Medicaid Program; Eligibility Changes Under the Affordable Care Act of 2010, 51148-51199 [2011-20756]
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Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 / Proposed Rules
DEPARTMENT OF HEALTH AND
HUMAN SERVICES
Centers for Medicare & Medicaid
Services
42 CFR Parts 431, 433, 435, and 457
[CMS–2349–P]
RIN 0938–AQ62
Medicaid Program; Eligibility Changes
Under the Affordable Care Act of 2010
Centers for Medicare &
Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
AGENCY:
This proposed rule would
implement provisions of the Patient
Protection and Affordable Care Act of
2010 and the Health Care and Education
Reconciliation Act of 2010 (collectively
referred to as the Affordable Care Act).
The Affordable Care Act expands access
to health insurance through
improvements in Medicaid, the
establishment of Affordable Insurance
Exchanges (‘‘Exchanges’’), and
coordination between Medicaid, the
Children’s Health Insurance Program
(CHIP), and Exchanges. This proposed
rule would implement sections of the
Affordable Care Act related to Medicaid
and CHIP eligibility, enrollment
simplification, and coordination.
In addition, this proposed rule also
sets out the increased Federal Medical
Assistance Percentage (FMAP) rates and
the related conditions and requirements
that will be available for State medical
assistance expenditures relating to
‘‘newly eligible’’ individuals and certain
medical assistance expenditures in
‘‘expansion States’’ beginning January 1,
2014, including a proposal of three
alternative methodologies to use for
purposes of applying the appropriate
FMAP for expenditures in accordance
with section 2001 of the Affordable Care
Act.
DATES: To be assured consideration,
comments must be received at one of
the addresses provided below, no later
than 5 p.m. on October 31, 2011.
ADDRESSES: In commenting, please refer
to file code CMS–2349–P. Because of
staff and resource limitations, we cannot
accept comments by facsimile (FAX)
transmission.
You may submit comments in one of
four ways (please choose only one of the
ways listed):
1. Electronically. You may submit
electronic comments on this regulation
to https://www.regulations.gov. Follow
the ‘‘Submit a comment’’ instructions.
2. By regular mail. You may mail
written comments to the following
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address ONLY: Centers for Medicare &
Medicaid Services, Department of
Health and Human Services, Attention:
CMS–2349–P, P.O. Box 8016, Baltimore,
MD 21244–8016.
Please allow sufficient time for mailed
comments to be received before the
close of the comment period.
3. By express or overnight mail. You
may send written comments to the
following address ONLY: Centers for
Medicare & Medicaid Services,
Department of Health and Human
Services, Attention: CMS–2349–P, Mail
Stop C4–26–05, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
4. By hand or courier. Alternatively,
you may deliver (by hand or courier)
your written comments ONLY to the
following addresses prior to the close of
the comment period:
a. For delivery in Washington, DC—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, Room 445–G, Hubert
H. Humphrey Building, 200
Independence Avenue, SW.,
Washington, DC 20201.
(Because access to the interior of the
Hubert H. Humphrey Building is not
readily available to persons without
Federal government identification,
commenters are encouraged to leave
their comments in the CMS drop slots
located in the main lobby of the
building. A stamp-in clock is available
for persons wishing to retain a proof of
filing by stamping in and retaining an
extra copy of the comments being filed.)
b. For delivery in Baltimore, MD—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
If you intend to deliver your
comments to the Baltimore address, call
telephone number (410) 786–7195 in
advance to schedule your arrival with
one of our staff members.
Comments erroneously mailed to the
addresses indicated as appropriate for
hand or courier delivery may be delayed
and received after the comment period.
For information on viewing public
comments, see the beginning of the
SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Sarah Delone, (410) 786–0615.
Stephanie Kaminsky, (410) 786–4653.
SUPPLEMENTARY INFORMATION: A detailed
Preliminary Regulatory Impact Analysis
associated with this proposed rule is
available at https://www.cms.gov/
MedicaidEligibility/downloads/CMS2349-P-Preliminary
RegulatoryImpactAnalysis.pdf. A
summary of the aforementioned analysis
is included as part of this proposed rule.
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Inspection of Public Comments: All
comments received before the close of
the comment period are available for
viewing by the public, including any
personally identifiable or confidential
business information that is included in
a comment. We post all comments
received before the close of the
comment period on the following Web
site as soon as possible after they have
been received: https://
www.regulations.gov. Follow the search
instructions on that Web site to view
public comments.
Comments received timely will also
be available for public inspection as
they are received, generally beginning
approximately 3 weeks after publication
of a document, at the headquarters of
the Centers for Medicare & Medicaid
Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday
through Friday of each week from
8:30 a.m. to 4 p.m. To schedule an
appointment to view public comments,
phone 1–800–743–3951.
