BILL ANALYSIS                                                                                                                                                                                                    Ó

                                                                     AB 763

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          Date of Hearing:  April 7, 2015

                            ASSEMBLY COMMITTEE ON HEALTH

                                  Rob Bonta, Chair

          AB 763  
          (Burke and Bonilla) - As Introduced February 25, 2015

          SUBJECT:  Medi-Cal:  program for aged and disabled persons.

          SUMMARY:  Increases the amount of income that is disregarded in  
          calculating eligibility for purposes of the Medi-Cal aged and  
          disabled (A&D) program which effectively increases the upper  
          limit of financial eligibility to 138% of the federal poverty  
          level (FPL).

          EXISTING LAW:  

          1)Establishes the Medi-Cal program as California's version of  
            the federal Medicaid program.  Medi-Cal provides comprehensive  
            health benefits to low-income children, their parents or  
            caretaker relatives, pregnant women, elderly, blind or  
            disabled persons, nursing home residents, and refugees who  
            meet specified eligibility criteria.

          2)Requires Medi-Cal coverage of adults under age 65 who are not  
            currently eligible with incomes up to 138% of the FPL or below  
            $15,856 in 2013 for an individual.

          3)Establishes, to the extent that federal financial  
            participation is available, the Medi-Cal A&D program.  Sets  


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            the upper limit of financial eligibility for this program at  
            100% FPL plus a specified additional amount ($230 for an  
            individual; $310 for a couple) that is disregarded in  
            calculating eligibility.   

          4)Prohibits the income standard for the A&D program from being  
            less than the Supplemental Security Income/ Supplemental State  
            Payment (SSI/SSP) payment level for a disabled individual or,  
            in the case of a couple, the SSI/SSP payment level for a  
            disabled couple.

          5)Permits the financial eligibility requirements for the A&D  
            program to be adjusted upwards to reflect the cost of living  
            in California, contingent upon appropriation in the annual  
            Budget Act.

          FISCAL EFFECT:  This bill has not been analyzed by a fiscal  


          1)PURPOSE OF THIS BILL.  According to the author, the A&D  
            Program income level loses value every year because of  
            inflation, thereby pushing the program out of reach of some  
            seniors and people with disabilities.  The author points out  
            the income level for the A&D Program is 100% FPL plus $230 for  
            an individual and 100% FPL plus $310 for a couple, which was  
            the equivalent of 133% FPL in 2000 when the program was  
            started.  With 15 years of inflation, the income limit for the  
            A&D Program is the equivalent of 123% FPL.  The author argues  
            the effects are widespread, pointing to the estimate of the  
            Department of Health Care Services (DHCS) that approximately  
            55,827 'Aged' Californians had Medi-Cal with a share of cost,  
            in January 2013.

          The author explains that if someone's income is $1.00 over the  
            allowable A&D Program income level, he or she ends up with a  


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            very high share of cost - referred to as the share of cost  
            cliff.  A share of cost is the difference between a  
            beneficiary's countable income and the Maintenance Need Income  
            Level (MNIL), or what the state considers to be the base  
            amount of income a person needs to survive on a monthly basis.  
             The MNIL is $600 per month and has not changed since 1989.   
            As a result, anything an individual earns over $600 a month  
            (or a low-income family of four earns over $1,100), becomes  
            that individual's share of cost.  For example a 65 year-old  
            individual with a monthly income of $1,250 would have a $650  
            share of cost, even though if she was 64 she could be eligible  
            for free Medi-Cal without a share of cost.

          The author explains the unfair effects have been exacerbated by  
            the Affordable Care Act and state legislation which increased  
            the income level for most adults to 138% FPL ($16,243 for an  
            individual), but seniors who don't fall into the new income  
            category have their Medi-Cal eligibility based on a 26 year  
            old MNIL that assumes people can live on $600 per month.

          The author notes that federal law allows states to adjust their  
            maintenance need levels for inflation and to adopt more  
            generous income exemptions through a state plan amendment and  
            that low income seniors and adults with disabilities shouldn't  
            have to choose between putting food on the table and going to  
            the doctor.  The author concludes that adjusting the income  
            level in California to more accurately reflect the true cost  
            of living will help thousands of vulnerable individuals access  
            the care that they need.


             a)   A&D Program.  AB 2877 (Thomson), Chapter 93, Statutes of  
               2000, the health budget trailer bill, established the A&D  
               FPL program, a no share-of-cost Medi-Cal benefit for many  


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               elderly and disabled recipients who previously had to pay a  
               significant share of cost to access Medi-Cal services.  The  
               income cutoff under the A&D FPL program was set at 100% FPL  
               plus either $230 a month for individuals or $310 a month  
               for couples.  At the time of enactment that formula created  
               an income cutoff of approximately 133% FPL.  However, with  
               time and increases in the cost of living, that formula has  
               not kept pace with the cost of living.  As a result, the  
               upper limit of financial eligibility is now 124% FPL.  That  
               number will continue to drop when the cost of living  
               increases, making fewer people eligible for the program.   
               Formerly eligible beneficiaries, whose Social Security  
               income rises with the cost of living, are forced off the  
               A&D FPL program on to the more costly share-of-cost  
               Medi-Cal, if they choose to retain Medi-Cal coverage.

