Families of Medicaid-enrolled Children with Disabilities and ACA Marketplace Coverage

Family Voices Indiana shares this information from the Catalyst Center regarding children with Medicaid trying to enroll in the ACA marketplace. We realize that many families have already explored the marketplace at this point in time, but we were just given this document today.

Individuals with what is called Minimum Essential Coverage (MEC) are not eligible for subsidized coverage in the marketplaces. The final IRS regulations define Medicaid coverage for disabled children through TEFRA, Home and Community-Based service waivers (also known as 1915 (c) waivers), and the Family Opportunity Act’s Medicaid buy-in option as MEC. 

What are these programs? TEFRA (the Tax Equity and Fiscal Responsibility Act of 1982) created a pathway to Medicaid eligibility for children with complex health issues who require an institutional level of care AND whose household income is too high to be categorically eligible for Medicaid. TEFRA is an optional pathway to Medicaid that is not available in every state. 

Home and Community-based Services (HCBS) waivers (also know as 1915 (c) waivers) provide Medicaid and additional support services to make it possible for individuals who require an institutional level of care to live at home. HCBS waiver eligibility and availability vary by state. 

The Family Opportunity Act (FOA) is a pathway to Medicaid for children with a Supplemental Security Income (SSI) level of disability whose household income is too high to be categorically eligible for Medicaid but is 300% (or less as determined by the state) of the federal poverty level. This optional pathway to Medicaid is not available in most states. 

Scenario: A child with a disability has Medicaid through TEFRA, an HCBS waiver, or FOA, and the rest of the family members do not have access to affordable employer-sponsored insurance that provides Minimum Essential Coverage or MEC. Household income is between 100 and 400 % of the federal poverty level.

Question: Can the child with a disability have both marketplace coverage and Medicaid?

Answer: No. Under IRS rules for the Affordable Care Act (ACA), TEFRA, HCBS waivers, and FOA are all considered Minimum Essential Coverage or MEC. Outside of the marketplace, children with disabilities can have both private health insurance and Medicaid through TEFRA, HBCS waivers, or FOA. Inside the marketplace, children cannot have both marketplace coverage and Medicaid. This is due to an anti-crowd out provision of the ACA. 

Question: Is the rest of the family eligible for federal subsidies to purchase insurance in the marketplace?

Answer: Yes.

Question: Are 1115 research and demonstration waivers considered MEC?

Answer: The IRS has not made a final determination about this.

Additional Resources

Read more about Medicaid Premium Assistance Programs in the IRS rule about Shared Responsibility Payment for Not Maintaining Minimum Essential Coverage.

Read the IRS rule about Health Insurance Premium Tax Credit and the definition of affordable employer-

sponsored health plans. 

Learn about the Medicaid waivers available in your state. 

Learn about the Medicaid State Plan Amendments available in your state