Table of Contents
I. Background
A. Introduction
B. Legislative Overview
C. Overview of the Proposed Rule
II. Provisions of the Proposed Rule
A. Changes to Medicaid Eligibility
1. Coverage for Individuals Age 19 or Older
and Under Age 65 at or Below 133
Percent FPL (§ 435.119)
2. Individuals Above 133 Percent FPL
(§ 435.218)
3. Amendments to Part 435, Subparts A
Through D
a. Eligibility for Parents and Other
Caretaker Relatives, Pregnant Women,
and Children
(1) Parents and Other Caretaker Relatives
(§ 435.110)
(2) Pregnant Women (§ 435.116)
(3) Infants and Children Under Age 19
(§ 435.118)
b. Other Conforming Changes to Existing
Regulations
B. Financial Methodologies for
Determining Medicaid Eligibility Based
on MAGI Under the Affordable Care Act
1. Point-in-Time Measurement of Income
(Budget Periods) (§ 435.603(h))
2. Changes to Medicaid Financial Methods
3. Provisions of Proposed Rule
Implementing MAGI Methods
a. Proposed Methods for Counting Income
Based on MAGI (§ 435.603(e))
b. Proposed Rules for Determining
Household Composition Under MAGI
Based Methods (§ 435.603(f))
(1) Household Composition for Tax Filers
(§ 435.603(f)(1)) and Their Tax
Dependents (§ 435.603(f)(2))
(2) Household Composition for Non-Filers
(§ 435.603(f)(3))
(3) Retention of Existing Financial Methods
(§ 435.603(i))
C. Residency for Medicaid Eligibility
Defined
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1. Residency Definition for Adults (Age 21
and Over) § 435.403(h))
2. Residency Definition for Children
(Under Age 21) (§ 435.403(i))
D. Application and Enrollment Procedures
for Medicaid
1. Availability of Program Information
(§ 435.905)
2. Applications (§ 435.907)
3. Assistance With Application and
Redetermination (§ 435.908)
E. MAGI Screen (§ 435.911)
F. Coverage Month
G. Verification of Income and Other
Eligibility Criteria (§ 435.940 Through
§ 435.956)
1. Basis, Scope, and General Requirements
(§ 435.940 and § 435.945)
2. Verification of Financial Eligibility
(§ 435.948)
3. Verification of Information From Federal
Agencies (§ 435.949)
4. Use of Information and Request for
Additional Information (§ 435.952)
5. Verification of Other Non-Financial
Information (§ 435.956)
H. Periodic Redetermination of Medicaid
Eligibility (§ 435.916)
I. Coordination of Eligibility and
Enrollment Among Insurance
Affordability Programs—Medicaid
Agency Responsibilities (§ 435.1200)
1. Basic Responsibilities (§ 435.1200(c))
2. Internet Web Site (§ 435.1200(d))
3. Provision of Medical Assistance for
Individuals Found Eligible for Medicaid
by an Exchange (§ 435.1200(e))
4. Transfer of Applications From Other
Insurance Affordability Programs to the
State Medicaid Agency (§ 435.1200(f))
5. Evaluation of Eligibility for Other
Insurance Affordability Programs
(§ 435.1200(g))
J. Single State Agency (§ 431.10 and
§ 431.11)
K. Provisions of Proposed Regulation
Implementing Application of MAGI to
CHIP
1. Definitions and Use of Terms (§ 457.10
and § 457.301)
2. State Plan Provisions (§ 457.305)
3. Application of MAGI and Household
Definition (§ 457.315)
4. Other Eligibility Standards (§ 457.320)
5. Clarifications Related to MAGI
L. Residency for CHIP Eligibility
(§ 457.320)
M. CHIP Coordinated Eligibility and
Enrollment Process
1. Applications and Outreach Standards
(§ 457.330, § 457.334, § 457.335 and
§ 457.340)
2. Determination of CHIP Eligibility and
Coordination With Exchange and
Medicaid (§ 457.348 and § 457.350)
3. Periodic Redetermination of CHIP
Eligibility (§ 457.343) and Coverage
Months
4. Verification of Eligibility (§ 457.380)
5. Ministerial Changes (§ 457.80, § 457.300,
§ 457.301, § 457.305, and § 457.353)
N. Federal Medical Assistance Percentage
(FMAP) for Newly Eligible Individuals
and for Expansion States
1. Availability of FMAP (§ 433.10(c))
a. Newly Eligible FMAP (§ 433.10(c)(6))
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b. Expansion State FMAP (§ 433.10(c)(7)
and § 433.10(c)(8))
(1) 2.2 Percentage Points Increase in FMAP
(§ 433.10(c)(7))
(2) Expansion State FMAP (§ 433.10(c)(8))
2. Methodology (§ 433.206(a) and
§ 433.206(b))
3. Alternative 1: 2009 Eligibility Standard
Threshold
4. Alternative 2: Statistically Valid
Sampling Methodology (§ 433.210)
5. Alternative 3: Use of a FMAP
Methodology Based on Reliable Data
Sources (§ 433.212)
6. Additional Methodology Approaches
III. Collection of Information Requirements
IV. Response to Comments
V. Summary of Preliminary Regulatory
Impact Analysis
Regulations Text
Acronyms
Because of the many organizations
and terms to which we refer by acronym
in this proposed rule, we are listing
these acronyms and their corresponding
terms in alphabetical order below:
Act Social Security Act
AFDC Aid to Families with Dependent
Children
BBA Balanced Budget Act of 1997
CHIP Children’s Health Insurance Program
CMS Centers for Medicare & Medicaid
Services
DHS Department of Homeland Security
EITC Earned Income Tax Credit
EPSDT Early and periodic screening,
diagnosis, and treatment
FFP Federal financial participation
FMAP Federal medical assistance
percentage
FPL Federal poverty level
HCERA Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111–
152, enacted March 30, 2010)
HHS [U.S.] Department of] Health and
Human Services
IRA Individual Retirement Account
IRC Internal Revenue Code of 1986
IRS Internal Revenue Service
LEP Limited English Proficient
MAGI Modified adjusted gross income
MSA Medical Savings Account
PRWORA Personal Responsibility and
Work Opportunity Reconciliation Act of
1996
QI Qualifying Individuals
