The most significant difference between Obamacare and Medicaid is that Obamacare health plans are offered by private health insurance carriers whereas Medicaid is a government program designed for low-income individuals and families. Obamacare or the Affordable Care Act is a federal law used to refer to individual health insurance plans that are obtained through the exchanges, and Medicaid is a government-run health insurance program designed for low-income people. Both Medicaid and Obamacare sometimes get blended, as both these terms involve health coverage, healthcare reform, and the federal government.
People shopping for health insurance need to understand that there is a significant difference between Obamacare and Medicaid, right from carrier providing the coverage to people eligibility for the plan, and from the enrollment periods to the cost-sharing for the plans. Obamacare is just a nickname for the Affordable Care Act that was initially used by the opponents of this law in a derogatory sense, but in 2012 president Obama embrace this term and it has been used ever since by the supporters as well as the opponents of the law. Though Obamacare encompasses all the Affordable Care Act but it generally refers to individual health plans sold in the health insurance exchanges.
Key Points of the Affordable Care Act:
- All new major medical plans available either on-exchange or off-exchange are ACA-complaint plans.
- Medicaid expansion is a vital component of the Affordable care Act
- The Affordable Care Act encourages people to obtain health coverage, and so there was an individual mandate which is still in effect, but there is no longer a penalty for non-compliance with the individual mandate unless people live in a state that has its own penalty.
- The ACA-compliant plans do offer premium subsidies and cost-sharing reductions that make coverage and care more affordable for people buying health insurance plans.
Medicaid vs. Private Health Plans
Medicaid is the government health insurance program designed for low-income residents like a social welfare program such as SNAP food stamps or Temporary Assistance to Needy Families. Over 76 million people were receiving Medicaid benefits as of 2020 that was an increase of nearly 20 million people since 2013. The rise in the Medicaid beneficiaries is mainly because of the Medicaid expansion under the Affordable Care Act and also due to the widespread job losses due to the COVID-19 pandemic. Obamacare or private health plans though obtained through the state health insurance exchange but are not run by the government. However, these plans comply with the state and federal government regulations and provide coverage to over 10 million people.
Over two-thirds of the Medicaid enrollees all over the nation are on Medicaid managed care plans that are administered by the private health insurance carriers offering commercial plans to both individuals and businesses. Medicaid benefits offered by those plans are offered via a contract with the state government. This can create doubts and confusion in the mind of people that is further increased by the fact in most states Medicaid is referred to with different names like Apple Health in Washington and BadgerCare Plus in Wisconsin.
Eligibility Requirements for Medicaid vs. Obamacare
Getting a Medicaid plan is more difficult compared to an Obamacare health plan because Obamacare plans can be easily obtained by a legal resident of the United States. People can buy an ACA plan through their state’s health insurance exchange, as long as they are not enrolled in Medicare.
Eligibility for Subsidy – Individuals whose income falls between 100% and 400% of the federal poverty level and they are not eligible for Medicare, Medicaid, or employer-sponsored plan providing comprehensive and affordable coverage, then they may qualify for a subsidy that will help in paying the monthly premiums.
Subsidy eligibility differs in Medicaid expanded states – People with an income of up to 138% of the poverty level are eligible for Medicaid in states that have expanded Medicaid. Thus, the lower threshold for ACA subsidy eligibility is 139% of the poverty level in those states. Therefore, the lower eligibility level for premium subsidy eligibility is 139% of the poverty level in the majority of the country because Medicaid has been expanded in 36 states and DC as of January 2021. In the mid of 2021, two additional states Missouri and Oklahoma will also expand Medicaid.
Individuals paying full price – All the individuals whose income is above 400% of FPL or below 100% of FPL do not get help paying for the health premiums sold on Obamacare exchanges. Though these individuals can buy a plan from the exchange but they will have to pay 100% of the premium.
Legal Immigrants – All the legally present immigrants in every state with income below the poverty level qualify for premium subsidies if they are not eligible for Medicaid due to the five year waiting period for the recently arrived immigrants.
There are a few exceptions like in California only people with a household income of up to 600% of the poverty level are eligible for state-funded premium subsidies as of 2021. Even New Jersey has state-funded premium subsidies that supplement the federal subsidies and is available to the same section of people having income up to 400% of the poverty level.
Eligibility for Medicaid Coverage
Eligibility for Medicaid coverage are strict and vary from state to state.
Individuals having income below 138% of the poverty level – As per the initial ACA rule, all the legal residents of the U.S. having income up to 138% of the federal poverty level got Medicaid coverage for free. However, a decision of the Supreme Court made it optional for states to comply with this ACA rule.
Coverage Gap – Fourteen states as of early 2021 have not expanded Medicaid coverage and so around 2.3 million people in those states are in the coverage gap. The incomes of those people are below the federal poverty level and are also low to receive Obamacare subsidies and they don’t even qualify for Medicaid. However, Wisconsin is the only state that despite not expanding Medicaid has managed to avoid a coverage gap by offering Medicaid to its residents with income up to the poverty level.
Eligibility for Medicaid – If a person is living in a state that has expanded Medicaid coverage and his/her modified adjusted gross income is not more than 138% of FPL, then the person is eligible for Medicaid. The Medicaid coverage is usually free of charge, though some states may charge a small premium to provide coverage to people with income above the poverty level. The residents of the states that have not expanded Medicaid coverage need to meet the previous stricter eligibility criteria that vary from state to state. Individuals belonging to any one of the vulnerable groups such as the elderly, disabled, blind, pregnant women, children, parents, or adult caregivers of young children will be eligible for Medicaid.
