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Falling into the Health Insurance Coverage Gap

Falling into the Health Insurance Coverage Gap

As a program manager at MDC in Durham, N.C., Kate Mitchell serves as a federally certified Navigator, helping people learn about and enroll in health insurance options available under the Affordable Care Act. The following story is about her work with a client who falls in the “coverage gap” between North Carolina Medicaid and federally subsidized health insurance.

I met with Christine (not her real name) on a rainy Tuesday evening in February, after she finished her housekeeping shift at a hotel off I-40 near Raleigh, N.C. She had completed a two-year substance abuse recovery and job training program a few months earlier, and she was happy to be employed, even at minimum wage for less than 25 hours a week. However, at 44 with an annualized salary of $9,400, she arrived at my office convinced that affordable coverage through Medicaid or a private plan was simply too good to be true.  

In the end, she was right.

Christine’s annualized wages were too low to qualify for advanced premium tax credits—the subsidies that have allowed millions of Americans to purchase private health insurance plans at an affordable rate—and too high to qualify for Medicaid in North Carolina. Her only option for health insurance was to pay the full price of $215 a month for the lowest cost plan offered, nearly 30 percent of her gross wages. She was understandably confused and upset.

Why did this happen to her?

As the Affordable Care Act was originally approved by Congress and signed into law by the President in 2010, all Americans with incomes up to 400 percent of the Federal Poverty Level ($45,960 for a single tax-filer) would have access to affordable health insurance. Excluding those with access to affordable coverage through another source (like a job or Medicare), individuals and families with incomes between 0 percent and 138 percent of the Federal Poverty Line would be covered by an expanded Medicaid program, administered by the states and initially paid for by the federal government. Those with incomes between 138 percent and 400 percent would be eligible for subsidized private coverage through state-sponsored health insurance “exchanges” or through the federal “Marketplace.”

However, in a landmark court case (National Federation of Independent Business v. Sebelius), the Supreme Court of the United States ruled that Congress could not require states to expand their Medicaid programs per the initial language of the Affordable Care Act. When 23 states—including North Carolina—declined this expansion, a large “coverage gap” was created, wherein people like Christine were left without Medicaid or an option for subsidized private coverage. In North Carolina, the Kaiser Family Foundation estimates that 318,710 individuals fall into this category.

I did my best to explain this to Christine, who looked out the window at the rain. Did she understand why this was happening? Did she think she could get more hours? Was there any chance she might expect to make more than the $11,490 required for a subsidy for a single tax filer? Yes, she understood. No, she was certain she would not make another $2,000 dollars.

I explained her options, which were few. She could purchase a full price plan through the Marketplace—$215 a month—or she could apply for the existing Medicaid program, although I cautioned her that she was very unlikely to qualify given her income and lack of dependents. It was little consolation, but she wouldn’t have to pay a fine for not having health insurance this year, and she could visit one or more low-cost clinics for uninsured people in Durham.

I was surprised that she still had a smile, although a sad and tired one. “It really was too good to be true,” she said. Thanking me for the time, she headed for the bus stop, hotel uniform in her bag. When she left, I stayed, gathering myself for the next appointment and the possibility of explaining yet again why no truly affordable health insurance option exists for more than a quarter million people in this state.