QMB Qualified Medicare Beneficiaries
SHO State Health Official
SLMB Specified Low-Income Medicare
Beneficiaries
SMD State Medicaid Director
SNAP Supplemental Nutrition Assistance
Program
SPA State Plan Amendment
SSA Social Security Administration
SSI Supplemental Security Income
SSN Social Security number
TANF Temporary Assistance for Needy
Families
I. Background
A. Introduction
The Patient Protection and Affordable
Care Act (Pub. L. 111–148, enacted on
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March 23, 2010), was amended by the
Health Care and Education
Reconciliation Act of 2010 (Pub. L. 111–
152, enacted on March 30, 2010), and
together these laws are referred to as the
Affordable Care Act. In addition, section
205 of the Medicare & Medicaid
Extenders Act of 2010 (Pub. L. 111–309,
enacted December 15, 2010) made
technical corrections to the Social
Security Act (the Act) to implement the
Affordable Care Act. This proposed rule
addresses changes to Medicaid and
CHIP eligibility in the Affordable Care
Act.
Prior to the implementation of the
Affordable Care Act in 2014, individuals
who fall into certain ‘‘categories’’ or
‘‘categorical groups’’ are eligible for
Medicaid, including low-income
children, pregnant women, parents and
other caretaker relatives, seniors, and
people with disabilities. Federal
minimum income eligibility standards
vary by category. All States currently
cover pregnant women and children
under age 6 at or below 133 percent of
the Federal poverty level (FPL) (in some
States the minimum eligibility level is
185 percent FPL for pregnant women
and children under one), and children
age 6 through age 18 with family
incomes at or below 100 percent of the
FPL, though many States have
implemented higher standards for
pregnant women and children. The
Federally specified minimum eligibility
levels for parents, people with
disabilities and the elderly are
significantly lower, although States have
the option to expand coverage to people
within these categories at higher income
levels. Prior to the Affordable Care Act,
States could not cover non-disabled,
non-elderly adults who do not have
dependent children, regardless of their
income level, except through a
Medicaid demonstration under Section
1115 of the Act. As a result of the
varying Federal minimum standards
and State options, eligibility for
Medicaid is complicated and significant
gaps continue to exist even among the
lowest income Americans.
The Affordable Care Act extends and
simplifies Medicaid eligibility. Starting
in calendar year (CY) 2014, it replaces
the complex categorical groupings and
limitations to provide Medicaid
eligibility to all individuals under age
65 with income at or below 133 percent
FPL, provided that the individual meets
certain non-financial eligibility criteria,
such as citizenship or satisfactory
immigration status. Children and, in
some States, pregnant women will be
eligible at income levels equal to or
higher than the 133 percent level,
depending on existing State-established
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income eligibility standards. In
addition, States will have a new option
to expand eligibility beyond the new
simplified Federal minimums.
In addition, starting January 1, 2014,
eligibility for Medicaid for most
individuals, as well as for CHIP, will be
determined using methodologies that
are based on modified adjusted gross
income (MAGI), as defined in the
Internal Revenue Code of 1986 (IRC).
Per the Affordable Care Act, eligibility
for advance payments of premium tax
credits for the purchase of private
coverage through the Exchange will use
MAGI as it is defined in the IRC to
determine eligibility as well. Medicaid,
CHIP and the Exchanges will use
common income methodologies and
will align the rules and methodologies
used to evaluate eligibility for most
individuals under all three programs.
The alignment of the methods for
determining eligibility is one part of an
overall system established by the
Affordable Care Act that allows for realtime eligibility determinations of most
applicants and allows for prompt
enrollment of individuals in the
‘‘insurance affordability program’’ for
which they qualify. In this proposed
rule, insurance affordability programs
include Medicaid, CHIP, advance
payments of premium tax credits and
cost-sharing reductions through the
Exchange, and any State-established
Basic Health Program, if applicable.
Individuals will not have to apply to
multiple programs nor will they be sent
from one program to another if they
initially apply to a program for which
they are not ultimately eligible. To
achieve coordination, this proposed rule
for Medicaid and CHIP eligibility is
aligned with the applicable provisions
in the proposed rule establishing the
Exchanges published in the July 15,
2011 Federal Register (76 FR 41866)
(‘‘Patient Protection and Affordable Care
Act; Establishment of Exchanges and
Qualified Health Plans’’), as well as in
the accompanying proposed rule
published elsewhere in this Federal
Register implementing the Affordable
Care Act provisions related to the
eligibility for advance payments of
premium tax credits and cost-sharing
reductions and enrollment in a qualified
health plan through the Exchanges
(referred to hereinafter as the ‘‘Exchange
proposed rule’’) as well as the proposed
rule developed by the Department of the
Treasury regarding the health insurance
premium assistance tax credit (‘‘the
Treasury proposed rule’’), also
published elsewhere in this Federal
Register.