Individual’s eligibility for Medicaid depends on the state in which they live in.
Residents of the states that have expanded Medicaid will be eligible for Medicaid based on their income criteria, which is income under 138% FPL.
Residents of the states that have not expanded Medicaid will not be eligible because they don’t belong to a vulnerable group. They will not be in the coverage gap and so not eligible for Medicaid or a premium subsidy in the exchange because their income is under the poverty level.
The Difference in Enrollment Periods
People who qualify for Medicaid can enroll in this plan throughout the year, whereas the enrollment period for ACA plans is only possible during the annual open enrollment period. Besides, annual open enrollment period, individuals may be eligible for a limited special enrollment period if they face any qualifying life events like a change of marital status, birth or adoption of a child, or loss of insurance coverage. Individuals who don’t have a qualifying life event triggering a special enrollment period have to wait until the next open enrollment period to apply for the ACA plans. The ACA compliant health plans sold outside the exchange also have the same limited enrollment period.
The Difference in the Plan’s Effective Date
Individuals apply for the ACA plans during the open enrollment period that in most states fall from November 1 to December 15 but the plans become effective from January 1 of the following year. For example, if an individual enrolled in a plan during the 2020 open enrollment period, then the plan will become effective from the January 1, 2021. The plan’s effective date will differ if an individual has enrolled in a plan during the special enrollment period. In the case of Medicaid plans, there is no waiting period and the coverage of this plan starts immediately after enrolling in the plan.
The Difference in the Retroactive Coverage
All the Affordable Care Act plans are usually retroactive meaning that people will not receive coverage for any healthcare service before the plans become effective. Though a few exceptions are there when individuals receive coverage for a newborn or newly adopted child. Some of the state-run exchanges may also offer retroactive coverage during special enrollment periods like Maryland state was doing during special enrollment period triggered due to COVID.
Medicaid coverage can be retroactive depending upon the circumstances and the state where the people live. If a six months pregnant women apply for Medicaid and she starts receiving Medicaid coverage, then Medicaid will also pay for the prenatal care she received during the first five months of her pregnancy, i.e. she will be covered even for the period when she has not applied for the Medicaid plan. However, waiver requests of some states that want to end retroactive coverage under Medicaid have been approved by the Trump administration but still, most of the states do offer retroactive Medicaid coverage. Medicaid coverage without retroactive coverage will become similar to private health plans in terms of coverage effective date. Nonetheless, the health plan coverage generally becomes effective from the first date of the month in which people have applied compared to the first date of the following month. So the coverage of health plans is still retroactive by a few weeks depending on the time when people enrolled for the plans.
Medicaid plans do not have much cost-sharing, as there are no copayments, coinsurance, and deductibles amount attached to them. Since the Medicaid plan is designed for low-income people, paying other than a small cost-sharing amount would be unaffordable for the Medicaid recipient and they will be unable to buy this plan too. Whereas ACA health plans have substantial copayments, coinsurance, and deductibles. Though, people who earn less than 250% of the federal poverty level receive subsidies to reduce the out-of-pocket expenses and people who earn more than 250% of the FPL are responsible to pay the full amount of the cost-sharing required by their plan.
Combining Coverage With Medicare
Individuals need to know that they can have Medicaid as well as Medicare at the same time, provided they are eligible for both. People who are eligible for both these plans are called dual eligible, and it is legal and beneficial to have both coverage at the same time. However, there is no benefit of having ACA plan as well as Medicare and it is illegal for private health insurance carriers to sell individual plans to people who are already enrolled in Medicare. However, it is legal to sell an individual plan to people who are eligible for Medicare but have not enrolled in it. Besides, health insurance carriers can compel people to give up their ACA plan on becoming eligible for Medicare. People who are having an ACA plan on becoming eligible for Medicare will lose their premium subsidy if they are receiving any subsidy, and there is even no coordination of benefits between the individual plans and Medicare. People are therefore advised to drop their individual coverage on becoming eligible for Medicare. This is not an automatic process and people need to initiate the cancellation of the ACA plan themselves and coordinate it with the time when Medicare coverage will start.
Determining Medicaid Eligibility
As far as ACA plans and Medicaid is concerned, it is extremely difficult and confusing to understand who is providing the coverage, particularly in some situations. Individuals need to know that they will not be able to know their eligibility for Medicaid until they fill an application through the ACA health insurance exchange in their state. It is the exchange that determines whether a person qualifies for Medicaid or not, and if an individual qualifies for it, then the information is forwarded to the state Medicaid office that starts the application process. Thus, an individual may have submitted a health insurance application to the ACA health insurance exchange and may end up receiving Medicaid instead of a private ACA plan.
Private Companies offering Medicaid
People might be shocked to know that Medicaid plans may be offered through private health insurance carriers in most of the states despite being a government program. People receiving Medicaid ID cards from Humana or Kaiser may assume that they are receiving a private health plan whereas, in reality, the state may have contracted the private carriers to provide Medicaid coverage to its residents. Though private carriers may be responsible for managing the Medicaid plans but the benefits are the same as Medicaid and those benefits are funded from the federal and state taxpayer funds.