The Centers for Medicare & Medicaid Services (CMS) issued information in the form of frequently asked questions on rules governing premium assistance in the Medicaid program. As CMS notes, the Medicaid statute provides several options for states to pay premiums for adults and children to purchase coverage through private group health plans, and in some cases, individual plans. In most instances, the statute conditions such arrangements on a determination that they are “cost effective.” Cost effective generally means that Medicaid’s premium payment to private plans plus the cost of additional services and cost-sharing assistance that would be required would be comparable to what it would otherwise pay for the same services. Similar provisions also apply to the Children’s Health Insurance Program (CHIP).  CMS also notes that the Affordable Care Act does not provide for a phased-in or partial expansion of Medicaid and that states that wish to take advantage of the enhanced federal matching funds for newly eligible individuals must extend eligibility to 133 percent of the federal poverty level (FPL). According to CMS, Arkansas has initiated discussions about “premium assistance” options for Medicaid beneficiaries, and partial expansion is not part of these discussions.

In addition, CMS notes a state may increase the opportunity for a successful demonstration by choosing to target within the new adult group individuals with income between 100 and 133 percent of the FPL, since Medicaid allows for additional cost-sharing flexibility for populations with incomes above 100 percent of the federal poverty level. This population tends to be more subject to churning due to fluctuating incomes and would be eligible for advance premium tax credits and coverage in health insurance exchanges if a state did not expand Medicaid to 133 percent of the FPL.

Link(s): Frequently Asked Questions