Section 2001 of the Affordable Care
Act ensures that States will receive an
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increased FMAP for all newly eligible
individuals, defined as those who
would not have been eligible in the
State in December 2009. The FMAP for
these newly eligible individuals will be
100 percent for Calendar Year (CY)
2014—2016, gradually declining to 90
percent in 2020 where it remains
indefinitely. In addition, some States
that had expanded coverage to adults
(parents and adults without children)
prior to December 2009, referred to as
‘‘expansion States,’’ shall also receive an
increased FMAP that begins in 2014
between the regular FMAP and the
FMAP for newly eligible individuals
and equalizing with the newly eligible
FMAP in 2019 and beyond. The
proposed rule sets forth the definitions
of newly eligible individuals and
expansion States as well as the
applicable FMAPs beginning in 2014.
While the new FMAPs provide
significant new federal financial support
for States, they could cause States
significant burden to administer if
States had to evaluate all applicants
under the new simplified rules for
purposes of determining eligibility and
under their otherwise obsolete
December 2009 eligibility rules for
purposes of determining the appropriate
FMAP. A dual system would be
inefficient and likely lead to
inaccuracies. To promote States’ ability
to operate efficient and effective
processes, this rule proposes three
alternative approaches for determining
the applicable FMAP. Based on the
comments received through this
proposed rule and the results of an
upcoming CMS/HHS feasibility study,
we expect to modify, narrow or combine
the approaches available to States in the
final rule. By establishing an alternative
methodology or methodologies for use
in the FMAP determination by a State,
the proposed rule aims to ensure that it
will not be necessary for a State to make
an eligibility determination for every
individual using two separate eligibility
systems and thereby advancing efficient
and effective operations for States,
individuals, and the Federal
government.
Starting in 2014, individuals and
small businesses will be able to
purchase private health insurance
through State-based competitive
marketplaces called Affordable
Insurance Exchanges. Exchanges will
offer Americans competition, choice,
and clout. Insurance companies will
compete for business on a level playing
field, driving down costs. Consumers
will have a choice of health plans to fit
their needs. And Exchanges will give
individuals and small businesses the
same purchasing clout as big businesses.
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The Departments of Health and Human
Services, Labor, and the Treasury (the
Departments) are issuing regulations
implementing Exchanges in several
phases. The first in this series was a
Request for Comment relating to
Exchanges, published in the August 3,
2010 Federal Register (75 FR 45584).
Second, Initial Guidance to States on
Exchanges was published issued on
November 18, 2010. Third, a proposed
rule for the application, review, and
reporting process for waivers for State
innovation was published in the March
14, 2011 Federal Register (76 FR
13553). Fourth, two proposed
regulations were published in the
Federal Register on July 15, 2011 (76 FR
41866 and 76 FR 41930) to implement
components of the Exchange and health
insurance premium stabilization
policies in the Affordable Care Act.
Fifth, a proposed regulation for the
establishment of the Consumer
Operated and Oriented Plan (CO–OP)
Program under section 1322 of the
Affordable Care Act was published in
the Federal Register on July 20, 2011
(76 FR 43237). Sixth, three proposed
rules, including this one, are being
published in the Federal Register on
August 17, 2011 to provide guidance on
the eligibility determination process
related to enrollment in a qualified
health plan, advance payments of the
premium tax credit, cost-sharing
reductions, Medicaid, and the
Children’s Health Insurance Program
(CHIP).
B. Legislative Overview
This proposed rule implements the
Medicaid and CHIP eligibility and
enrollment provisions of the Affordable
Care Act including:
• Section 1413, which directs the
Secretary of HHS (the ‘‘Secretary’’) to
establish a streamlined system for
individuals to apply for and be enrolled
in an insurance affordability program if
eligible.
• Section 1414, which directs the
Secretary of Treasury, upon written
request, to provide the Secretary with
certain tax return information used in
determining an individual’s eligibility
for all insurance affordability programs.
• Section 2001, which sets out the
Medicaid eligibility changes and new
optional coverage effective in CY 2014.
• Section 2002, which references the
determination of financial eligibility for
Medicaid for certain populations.
• Section 2101, which implements
new eligibility standards for CHIP.
• Section 2201, which simplifies and
coordinates eligibility and enrollment
system between all insurance
affordability programs.
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• Section 2001(a)(3), which added a
new section 1905(y) of the Act, which
provides for a significant increase in the
FMAP for medical assistance
expenditures for individuals determined
eligible under the adult group in the
State and who are considered to be
‘‘newly eligible’’, as defined in section
1905(y)(2)(A) of the Act.
• Section 10201(c)(4), which added a
new section 1905(z) to the Act. As
discussed in section N of this rule,
Section 1905(z) of the Act contains two
provisions, which make available
additional FMAP rates for the expansion
States.
