-550-4355. There is no fee to apply for Health Choices.
Even if you are not sure whether you qualify for Health Choices, you should still apply. You may find that you or members of your household are eligible for Medicaid or other government benefits. If you are not eligible you will receive an explanation of why you do not qualify. There is no deadline to apply for Health Choices. Of course, if you think you qualify for traditional Medicaid you can and should apply immediately.