Minimum Essential Coverage
On November 7, 2014, Centers for Medicard & Medicaid Services (CMS) provided guidance, in the form of state health official letter (SHO #14-002), on the considerations that the Secretary of Health and Human Services (HHS) intends to apply in exercising her authority under section 5000A(f)(1)(E) of the Code to recognize certain types of Medicaid coverage as minimum essential coverage (MEC).
In coordination with the Treasury Secretary, CMS set forth in the letter:
- Notice of the determination by the HHS Secretary using authority under section 5000A(f)(1)(E) of the Code that coverage for low-income pregnant women in states that have elected in their Medicaid state plan to provide the same coverage to low-income pregnant women as that provided to other categorically needy individuals eligible under the state plan is MEC
- Guidance on the considerations that the HHS Secretary intends to apply, in exercising the authority under section 5000A(f)(1)(E) of the Code, in determining whether to recognize as MEC Medicaid coverage for low-income pregnant women in other states, coverage provided for medically needy individuals, and coverage provided pursuant to a section 1115 demonstration project
- The process that the HHS Secretary will use to designate Medicaid coverage as MEC under her authority
- Protections for consumers enrolled only in Medicaid coverage that is not recognized as MEC
SHO #14-002 does not address coverage under a Medicaid state plan that is limited to family planning services, tuberculosis-related services or treatment of emergency medical conditions. IRS regulations except such coverage from MEC and this exception is not impacted by this guidance.
Minimum Essential Coverage Review Process
CMS reviewed state plans and 1115 demonstration documentation and, as needed, conducted interviews with state officials in 48 states, which provide medically needy, pregnancy-related, and/or 1115 coverage, to determine whether coverage met the requirements for MEC. Coverage that was equivalent to state plan coverage available to the categorically needy was determined to be MEC. Where the state provided a more limited benefit package, staff applied the considerations laid out in the SHO letter to determine whether the coverage met the requirements to be approved as MEC.
CMS reviewed state plan coverage in seven states (Alabama, Arkansas, California, Idaho, New Mexico, North Carolina, and South Dakota) that elected to establish an income level higher than the mandatory population of qualified pregnant women and provide pregnancy-related services only. Four of those states (AL, CA, NM, and NC) provide services to pregnant women that are comparable to the full Medicaid state plan benefit for the mandatory categorically needy and are therefore considered to be MEC. Three states (AR, ID, and SD) apply limits to the benefit coverage and therefore were not approved as MEC.
CMS reviewed the coverage described in state plans for 32 states to determine if the medically needy coverage could meet the comprehensiveness review described in the SHO letter. The review found:
- Twenty-three states provide medically needy beneficiaries with the categorically needy benefit package and this coverage was determined comprehensive
- Four states (Arkansas, Georgia, Kentucky, and Nebraska) indicate a limitation to nursing facility services, but the limitations did not apply to skilled nursing facility care and coverage is comparable to coverage available in the Marketplace so is considered to be comprehensive
- Five states (Florida, Iowa, Louisiana, New Jersey, and Virginia) place limits, such as inpatient hospital, pharmacy, preventative, therapies and Early and Periodic Screening, Diagnostic, and Treatment (EPSDT), that does not conform to the standards in the SHO letter
Where coverage is comprehensive, a second test, applied by the state, considers whether an individual’s income exceeds the income eligibility threshold. If the individual’s income is at or below the state’s medically needy income level (MNIL), then the individual will have coverage that is MEC. However, if an individual is required to spend down to the MNIL, the individual will not have MEC despite the comprehensive coverage.
Most demonstration projects either clearly provide such coverage, or do not. Demonstration projects that provide the same coverage as that afforded to mandatory categorically needy individuals eligible under the state plan whose benefits are not limited under the demonstration project – including under an Alternative Benefit Plan, benchmark or benchmark-equivalent coverage – are recognized as MEC. Conversely, coverage that is limited to a specific category of benefits – such as family planning services, prescription drugs, services to treat a specific medical condition – or to services available from a limited, local network of providers which does not meet the standard, are not recognized as MEC.