In this rule, ‘‘CHIP’’ refers to a
separate child health program operated
by a State under title XXI and the
regulations governing such programs at
42 CFR part 457.
C. Overview of the Proposed Rule
The proposed amendments to 42 CFR
parts 431, 435, and 457 in this rule
propose the Federal policies and
guidelines necessary to facilitate the
creation of the eligibility and enrollment
system established by the Affordable
Care Act. Amendments to 42 CFR part
435 subparts B and C are proposed to
implement the statutory changes to
Medicaid eligibility. We propose
amendments to subpart A to add new or
revised definitions.
Amendments to 42 CFR part 435
subpart G propose that, for most
individuals, financial eligibility for
Medicaid will be based on MAGI, to
define the new MAGI-based financial
methodologies, and to identify those
individuals whose eligibility will not be
based on MAGI.
Proposed amendments to subpart J
and the addition of a new subpart M
provide Federal rules to promote the
establishment by States of a seamless
and coordinated system to determine
eligibility of individuals seeking
assistance and to enroll them in the
appropriate insurance affordability
program. We propose a new subpart M
to delineate the responsibilities of the
State Medicaid agency in the
coordinated system of eligibility and
enrollment established under the
Affordable Care Act, and propose
comparable amendments for CHIP at 42
CFR part 457.
We propose to amend 42 CFR part 433
to add new provisions at § 433.10(c) to
indicate the increases to the FMAPs as
available to States under the Affordable
Care Act. A number of provisions in the
Affordable Care Act are not included in
this proposed rule, but either have been
or will be addressed in separate
rulemaking or other guidance. In the
April 19, 2011 Federal Register, we
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published the Federal Funding for
Medicaid Eligibility Determination and
Enrollment Activities final rule (76 FR
21950) that provides details on
enhanced Federal funding for Medicaid
eligibility systems.
We also intend to issue additional
proposed rules on related matters such
as appeals, notices, presumptive
eligibility, eligibility for former foster
care children, deletion of existing
regulations that have been rendered
obsolete, and eligibility policy in the
territories. In addition, we intend to
release a Request for Information (RFI)
related to State conversion of current
income standards to MAGI-equivalent
standards per section 2002 of the
Affordable Care Act as well as a RFI
related to the State flexibility to
establish basic health programs for lowincome individuals not eligible for
Medicaid under section 1331 of the
Affordable Care Act.
II. Provisions of the Proposed Rule
The following descriptions are
structured to explain the provisions
being proposed and do not necessarily
follow the order of the regulation’s text.
A. Changes to Medicaid Eligibility
1. Coverage for Individuals Age 19 or
Older and Under Age 65 at or Below 133
Percent FPL (§ 435.119)
Section 2001(a) of the Affordable Care
Act adds a new section
1902(a)(10)(A)(i)(VIII) of the Act
(referred to as ‘‘the adult group’’), under
which States will provide Medicaid
coverage starting in CY 2014 to
individuals under age 65 who are not
otherwise mandatorily eligible for
Medicaid under sections
1902(a)(10)(A)(i)(I) through (VII) or (IX)
of the Act and have household income,
based on the new MAGI methods
described in section II.B of this
proposed rule, at or below 133 percent
FPL. Although the Act specifies that this
new group is for individuals under age
65, individuals under age 19 are not
included because such individuals with
household income at or below 133
percent FPL are covered in the
eligibility groups under sections
1902(a)(10)(A)(i)(IV), (VI), and (VII) of
the Act.
We propose to replace the current
§ 435.119 (which addresses obsolete
provisions for eligibility of qualified
family members under section
1902(a)(10)(A)(i)(V) of the Act for which
the statutory authority ended on
September 30, 1998), to establish this
new eligibility group.
Proposed § 435.119(a) and (b) set forth
the policy, explained above. Reflected
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in proposed paragraph (b), financial
eligibility for the adult group will be
based on MAGI, as defined in section
1902(e)(14) of the Act and implemented
at proposed § 435.603; there is no
resource test.
Section 1902(a)(10)(A)(i)(VIII) of the
Act specifies that individuals may be
eligible for the adult group if they ‘‘are
not described in a previous subclause
of’’ section 1902(a)(10)(A)(i) of the Act.
Under these proposed rules, an
individual is not eligible under the new
adult group if the individual is
otherwise eligible under section
1902(a)(10)(A)(i) of the Act and 42 CFR
435 subpart B, but may be eligible for
the adult group if the individual is
described in but not eligible for
Medicaid under another mandatory
group. This will mean that an
individual who is a recipient of
Supplemental Security Income (SSI)
benefits, and so potentially eligible
under section 1902(a)(10)(A)(i)(II) of the
Act, may be eligible for coverage under
the adult group in a State that has
elected in accordance with section
1902(f) of the Act and § 435.121 to use
more restrictive eligibility criteria for
Medicaid than SSI.
The new adult group will include
parents as well as adults not living with
children. It will also include individuals
currently eligible under an optional
coverage group (such as, for individuals
with disabilities) who have household
income, based on the new MAGI
methods, at or below 133 percent of the
FPL and otherwise meet the criteria for
coverage under the new group. At
proposed § 435.119(c), we codify section
1902(k)(3) of the Act, which permits
coverage of parents and other caretaker
relatives under the new adult group
only if their children under age 19 (or
higher if the State has elected to cover
children under age 20 or 21 under
§ 435.222) are enrolled in Medicaid or
‘‘other health insurance coverage.’’ In
paragraph (c)(1), we propose to define
‘‘other health insurance coverage’’ to
mean minimum essential coverage, as
defined in § 435.4 of this proposed rule.
