Medicaid redeterminations and the projected cost to employer health plans 

After the COVID-19 pandemic began, a myriad of COVID-19 relief measures were enacted to ensure that individuals had health coverage during the public health emergency (PHE). One of those was a pause in Medicaid redeterminations – the process by which States annually review Medicaid eligibility to determine who can remain on the program. Congress decided in December 2022 that the Medicaid relief provisions would end on March 31, 2023. As a result, this April many States will begin reviewing and disenrolling ineligible individuals from Medicaid.

Some of those disenrolled individuals will enroll in their employer’s group health plans, but the important question is how many. (Eligible employees or dependents losing coverage under Medicaid have a 60-day HIPAA special enrollment right to join their employer’s group health plan.) Our best estimate as of now, based on available data and projections of how the affected individuals will respond, is that the redetermination process could increase the overall enrollment in employer group health plans (and, by extension, cost) by 1% - 3% over the redetermination period. Of course, some companies will feel no impact, while for others enrollment gains may be much higher than the national average. Industries that have higher Medicaid-eligible populations, such as hospitality and retail, will be the most affected.

Employer group health plans may begin to see an impact of this redetermination process in 2023. The redetermination process is gradual and dependent on State resources and motivation to move ineligible individuals off Medicaid. Forty-one states already have indicated they will need 12 months to complete this process.  Employers with a substantial Medicaid-eligible population, in particular, might find it useful to consider a scenario in which plan enrollment rises in 2023 with some spillover into 2024. Some employers may also want to consider an employee communication that explains the eligibility rules, including special enrollment rights, for their group health plan. This communication could also highlight potential enrollment opportunities, with a reminder of the extended and expanded federal subsidies for individual health coverage obtained via ACA public exchanges.