Learn About the Medicare Coverage Gap

When the Affordable Care Act was enacted in 2010, one of the law’s main goals was to expand the Medicaid program so it would cover all adults who had an income level of below 138 percent of the federal poverty level.

However, not all states have expanded their Medicaid programs. This is because in 2012, the Supreme Court made it optional to expand Medicaid. By June 2018, there were 17 states without the expanded program

Many uninsured residents in the United States fall into the Medicaid coverage gap. The coverage gap refers to any applicants who are unable to get Medicaid coverage because they are too poor to be eligible for tax credits and do not qualify for Medicaid due to their state not expanding under the Affordable Care Act. The coverage gap is a serious issue, which effects millions of Americans. Whether or not you are affected by the coverage gap largely depends on where you live. Listed below is more information about the coverage gap.

The Limitations of Medicaid Qualifications

In order to understand why there is a coverage gap, you must understand the limitations of the Medicaid program. Medicaid qualification is more difficult for any adults in the 17 states without the expanded Medicaid program. In these states, the average income limit for parents in 2018 was only 43 percent of the poverty level. This equates to an annual income of $8,935 for a family of three. In addition, childless adults remain illegible in nearly all states without expanded Medicaid coverage. Also, because the Affordable Care Act envisioned residents would receive coverage through Medicaid, it does not provide financial assistance for residence below the poverty level for other types of coverage options. Therefore, many adults in states without the expanded Medicaid program fall into a coverage gap. These adults have low income, but are still above the eligibility limits for Medicaid, but below the lower limit for Marketplace premium tax credits.

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Medicaid expansion through the Affordable Care Act was designed to allow the high number of uninsured low-income adults in the United States with limited access to employer coverage to buy coverage of their own. In the states with expanded Medicaid, millions of adults gained coverage and the uninsured rate significantly dropped as a result of the expansion. At the same time, with so many states not implementing Medicaid expansion, millions of uninsured Americans are outside the reach of the Affordable Care Act. These adults not only have limited insurance options as a result, but it raises doubt about the effectiveness of the Affordable Care Act, since the act promised to significantly decrease the number of uninsured U.S. residents. Critics can point to these states; insinuating Medicaid does not work when the problem is actually the states failing to expand the program.

How Many Americans Are in the Coverage Gap?

The number of uninsured adults who could have been eligible for Medicaid through the Affordable Care Act but who are now in the coverage gap is high. At present, 2.2 million adults in the country fall into the coverage gap. The state of Texas has some of the most limited Medicaid eligibility. It also has a large uninsured population. In fact, more than a quarter of residents in the coverage gap live in Texas. Texas is not the only guilty state, however:

  • 17 percent of people in the coverage gap reside in Florida.
  • 11 percent live in Georgia.
  • Nine percent live in North Carolina.

The Characteristics of Adults in the Coverage Gap

The characteristics of adults who fall into the coverage gap mirror those of uninsured adults in poverty. For instance, ethnic minorities are more likely to lack coverage and live in families with low incomes than white non-Hispanics. These adults are disproportionately represented among residents in the coverage gap.

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Nonelderly adults of all ages also fall into the coverage gap. Over half of the adults without insurance are middle aged or close to becoming seniors. Aging adults are more likely to have growing health concerns and needs. Research has shown uninsured adults in this age range may leave health concerns untreated until they reach 65 and a half years of age, when they become eligible for Medicare.

Adults who do not have dependent children account for a disproportionate number of  in the U.S. citizens  within the coverage gap as well. These adults account for 77 percent of residents in the coverage gap. Furthermore, nearly a quarter of adults in the coverage gap are parents whose income level places them above the eligibility levels for Medicaid. This means approximately 161,000 children are also uninsured.

Some critics believe adults only end up in the coverage gap if they do not work, but this is incorrect. Six in 10 adults in the coverage gap live with a family with at least one worker. The majority of workers who fall into the coverage gap are not offered coverage from their employers. In addition, half of ineligible workers work for small companies not subject to Affordable Care Act penalties for not offering employees coverage. To make matters worse, many companies do not provide coverage for part-time workers.

What if All States Expanded Medicaid?

The 2.2 million adults in the coverage gap would become eligible for Medicaid if every state adopted the expansion of the Medicaid program. Furthermore, the 1.5 million adults who are uninsured but who are currently eligible for Marketplace coverage would qualify for Medicaid. Even though the majority of these adults qualify for tax credits to buy Marketplace coverage, having Medicaid coverage could lower their premiums or cost-sharing more than with Marketplace coverage.

Debate continues in some states regarding whether to expand the Medicaid program. There is currently no deadline in place for states to expand the program under the Affordable Care Act and many non-expansion states have reported their reconsideration of expanding Medicaid is on hold because of the uncertainty about the Affordable Care Act’s future. As of writing, there is even debate on whether the Affordable Care Act should remain at all.

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