2. Individuals Above 133 Percent FPL
(§ 435.218)
Section 2001(e) of the Affordable Care
Act adds a new section
1902(a)(10)(A)(ii)(XX) of the Act, giving
States the option starting in CY 2014 to
provide Medicaid coverage to
individuals under age 65 (including
pregnant women and children) with
income above 133 percent FPL. This
new eligibility group provides a
simplified mechanism for States to
cover individuals whose income
exceeds the State’s income standard for
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mandatory coverage (for example, 133
percent FPL for the adult group). This
option is an alternative to the use of
income disregards under section
1902(r)(2) or 1931(b)(2)(C) of the Act,
which have been used in the past to
expand eligibility, but which will no
longer be available starting in 2014.
We propose to add a new § 435.218
establishing this optional eligibility
group, which covers individuals who
are under 65 years old; are not eligible
for and enrolled in an eligibility group
under section 1902(a)(10)(A)(i) of the
Act and 42 CFR 435 subpart B or under
section 1902(a)(10)(A)(ii) of the Act and
42 CFR part 435 subpart C; and have
household income based on MAGI that
exceeds 133 percent of the FPL but does
not exceed the optional income
standard established by the State. The
basis and basic eligibility criteria for
this group are set forth in proposed
§ 435.218(a) and (b)(1).
Section 1902(a)(10)(A)(ii)(XX) of the
Act specifies that individuals may be
eligible under this category if they ‘‘are
not described in or enrolled under a
previous subclause of’’ section
1902(a)(10)(A)(ii) of the Act. We
interpret the language ‘‘described in or
enrolled under’’ to mean eligible for
another optional or mandatory group
under section 1902(a)(10)(A) of the Act,
and we propose at § 435.218(b)(1)(ii)
and (iii) that this limitation applies only
if the individual is eligible for or
enrolled under another eligibility group
that is covered by the State.
To ease administrative burden on
States and to make it easier for States to
enroll eligible individuals under the
simplest eligibility category, we also
propose in § 435.218(b)(1)(ii) and (iii)
that an individual who meets the
eligibility criteria at § 435.218(b)(1)(i)
and (iv) would be determined eligible
under this group, unless the individual
can be determined eligible under
another eligibility group based on
information available to the State from
the application. A State is not required
to make determinations regarding
eligibility factors such as disability,
level of care, or resources first in order
to decide whether an individual would
be eligible for another eligibility group,
unless such determination can be made
based only on the information provided
on the application. However, as an
exception to this, if an individual
appears to be eligible as ‘‘medically
needy’’ based on information provided,
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he or she could still be enrolled in this
optional group. States would still have
to determine eligibility under all
possible categories if the individual is
not eligible under this new optional
group.
Section 1902(a)(10)(A)(ii)(XX) of the
Act provides that, to be eligible under
this optional group, an individual’s
income must ‘‘not exceed the highest
income eligibility level established
under the State plan or under a waiver
of the plan[.]’’ We are interpreting the
statute to give States flexibility in
establishing the income standard for
this group, provided such standard
exceeds 133 percent FPL and is
approved in the State plan.
Section 1902(hh)(1) of the Act
provides that States ‘‘may elect to
phase-in’’ coverage for this optional
group ‘‘based on the categorical group
(including non-pregnant childless
adults) or income, so long as the State
does not extend such eligibility to
individuals * * * with higher income
before making individuals * * * with
lower income eligible for medical
assistance.’’ We propose that if a State
wants to phase in coverage for this
group, it submit a plan for Secretarial
approval.
Children are included in this new
optional group for individuals above
133 percent FPL if they are not already
eligible for Medicaid. Therefore, if a
State covers children above 133 percent
FPL under a separate CHIP and adopts
coverage under this new optional group,
the State ultimately must shift coverage
of children with income at or below the
income standard from CHIP to Medicaid
under this group. The State would still
be able to claim enhanced FMAP under
title XXI for such children.
Section 1902(hh)(2) of the Act limits
eligibility of parents and other caretaker
relatives under the new optional group
to individuals whose children have
coverage in the same manner as
eligibility is limited for parents and
caretaker relatives under the new adult
group per section 1902(k)(3) of the Act.
At § 435.218(b)(2)(ii), we propose to
implement this provision in the same
manner as proposed for the new adult
group at § 435.119(c).
3. Amendments to Part 435, Subparts A
Through D
Determining Medicaid eligibility prior
to the Affordable Care Act changes in
CY 2014 is complicated due to a
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patchwork of multiple mandatory and
optional eligibility groups for different
‘‘categorical populations.’’ Many States
cover 50, 60, or more distinct eligibility
groups. Financial eligibility is
determined using methodologies based
on other programs, such as the SSI and
the former AFDC programs, adding
further complexity to the eligibility
determination process. In this rule,
consistent with the Affordable Care Act
policies, we propose to streamline and
simplify current regulations governing
Medicaid eligibility for children,
pregnant women, parents, and other
caretaker relatives whose financial
eligibility, beginning in CY 2014, will be
based on MAGI.