             b)   Medi-Cal for people with disabilities.  People with  
               disabilities have more ways they can qualify for Medi-Cal  
               if they don't meet the standard income eligibility rules.   
               The A&D program is one way, another is the aged, blind, and  
               disabled medically needy program Medi-Cal program (ABD-MN).  
                For the A&D program, while income is an important factor  
               in determining eligibility, there are various calculations  
               made in eligibility determination which can result in  
               people with higher incomes being eligible.  This reflects  
               one of the goals of the program which is to allow disabled  
               people to work without forfeiting eligibility for the  
               program.  To determine eligibility for the A&D program,  
               there are different deductions from earned and unearned  
               income.  Earned income is not entirely counted and  
               deductions are made for specified work expenses and payment  
               of any health insurance premiums.  A maintenance need  
               allowance based on family size is also deducted.  It is the  
               remaining amount that must be below the upper income limit  
               of eligibility, $1,188 for a single individual.

             c)   Medically needy.  If an individual cannot meet the  
               requirements of the A&D program, they may be able to  
               qualify for ABD-MN.  The ABD-MN program requires a share of  


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               cost and the payment can be a very large proportion of  
               income for the beneficiary.  A single individual whose  
               income is $1.00 greater than the countable income maximum  
               of $1,188 in the A&D program faces a share of cost of  
               approximately $700 monthly.  The share of cost is  
               calculated by taking the applicants net income, higher than  
               countable, and deducting $600 for monthly needs.  The  
               beneficiary must then live on the monthly needs amount and  
               can easily devote more than 50% of their gross income to  
               paying for Medi-Cal.

          3)SUPPORT.  The Western Center on Law and Poverty, the sponsor  
            of this bill, notes that the A&D program is a critical part of  
            the Medi-Cal program and it provide free, comprehensive  
            coverage to persons over the age of 65 and those with  
            disabilities while simultaneously allowing them to have a  
            monthly income.  The A&D program was enacted in 2000, with an  
            income eligibility standard of 199% FPL plus income  
            disregards, making the eligibility criteria equivalent to 133%  
            of the FPL.  However, the disregards lose real value every  
            year, with the resulting income standard today at only 123% of  
            the FPL.  When a senior has even a small increase in their  
            income that puts them over 123% FPL, they are forced into the  
            Medi-Cal Medically Needy program with a high share of cost.

            Supporters argue this bill will help Californians by  
            increasing the income disregards and thereby increasing  
            eligibility.  They note that senior citizens should not have  
            to choose between their health and basic necessities, such as  
            food and housing.  Supporters also note that in an era when  
            almost all other adults who quality for free Medi-Cal have  
            income up to 138% of the FPL, it is particularly unfair to  
            require only medically frail and vulnerable individuals to pay  
            possible more than half their income before they can receive  
            no-cost care.

             a)   AB 2025 (Dickinson) of 2014, was very similar to this  


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               bill.  AB 2025 was held in the Assembly Appropriations  

             b)   AB 1 X1 (John A. Pérez), Chapter 3, Statutes of 2013-14  
               First Extraordinary Session, implements the Medicaid  
               provisions (Medicaid is known as Medi-Cal in California) in  
               the federal ACA, including the expansion of federal  
               Medicaid coverage to low-income adults with incomes between  
               0% and 138% of FPL, establishes the existing Medi-Cal  
               benefit package supplemented by the essential health  
               benefits (EHBs) adopted by the Legislature last session as  
               the benefit package for the expansion population, and  
               requires the existing Medi-Cal population to receive the  
               EHBs adopted by the Legislature.  Implements a number of  
               the Medicaid ACA provisions to simplify the eligibility,  
               enrollment, and renewal processes for Medi-Cal.

             c)   AB 969 (Chan) of 2001 would have incorporated annual  
               cost of living increases in the A&D FPL formula.  AB 969  
               was held in the Senate Appropriations Committee.



          Western Center on Law and Poverty (sponsor)

          American Federation of State, County and Municipal Employees,  


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          Asian Law Alliance

          Association of Regional Center Agencies

          California Advocates for Nursing Home Reform

          California Association of Public Authorities

          California Optometric Association

          California Pan-Ethnic Health Network

          California Primary Care Association

          California State Council of the Service Employees International  

          Congress of California Seniors

          Disability Rights California

          Health Access

          Justice In Aging


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          Legal Services of Northern California

          National Association of Social Workers

          United Domestic Workers of America


          None on file.

          Analysis Prepared by:Roger Dunstan / HEALTH / (916) 319-2097