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MEDI-CAL
PROGRAMSBROWSE TOPICSABOUT CHCFMY PROFILE
FOLLOW CHCF
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Share of Cost Medi-Cal Fact Sheet No. 4 (August 1998) August 1998 The full text of this fact sheet is provided on this page and in the PDF below.
What Is Share of Cost Medi-Cal? Contrary to common misperception, many Medi-Cal recipients are not on welfare. In addition to covering individuals who receive cash assistance from the government, Medi-Cal offers health care coverage to individuals and families who have incomes too high to qualify for welfare, but too low to cover health care costs. Medi-Cal requires some of these recipients to contribute to their health care by paying a share of the cost of the services they receive. Share of cost is a term that refers to the amount of health care expenses a recipient must accumulate each month before Medi-Cal begins to offer assistance. Once a recipient's health care expenses reach a predetermined amount, Medi-Cal will pay for any additional covered expenses for that month. Share of cost is an amount that is owed to the provider of health care services, not to the state. Share of cost is not the same as cost sharing. Cost sharing requires a recipient to pay a set amount or percentage of each health care service received, while share of cost requires recipients to take full responsibility for health care expenses up to a predetermined amount. Share of cost is also not a premium; it is an amount that a recipient is responsible for only during a month in which Medi-Cal's assistance with health care expenses is needed. How Is Share of Cost Determined? Share of cost is calculated on a monthly basis by deducting a set amount called a "maintenance need level" from the net income:
Share of Cost = Net Income - Maintenance Need Net income is established by subtracting any allowable exclusions from the gross household income. Gross income includes earned income (earnings from a job), as well as other sources of income like disability payments or alimony. There are approximately 40 allowable exclusions from gross income, including deductions for educational expenses, dependent care, alimony payments, and an earned income deduction. The earned income deduction is the amount deducted for earnings from a job; it is intended to encourage recipients to work. For aged, blind, and disabled individuals, the main earned income deduction is determined by the 65 1/2 rule: The first $65 is deducted off the monthly gross earned income, and the balance is divided in half. For families, the first $90 of monthly gross earned income is deducted. Additional earned income deductions may apply depending upon individual circumstances. The maintenance need level is determined by state law, subject to federal guidelines. California is required by federal law to set maintenance need levels that will permit medically needy persons to meet their basic needs for food, clothing, and shelter. However, federal law also limits maintenance need by establishing a maximum allowable level. The following table outlines the monthly maintenance need level by family size for Medi-Cal in 1998:
Families and individuals on Medi-Cal who receive cash assistance through CalWORKs or SSI are not required to pay a share of cost. Rather, share of cost applies to Medi-Cal recipients who opt not to receive cash assistance, or whose income and resources are too high to qualify under cash assistance programs. The majority of share of cost recipients fall into two Medi-Cal eligibility categories: the medically needy and the medically indigent. California's medically needy (MN) program is made up of aged, blind, and disabled persons as well as low-income families who do not qualify for cash assistance (i.e., CalWORKs or SSI). Families with children who do not qualify for CalWORKs because of high incomes may still qualify for MN Medi-Cal if they meet the CalWORKs deprivation requirements: One parent is absent or incapacitated, or both parents are in the home but unemployed or underemployed. Similarly, aged, blind, and disabled individuals may qualify for MN Medi-Cal if they meet SSI disability standards, but have incomes too high to qualify for an SSI cash grant. MN Medi-Cal also covers individuals who qualify for SSI but opt not to apply for it. In October 1997, there were approximately 614,000 MN Medi-Cal recipients, or 12% of the total number of Medi-Cal recipients. The medically indigent (MI) program provides Medi-Cal coverage for low-income children under 21 whose families do not receive cash assistance and who are not eligible for MN Medi-Cal because they do not meet SSI disability standards or CalWORKs deprivation requirements. MI Medi-Cal also includes low-income adults who are in long term care or who are pregnant. In October 1997, there were approximately 252,000 MI Medi-Cal recipients, or 5% of the total number of Medi-Cal recipients. Not all MN and MI Medi-Cal recipients are required to pay a share of cost. In fact, the majority of MN and MI recipients have incomes so low that they receive Medi-Cal without having to pay any share of cost. In October 1997, for example, only 15.5% of MN recipients (roughly 95,700) met a share of cost. The majority of those recipients (70%) were long term care beneficiaries. Similarly, only 1.4% of MI recipients (roughly 3,600) met a share of cost in October 1997.
In the same period, more than 200,000 Medi-Cal eligibles who had a share of cost did not meet it. Although these persons were eligible for Medi-Cal, they did not incur medical expenses during the month that were high enough to exceed their share of cost. Thus, these eligibles did not make a claim and did not receive assistance from the Medi-Cal program in October 1997. The California Department of Health Services estimates that in October 1997, the overall average share of cost per case (i.e., for a family or for an aged, blind, or disabled individual) was approximately $480. The average share of cost for long term care recipients was approximately $620. In the same period, the total amount of share of cost paid or obligated was roughly $48 million. This amount is not significant when compared to the total Medi-Cal budget of $18 billion, due to the limited number of share of cost Medi-Cal eligibles. Several factors, including welfare reform and a low unemployment rate, are likely to raise share of cost eligibility rates by increasing incomes through employment. On the other hand, the implementation of the Healthy Families program is likely to cause a decline in share of cost Medi-Cal enrollment: The children in virtually all families with share of cost Medi-Cal are now eligible for Healthy Families. The overall effect of these changes on the number of persons eligible for share of cost Medi-Cal remains to be seen.
Example 1: Computing share of cost for a single, disabled recipient with SSD (social security disability) income and a part-time job.
Net income = gross income - deductions = $1265 - $285 = $980 per month Maintenance need level for a single adult = $600 per month Share of cost = net income - maintenance need = $980 - $600 = $380 per month
In a given month, this individual would need to incur health care costs of $380 before Medi-Cal would begin to provide assistance. Computing share of cost for a single mother with one child (age 4) who works, receives alimony, and pays $300 per month for child care.
Net income = gross income - deductions = $1450 - $315 = $1135 per month Maintenance need level for a two-person family = $750 per month Share of cost = net income - maintenance need = $1135 - $750 = $385 per month
In a given month, this family would need to incur health care costs of $385 before Medi-Cal would begin to provide assistance. Document Downloads
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