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Express Lane Eligibility Prepared for the National Academy for State Health Policy Stan Dorn The Urban Institute May 14, 2009
Topics to discuss Why this matters What’s the thinking behind Express Lane Eligibility (ELE)? Promising opportunities to use ELE
Most uninsured children are eligible for Medicaid or CHIP Sources: Dorn, et al., Feb. 2009, applying eligibility simulation model described in Dubay, et al., 2007.
New financial incentives in CHIPRA Increased CHIP enrollment can raise future CHIP allocations And lower enrollment can cut future allocations Increased Medicaid enrollment can qualify for performance bonuses So long as state implements 5 of 8 “best practices,” which include ELE
The value added question When a family has already shown low income by filling out forms for one government agency, what is the value of requiring it to complete a similar form for a different government agency? How does that value compare to the consequences for: Enrollment; Household convenience; and Administrative costs?
The impact of inertia and procrastination on human behavior Sources: Sailer and Holden, 2005; Laibson (NBER), 2005.
3. Potentially promising applications of Express Lane Eligibility (ELE) State income tax forms Food Stamps National School Lunch Program
State income taxes An extraordinary opportunity to locate uninsured children
Uninsured children who qualify for Medicaid or CHIP, by legal requirement to file federal income taxes and eligibility for federal EITC: 2004 Source: Dorn, et al., Feb. 2009.
Among various groups of uninsured children, the estimated percentage whose families filed federal income tax returns: 2004 Sources: Dorn, et al., Feb. 2009.
What about state income tax forms? What’s your state’s minimum income threshold for required tax filing? Does your state provide any refundable credits (e.g., an EITC or child care credit that supplements the federal credit)? Remember—if income is withheld from a paycheck, the worker may need to file a state tax return to get a refund
How it could work On tax form: Require parents to identify their uninsured children Let parents request disclosure of tax data to the state’s health agency Very important step. Without it, parents must file 2 forms, an income tax form and a later health coverage form. In Iowa, the state mailed application forms to parents who identified their children as uninsured on state income tax returns. Only 10% applied. Grant income-eligibility based on gross income (or AGI) and household size on income tax form Qualify children as citizens based on SSA data match (starting in 2010) Determine immigration status Intensive application assistance to obtain immigration evidence Can obtain in the enrollment phase In the meantime, can provide presumptive eligibility (PE) based on income alone Possible ELE based on SSA determination of permanent legal residence when issuing SSN
How it could work, continued If child is not eligible based on ELE, CHIPRA requires the family to have a chance to submit a standard application Collecting any remaining paperwork Can direct families to on-line forms CHIPRA allows electronic signature Can use CBOs, facilitated enrollers In a managed care state, can use MCOs Let the family pick an MCO If the family doesn’t act, the state chooses an MCO Once the MCO has been chosen, the MCO must collect the final paperwork before capitated payments start Key: no MCO contact until a plan is chosen
Possible concerns Parents may mislabel children as uninsured Confirm by running data match against Medicaid/CHIP files, perhaps Medicaid TPL records of private coverage Revenue agency may resist changing tax return IA, MD, NJ already use return to ask re children’s coverage MA uses return to request proof of coverage for adults Revenue agency may be concerned about violating the confidentiality of tax data Consent to disclosure should address those concerns Self-employment income For tax purposes, can deduct from even gross income Meals; Entertainment; Depreciation; etc. Could add back these deductions in calculating gross income or adjusted gross income, for purposes of ELE
Final concern: tax information is so last year! CHIPRA expressly allows using tax returns for ELE Can only use within a “reasonable period,” defined by state Multiple federal programs already do this Prior-year tax returns establish current-year eligibility What if your situation changed? If income rose this year, eligibility not reduced until next year If income fell this year, can immediately apply for extra help No application required if you file a tax form (although an application process is available as a fall-back) Once exception: applications are needed for college student aid. However, President Obama proposes to replace them with a “check-box” on the federal income tax return.
Income tax returns and eligibility for various federally-funded, means-tested benefits
Food stamps – basic eligibility rules Income eligibility 130 percent of FPL in gross income 100 percent of FPL in net income Must be citizen or legal permanent resident (but no 5-year bar)
How food stamp ELE could work Identify uninsured children Match food stamp eligibility files with Medicaid and CHIP files to identify food stamp children not receiving health coverage Permitted by pre-CHIPRA food stamp law Let parents opt out Send notice explaining that, unless they object, data from their children’s food stamp files will be used to determine potential eligibility for health coverage Determine eligibility Automatically find, via ELE, that All food stamp children are income-eligible for Medicaid; All immigrant food stamp children are legally residing in the U.S., for purposes of Medicaid Maybe not in a state with a 5-year bar for newly arrived immigrants Establish citizenship via SSA data-match (2010 and later) Parents must consent before enrollment
Trade-offs Potential advantages Huge efficiency gains. Almost no value is added by requiring a separate health application. Among uninsured food-stamp children, only 1/10th of 1% are ineligible for Medicaid and CHIP. Statistic applies to states that use CHIPRA to cover recently arrived immigrant children In other states, almost all uninsured, citizen children receiving food stamps qualify for Medicaid and CHIP under existing law Matchable, accessible data Potential disadvantages Not enormous reach: 12.4 percent of eligible, uninsured children received food stamps in 2004 41% of food stamp children without Medicaid or CHIP are privately insured Need to do data match with information about private coverage Some questions about categorically eligible Food Stamp recipients – good argument for applying ELE, but no CMS ruling Families with TANF, SSI, GA can automatically get Food Stamps
National School Lunch Program (NSLP): eligibility Income eligibility based on gross income Up to 130 percent of FPL, free school lunch 130-185 percent of FPL, reduced-price lunch No immigration status requirements
How ELE could work with NSLP On NSLP application form, parents can: Identify any uninsured children; and Consent to disclose NSLP and other data to determine children’s eligibility for free or reduced-cost health coverage If children receive free lunches, use ELE to automatically qualify them as income-eligible for Medicaid If children receive reduced-price lunches, either Use NSLP income-determination to establish income-eligibility for Medicaid/CHIP or Provide PE and target children for intensive assistance to determine ongoing eligibility For anything beyond PE, state must establish that NSLP children are citizens or legal immigrants Collection of remaining paperwork Can follow income tax approach
Trade-offs Potential advantages Broad reach: 59 percent of uninsured, low-income children live in families who participate in NSLP Potential disadvantages In many states Limited digitization of matchable enrollment records “District-by-district” implementation is time consuming Schools have other priorities Illinois law bases a district’s receipt of poverty-related school financing on, among other things, Medicaid and CHIP receipt Error rates For free lunches, not a problem. NSLP errors do not extend health coverage to very many otherwise ineligible children. That’s because maximum income eligibility for free lunches is far below CHIP income limits. For reduced price lunches, NSLP errors are more consequential.
Recipients of free and reduced-price school lunches, by income-eligibility for health coverage (based on actual income) Source: Dorn, April 2009.