ADEA State Update

CMS Approves Medicaid Waivers: Work Requirements, Premiums and Lockouts Included

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VermaSigningRecently, the Centers for Medicare & Medicaid Services (CMS) approved Medicaid 1115 demonstration waivers in Kentucky and Indiana. The waivers continue to signal a new direction by this administration regarding the future of Medicaid. Below is a brief overview of the waivers.



On Jan. 12, CMS approved Kentucky’s Medicaid 1115 waiver, entitled “Kentucky Helping to Engage and Achieve Long Term Health (KY HEALTH).

Premiums and Lockouts

Kentucky’s approved waiver charges premiums to most nondisabled adults on a sliding scale from $1 to $15 per month in lieu of copayments. For individuals above 100% of the federal poverty line, failure to pay premiums within the 60-day grace period would result in disenrollment and a six-month lockout unless they pay their back-due premiums and participate in a financial or heath literacy course.

The waiver also imposes a six-month lockout for a failure to report a change in circumstance, such as income or hours worked, or failure to timely complete their redetermination paperwork.

Work Requirements

The waiver conditions enrollment for working-age, childless adults on employment or community service. This includes both paid and unpaid work, education and job search activities. A Medicaid member must be engaged in work-related activities for at least 20 hours per week; failure to do so would result in suspension of benefits until the member satisfies the requirement for at least one month, resulting in what could be an indefinite lockout for unemployed Medicaid-eligible Kentuckians.

On Jan. 12, Gov. Matthew Bevin (R-KY) issued an executive order directing his administration to end Medicaid expansion in Kentucky if any part of the 1115 waiver approved by the federal government is blocked by a legal challenge in the court system. On Jan. 24, a complaint was filed against the Trump Administration in the U.S. District Court for the District of Columbia by 15 Kentucky residents.

In the complaint, the Kentucky residents argued that CMS’s actions regarding work requirements “sharply deviate” from the requirements of the Medicaid program and “vastly exceed” any legal use of the HHS secretary’s limited waiver authority. Their complaint goes on to say, “This change will harm Kentuckians across the state—housekeepers and custodians, ministers and morticians, car repairmen, retired workers, students, church administrators, bank tellers, caregivers, and musicians—who need a range of health services, including check-ups, diabetes treatment, mental health services, blood pressure monitoring and treatment, and vision and dental care. The [CMS] letter and approval of Kentucky’s application are unauthorized attempts to re-write the Medicaid Act, and the use of the statute’s waiver authority”


On Feb. 1, CMS approved Indiana’s Medicaid 1115 demonstration waiver, entitled “Healthy Indiana Plan” (HIP).


Under the approved waiver, Indiana is changing how HIP Plus beneficiaries will be charged premiums.[1] The state will apply a premium surcharge for HIP Plus beneficiaries who use tobacco and who do not participate in tobacco cessation activities. This increased premium will be applied after the first-year of enrollment, during which beneficiaries are encouraged to use the various state plan options available to cease tobacco use. By charging beneficiaries a surcharge related to a specific behavior (i.e., tobacco use), the state will test whether incentivizing beneficiaries to change behavior and engage in their own health care will achieve better health outcomes.

Work Requirements

Under the approved waiver, beginning in 2019, Indiana will implement a community engagement requirement as a condition of continued coverage and eligibility for adult beneficiaries enrolled in HIP who are not exempt. Certain groups, including pregnant women, beneficiaries identified as medically frail, students, some caregivers of dependents and beneficiaries in active substance use disorder treatment, will be exempt from this requirement.

[1] HIP Plus has comprehensive benefits including vision and dental. The member pays a monthly POWER account contribution based on income. There is no copayment required for receiving services with one exception: using the emergency room where there is no true emergency.

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