In response to the President’s request,
outlined in Executive Order 13563, that
agencies streamline and simplify
Federal regulations, we propose to use
the authority of section 1902(a)(19) of
the Act, which provides ‘‘that eligibility
* * * be determined * * * in a manner
consistent with simplicity of
administration and the best interests of
recipients,’’ to simplify and consolidate
certain existing mandatory and optional
eligibility groups into three categories
starting in CY 2014, to complement the
new adult group: (1) Parents and
caretaker relatives (new § 435.110); (2)
pregnant women (new § 435.116); and
(3) children (new § 435.118).
As illustrated in Table 1, we are
proposing to collapse existing Medicaid
eligibility categories, with the goal of
making the program significantly easier
for States to administer and for the
public to understand. In subsequent
rulemaking, we will provide additional
guidance on existing regulatory
provisions that are effectively subsumed
under the provisions contained in these
proposed rules or have been rendered
obsolete for other reasons. In proposing
a simplified approach to eligibility for
populations whose eligibility will be
based on MAGI, it is our intent that
eligibility for coverage will not change
for any of the populations as a result of
this proposal. We solicit comments on
the implications of these proposed rules
for individuals as well as States. Table
1 shows how the mandatory and
optional groups in current regulations
(the column on the left) are moved into
the new broader groups (parents,
pregnant women, and children) under
this proposed rule.
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TABLE 1
Medicaid Proposed Rule
Social Security Act and Pre-ACA Regulations
Parents/caretaker
relatives (§ 435.110)
Pregnant
women
(§ 435.116)
Children
< 19
(§ 435.118)
Mandatory Medicaid Eligibility Groups
Low-income families—1902(a)(10)(A)(i)(I) and 1931 AFDC recipients—§ 435.110 ........
Qualified Pregnant Women & Children < 19—1902(a)(10)(A)(i)(III)—§ 435.116 .............
Poverty-level related pregnant women & infants—1902(a)(10)(A)(i)(IV)—No rule ..........
X
..........................................
..........................................
X
X
X
X
X
X
Poverty-level related children 1–5—1902(a)(10)(A)(i)(VI)—No rule ................................
Poverty-level related children 6–18—1902(a)(10)(A)(i)(VII)—No rule .............................
..........................................
..........................................
....................
....................
X
X
Optional Medicaid Eligibility Groups
Families & children financially eligible for AFDC—1902(a)(10)(A)(ii)(I)—§ 435.210 .......
Families & children who would be eligible for AFDC if not institutionalized—
1902(a)(10)(A)(ii)(IV)—§ 435.211.
Poverty-level related pregnant women & infants—1902(a)(10)(A)(ii)(IX)—No rule .........
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a. Eligibility for Parents and Other
Caretaker Relatives, Pregnant Women,
and Children
(1) Parents and Other Caretaker
Relatives (§ 435.110)
We propose to delete in its entirety
§ 435.110 for individuals receiving
AFDC and to replace it with a new
§ 435.110 for existing eligibility that is
continuing under sections
1902(a)(10)(A)(i)(I) and 1931(b) and (d)
of the Act for parents and other
caretaker relatives of dependent
children (including pregnant women
who are parents or caretaker relatives).
These statutory provisions remain and
are not superseded by the provisions of
the Affordable Care Act establishing a
new adult group for individuals not
otherwise eligible under section
1902(a)(10)(A)(i) of the Act. While the
parent/caretaker relative category
continues to apply, our proposed rules
simplify this category considerably and
provides States flexibility to set their
income eligibility standard under this
category within allowable Federal
parameters.
Under the proposed rule, each State
will establish an income standard in its
State plan for coverage of parents and
other caretaker relatives under
§ 435.110. The Federal minimum and
maximum income standards for this
group are set forth in sections
1931(b)(2)(A) and 1931(b)(2)(B) of the
Act. The minimum income standard for
the new parent/caretaker relative group
is a State’s AFDC income standards for
a household of the applicable family
size in effect as of May 1, 1988. The
maximum income standard would be
established as set forth below. The
maximum income standard for the
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Keeps 435.210 for parents/caretaker relatives.
..........................................
X
X
X
X
..........................................
X
X
parent and other caretaker relative
eligibility group would be the higher of:
• The State’s effective income level
(including any disregard of a block of
income) for section 1931 families under
the State plan or waiver of such plan as
of March 23, 2010 or December 31,
2013, if higher, converted to a MAGIequivalent income standard in
accordance with guidance to be issued
by the Secretary under section
1902(e)(14)(A) and (E) of the Act (The
conversion of current income standards
to a MAGI-equivalent standard is
discussed in section II.B.3.a of this
proposed rule.); and
• The State’s AFDC income standard
in effect as of July 16, 1996, increased
by no more than the percentage increase
in the Consumer Price Index for all
urban consumers since such date.
If a State’s income standard for the
parent/caretaker relative group is below
133 percent FPL, parents and other
caretaker relatives with income above
that income standard and at or below
133 percent FPL would qualify for
Medicaid under the new adult group.
