Millions of people have been enrolled into expanded Medi-Cal through Covered California based solely on their lack of income. Thousands of those same Medi-Cal beneficiaries went on to get jobs or other insurance and forgot to report this to their county Medi-Cal eligibility department. Many of these people fear they will have to repay Medi-Cal for the months they were really ineligible for the no cost health insurance. Do you have to repay Medi-Cal after your income increases and you were no longer eligible? The short answer is usually not.
What’s The Repayment Penalty For Medi-Cal Ineligibility
California’s Medi-Cal program that provides health insurance for low income residents is complex. There are a variety of different programs for pregnant women, children, disabled individuals, those who care for ill family members, cancer victims, and most recently the expanded Medi-Cal program. The expanded Medi-Cal program is also known as MAGI (Modified Adjusted Gross Income) Medi-Cal. MAGI Medi-Cal is part of the Affordable Care Act and allows adults with incomes below 138% of the federal poverty level to be enrolled in a premium-free Medi-Cal health plan in their respective county. MAGI Medi-Cal is based solely on an adult’s income and not any assets he or she may own such as a savings account, car, house, or other property.
MAGI Medi-Cal For Adults
Most adults were determined eligible for MAGI Medi-Cal by applying through Covered California for health insurance. Once Covered California determines an individual is eligible for MAGI Medi-Cal, the information is sent to the state and the county in which the adult lives. Each county administers the final eligibility determination and enrollment into a health plan. The county pays the health insurance premium on behalf the eligible MAGI Medi-Cal beneficiary directly to designated health plan. (See How Much Does A Medi-Cal Plan Cost?)
Did You Forget To Report A Change To Medi-Cal?
For the overwhelming majority of individuals and families enrolled into a Medi-Cal health plan this was the first time they really had to interact with a government program where they are supposed to report life changes in real time to a bureaucracy. Most of us register our car and file our taxes once a year. But for MAGI Medi-Cal you have to report changes to income within 10 days. If there is a change of address or someone gets a new job, that all has to be reported to the county Medi-Cal office. Because people are not making monthly premium payments for their health insurance, notifying Medi-Cal – which is similar to being a teenager and having to report all your movements to your parents – is just not forefront on the list of things to do for most people.
Consequently, people have found themselves in situations where they realize they may no longer qualify for Medi-Cal for several months because they failed to report the change. Typical situations include
- New job with increased pay, but still no employer sponsored health insurance
- New job where the person enrolls in the company health plan
- Self-employed people whose businesses start to generate more revenue
- Person gets married and is enrolled in their spouse’s health plan
Will I Get Penalized For Not Reporting A Change To Medi-Cal?
I have received numerous frantic phone calls from people who just realized they forgot to report a change of income or enrolled in employer health plan and forgot to notify Medi-Cal. Their concern is that they will have to repay Medi-Cal or pay a penalty for those months they had the health insurance but were really ineligible for it.
Except for fraudulent activity, the Department of Health Care Services, the agency that oversees the county operations, doesn’t really have any mechanisms that I can find for forcing people to repay for MAGI Medi-Cal when they were ineligible. In a discussion with one county eligibility worker, he mentioned that most MAGI Medi-Cal health plans terminate when people fail to either provide requested information on a mid-year review or the annual re-determination paper work. In other words, the Medi-Cal enrollment will eventually terminate if the beneficiary never responds to requests for information. In one respect, the termination of Medi-Cal benefits limits the liability of potentially improper health plan premiums being paid by the county.
However, the specter of repayment of MAGI Medi-Cal health insurance premiums loomed large for adults over 55 years old. Under the Estate Recovery Program, once a Medi-Cal beneficiary dies, the state can attempt to collect from the deceased estate for health care insurance premiums paid and other costs. In 2017, under SB 833, for MAGI Medi-Cal beneficiaries over 55 years the Estate Recovery Program no longer applies to premium payments paid on their behalf. (See Updated Medi-Cal Estate Recovery Rules.)
To a certain extent, there is nothing to recover from the MAGI Medi-Cal beneficiary because they did not pay the premiums. If they were truly ineligible for the health insurance and they never used the health plan it’s up to the county to claw back the premiums they paid to the health plan. The county paid the capitation amount directly to the health plan on the beneficiary’s behalf. If there is any recovery to be made, it is the county Medi-Cal office debiting the account of the health plan for the months when the individual was not eligible or entitled to the health insurance.
But this does raise the thorny issue of MAGI Medi-Cal beneficiaries who received services from the Medi-Cal HMO plan but may not have been eligible for the program. First, a person should never assume they are ineligible. The determination is always made by the county eligibility worker. Just because your income increased, doesn’t mean you were ineligible for Medi-Cal. It is permissible to have both Medi-Cal and commercial private health insurance plan like an individual and family plan. This applies to adults as well as children. The health plans can communicate and coordinate the payment of benefits based on primary and secondary payer rules.
What should you do if you forgot to notify Medi-Cal of changes?
- Call the county social services department that handles Medi-Cal and request the form for reporting a change. You can also report the change over the phone, but I like the paper trail of submitting a document.
- Report all changes as soon as you become aware of them, even if they happened months ago. Most of the people I have talked to at Medi-Cal are really cool. They just want to help people, not judge them.
- If you are positive that you no longer qualify for Medi-Cal, you have employer sponsored health insurance, you moved out-of-state, or your income has really shot up, request that your Medi-Cal be terminated with form MC 215.
Will Medi-Cal Never Claw Back Premiums or Costs?
We can’t always assume that Medi-Cal will be so lenient with people who forget to report a change that may result in ineligibility for the program. If the proposed block grant Medicaid funding proposal is approved, states will have to become more efficient with their Medicaid grant dollars. This could put pressure to terminate Medi-Cal sooner in order to conserve limited funding. A worst case scenario would be a retroactive termination to the month in which the beneficiary was no longer eligible. If the person had other health insurance that covered any health care expenses, there is no problem. But if a health plan is terminated retroactively, and the member incurred claims, he or she may have to reimburse the provider for costs that the Medi-Cal health plan originally covered.
As they say in politics, “It’s not the act that gets you in trouble, it’s the cover up.” Don’t try to cover up an honest mistake. Just report the facts of your change in circumstances as soon as you remember to do so. So far, I have not heard of a single person who honestly forgot to report a change ever having to repay MAGI Medi-Cal benefits.
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