Waiver Agreement Clears Way for Changes That Take Effect on April 1

The Wisconsin Department of Health Services (DHS) announced today that Wisconsin has been granted a federal waiver to make substantial changes to BadgerCare.  As anticipated, the waiver allows the state to extend BadgerCare up to the poverty level for adults who aren’t custodial parents of dependent children (so-called “childless adults”).  That’s expected to provide health insurance coverage to an additional 83,000 adults, and it will improve the coverage available for the roughly 16,000 childless adults now in the BadgerCare Core Plan.

While everyone expected the expanded coverage for childless adults to be approved, what was less clear was whether federal officials would also approve the second part of the proposed waiver, which would have significantly reduced enrollment of parents in Transitional Medical Assistance (TMA) by requiring premiums for all adults in TMA over the poverty level and increasing the penalty for missing a premium.  WCCF and a number of other groups opposed that part of the waiver.  The waiver announced today strikes a compromise on the Transitional Medicaid issue.

TMA is a part of federal law that dates back to the early stages of welfare reform.  The idea is that families making a transition from welfare into the workforce should have a grace period before they lose their Medicaid eligibility to ensure continuous coverage for low-income families and reducing churning in and out of Medicaid.  That grace period is currently 12 months.  As a general rule, families in TMA have not been required to pay premiums, but in 2012 Wisconsin got federal approval to apply premiums to parents in TMA who have income above 133% of FPL.  Those premiums, which took effect on July 1, 2012 and were set to expire on January 1, 2014, have caused a dramatic reduction in the number of parents and caretaker relatives participating in TMA.  (Read more about that impact in this WCCF analysis from last September.)

As it was initially proposed by DHS, the waiver would have affected TMA by:

• extending the federal authorization to charge premiums to parents in TMA who are above 133% of FPL, so that authority would continue beyond the end of 2013;
• expanding that authority to apply premiums to roughly 15,000 parents and caretakers in TMA between 100% and 133% of FPL; and
• precluding any adults who fail to pay their premium from participating in TMA for 12 months (unless their income drops below the poverty level), which would terminate the remainder of their 12 months of eligibility.

The approved waiver strikes a compromise that makes a number of changes to the DHS proposal, including several changes relating to TMA that we had advocated.  The changes to the proposed waiver include the following:

• Although it allows the state to continue the current TMA premiums for adults above 133% FPL and to expand the premium requirement to parents and caretakers between 100% and 133% of the poverty level, premiums won’t apply to those below 133% until they have been in TMA for six months.
• It establishes a 30-day grace period before a parent in TMA may be disenrolled for failing to pay a premium.
• The penalty for failing to pay a premium is limited to a 3-month disqualification, rather than 12 months, and they can re-enroll at any time during that three-month period if they pay the owed premiums.  (Once the three month period is up, the person can be re-enrolled in TMA for the remainder of the 12 months regardless of whether or not they paid their past premiums.)
• The premium for parents and caretakers between 100% and 133% of the poverty level will be 2% of income, which is consistent with what they will pay if or when they move into Marketplace coverage, but which is a little lower than what DHS proposed.

The expansion of coverage for childless adults and the changes to the state’s current TMA policies take effect on April 1.

In light of the sharp drop-off in TMA participation after the state began applying premiums in July 2012, WCCF is very disappointed that federal officials are allowing the current authority to apply premiums to that transitional population to be continued and also expanded to more parents and caretakers.  However, we are relieved that state and federal officials reached a compromise that significantly improves the initial TMA changes that DHS proposed.

Jon Peacock