Reducing Medicaid Churning: Extending Eligibility for Twelve Months or to End of Calendar Year Are Most Effective

Because eligibility for Medicaid is determined by current monthly income, many beneficiaries temporarily lose coverage when their seasonal employment or overtime pay increases, and later requalify when their income dips. This churning can result in disruptions in care for the beneficiaries, and places administrative burdens on states and Medicaid managed care plans. This study reviews four policy options for addressing the problem and simulated their impact on churning and enrollment. The options include: 1) extending coverage to the end of the calendar year; 2) granting coverage for 12 continuous months, regardless of changes in income or life circumstances; 3) basing eligibility on an estimate of annual income; and 4) extending coverage by three months when a change in income or life circumstances causes a loss of eligibility.