ADEA State Update

Update on State Medicaid Expansion under the Affordable Care Act

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Twenty states and the District of Columbia plan to expand their Medicaid program under the Affordable Care Act (ACA), according to information provided by the Commonwealth Fund. Under the ACA, as of January 1, 2014, Medicaid eligibility will be expanded to reach all children and adults under age 65 with incomes at or below 133% of the federal poverty level. On June 28, 2012, the U.S. Supreme Court upheld the ACA; however, the Court’s ruling allows the ACA’s Medicaid expansion to proceed, but without a provision threatening non-compliant states with the loss of their existing Medicaid funding. As a result, states can either opt-in or opt-out of the Medicaid expansion provision.

According to information released by the U.S. Department of Health and Human Services, there will be no deadline for states to decide whether to participate in the Medicaid expansion; however, the longer states take to opt-in, the less that state will receive in federal matching funds. Specifically, the ACA provides 100% federal-matching funding for covering newly eligible Medicaid recipients in states that choose to expand for 2014, 2015 and 2016. For later years, the federal match decreases until it reaches 90% for 2020 and subsequent years.

Additionally, Arkansas, Indiana, Iowa and Michigan are currently pursuing alternative Medicaid expansion plans.


Arkansas has submitted a Section 1115 Demonstration Waiver application to the U.S. Department of Health and Human Services (HHS) that, if approved by HHS, will allow the state to move forward with the Health Care Independence Program (the official name of the Private Option). According to the 1115 waiver application, Arkansas will use premium assistance to purchase qualified health plans (QHPs) offered in the individual market through the marketplace for individuals eligible for coverage under Title XIX of the Social Security Act. Eligible individuals are either (1) childless adults between the ages of 19 and 65 with incomes at or below 138% of the federal poverty level (FPL) who are not enrolled in Medicare or incarcerated or (2) parents between the ages of 19 and 65 with incomes between 17% and 138% FPL who are not enrolled in Medicare or incarcerated (collectively “Private Option beneficiaries”). Private Option beneficiaries will receive the Alternative Benefit Plan (ABP) through a QHP that they select and have cost-sharing obligations consistent with both the State Plan and with the cost-sharing rules applicable to individuals with comparable incomes in the marketplace.

Additionally, Arkansas will provide through its fee-for-service Medicaid program wrap-around benefits that are required for the ABP but not covered by QHPs—namely, non-emergency transportation and Early Periodic Screening Diagnosis and Treatment (EPSDT) services for individuals participating in the Demonstration who are under age 21 (including pediatric vision and dental services, as well as other EPSDT services to the extent such services are not covered under the QHP). EPSDT services are relevant to the Private Option because the ACA defines 19 and 20 year olds as children for purposes of service benefit requirements, but adults for purposes of eligibility.


On September 3, the Centers for Medicare & Medicaid Services (CMS) approved a one-year extension of Indiana’s Section 1115 Healthy Indiana Plan (HIP) Demonstration. However, as a condition of approval, CMS is requiring the state to cut its income cap for eligibility by half, from 200% of the FPL to 100% of the FPL, in light of increased coverage options as a result of the new health insurance marketplaces. In addition, CMS is requiring Indiana to develop a transition plan to transfer coverage to people currently enrolled in the demonstration with incomes above that new eligibility level. According to staff from the Indiana Family and Social Services Administration, currently the HIP does not cover vision, dental or maternity services and that will not change with CMS’ one-year extension.


The final Iowa Wellness Plan and Iowa Marketplace Choice Plan 1115 Demonstration Waiver applications were submitted to CMS on August 20. Iowa is currently awaiting a response from CMS.

The three components of the Iowa Health and Wellness Plan are: (1) the Iowa Wellness Plan serving eligible individuals with income up to and including 100% of the FPL and medically frail eligible individuals with income up to and including 133% of the FPL through a 1115 demonstration that promotes coordinated care, managed care and the development of accountable care organizations; (2) the Marketplace Choice Plan serving non-medically frail individuals with income 101% of the FPL up to and including 133% of the FPL by offering premium assistance for eligible individuals to enroll in Qualified Health Plans (QHPs) through the health insurance marketplace; and (3) providing premium assistance for individuals with income up to and including 133% of the FPL who have access to cost-effective employer sponsored insurance (ESI) coverage under Iowa’s Health Insurance Premium Payment (HIPP) Program.

According to the applications, the Iowa Wellness Plan and the Marketplace Choice Plan will ensure the provision of Essential Health Benefits (EHB). However, dental benefits, similar to those provided on the Medicaid State Plan, will be provided as a supplement to the EHB benefits. Specifically, dental services similar to those provided on the Medicaid State Plan will be provided via a contracted commercial dental product.


The Michigan Legislature passed H.B. 4714 on Sept 3, and the bill was presented to the governor for approval on September 11. The bill would provide for the expansion of the state Medicaid program as permitted under the ACA, effective on January 1, 2014, and would require the state to seek waivers from the federal government to allow for modifications to the Medicaid program.

The first waiver would be a Medicaid expansion request, under which the expanded program could begin as early as January 1, 2014, and would feature cost-sharing requirements (including copays) and special cost-sharing accounts into which the newly eligible enrollees would contribute, as well as other criteria. A second waiver, requiring approval from the federal government by December 31, 2015, would allow the state to require individuals who had received medical assistance coverage for 48 months under the expanded program and who were between 100% and 133% of the FPL to choose one of the following options: (1) Purchase private insurance coverage through an American health benefit exchange operated in the state by changing their Medicaid eligibility status so as to be considered eligible for federal advance premium tax credit and cost-sharing subsidies from the federal government; or (2) Remain in the Medicaid program but increase cost-sharing requirements and require increased minimum contributions, with reductions possible for certain healthy behaviors.

To learn which states plan to expand their Medicaid program under the ACA and which states plan to opt-out, click on the interactive U.S. map. The map also provides users with up-to-date information on state Medicaid expansion status under the ACA, as well as data on the impact of the expansion on the uninsured population in each state. Please be aware that the information on this map is fluid and will change as some states continue to consider legislation related to Medicaid expansion and others await federal approval of alternative Medicaid expansion plans.

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