The conversion of current income
standards to a MAGI-equivalent
standard is discussed in section II.B.3.a
of this proposed rule.
States currently have the option to
cover parents and other caretaker
relatives at income levels above the
standard for families under section 1931
of that Act. They can do so under the
authority at section 1902(a)(10)(A)(ii)(I)
of the Act and § 435.210 of the existing
regulations. This option will continue
under the Affordable Care Act for
coverage of parents and other caretaker
relatives who are not eligible for
mandatory Medicaid coverage under
§ 435.110 or the new adult group at
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proposed § 435.119. We note that
parents and other caretaker relatives
who are Medicare-eligible or elderly
may be covered under § 435.110 and
§ 435.210, even though they are
excluded from coverage under the adult
group at § 435.119.
We are also proposing to simplify the
income methods for determining
eligibility under the new parent and
other caretaker relative group. PreAffordable Care Act, section 1931 of the
Act requires a two-step process in
determining income eligibility: (1) The
family must have gross income at or
below 185 percent of the State’s
consolidated standard of need under its
AFDC program, in effect as of July 16,
1996; and (2) the family’s net countable
income after subtracting various income
exclusions and disregards and expenses
must be at or below the State’s AFDC
payment standard or a higher income
standard established by the State under
section 1931 of the Act. Because each
State’s net countable income standard
converted to a MAGI-equivalent income
standard will be lower than its current
gross income standard, we propose to
eliminate the 185 percent gross income
test as unnecessary and, to simplify
eligibility, base income eligibility in
proposed § 435.110 only on the second
prong of the income test, that is, the net
countable income standard converted to
a MAGI-equivalent income standard.
Consistent with section 1931 of the
Act, we propose Medicaid definitions of
‘‘caretaker relative’’ and ‘‘dependent
child’’ at § 435.4. A caretaker relative is
defined as a parent or other relative
(related by blood, adoption, or marriage)
living with a dependent child for whom
such individual is assuming primary
responsibility. Per section 1931 of the
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Act, to be ‘‘dependent,’’ the child must
be ‘‘deprived’’ of at least one parent’s
support by reason of death, absence, or
unemployment. Under the statute, a
parent is considered to be unemployed
if he or she is working less than 100
hours per month. However, we propose
to codify in this rule the flexibility given
States in a final rule amending 45 CFR
233.101 (63 FR 42270) and in a State
Medicaid Director letter dated
September 22, 1997 to eliminate the
‘‘deprivation’’ requirement altogether
(which most States have done) or to
establish a higher number of working
hours as the threshold for determining
unemployment.
In proposing this rule, we are
retaining the minimum income
standards specified in Federal statute
for each eligibility group, while giving
States flexibility to set new standards at
a level that takes into account a State’s
current rules regarding how income is
counted. In all cases, the income
standard would be applied to an
individual’s MAGI-based household
income. We considered whether or not
States should convert the Federal
minimum income standards prescribed
in statute—for example, the minimum
standard for pregnant women and
children specified in section 1902(l) and
for parents and other caretaker relatives
in section 1931(b) of the Act—to a
MAGI-equivalent minimum income
standard based on the income
exclusions and disregards currently
used by the State. While doing so could
result in maintaining eligibility for
individuals who might otherwise lose
Medicaid due to the elimination of
income exclusions and disregards under
MAGI, if a State were to reduce its
income standard to the minimum
permitted, it also would result in
different minimum income eligibility
standards being applied across States
and reduce the amount of eligibility
simplification that could be achieved.
We, therefore, do not propose to require
conversion of the Federal minimum
income standards currently prescribed
in statute to MAGI-equivalent standards.
Furthermore, we do not believe that
the impact on eligibility of the proposed
policy will be significant. Eligibility
standards for children must be
maintained through September 2019, in
accordance with the maintenance of
effort provisions (MOE) in section
1902(gg) of the Act, and when the MOE
provision expires, eligibility for only a
small number of children would be
affected if a State were to drop coverage
to the minimum level permitted. Parents
and other caretaker relatives who could
lose eligibility under section 1931 of the
Act if a State were to reduce coverage
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to the minimum permitted under the
statute would retain eligibility under the
new adult group. Pregnant women
would be affected if a State were to
decrease its income standard to the
statutory minimum level, as the MOE
for pregnant women ends with the
establishment of an Exchange in 2014
and there is no other coverage group to
which affected pregnant women would
necessarily be transferred; instead,
pregnant women affected by a State’s
decision to reduce its Medicaid income
standard for pregnant women to the
minimum permitted under the Act
would likely become eligible for
advanced payments of the premium tax
credit for enrollment through the
Exchange.
(2) Pregnant Women (§ 435.116)
As is true for parents and caretaker
relatives, the law retains eligibility
based on pregnancy. To simplify the
eligibility rules, we propose to replace
the current § 435.116 for qualified
pregnant women and qualified children
under section 1902(a)(10)(A)(i)(III) of
the Act with a new § 435.116 for
pregnant women. In addition, under the
authority of section 1902(a)(19) of the
Act, we are consolidating many
different eligibility categories for
pregnant women and are proposing to
include in the revised § 435.116 all
mandatory and optional eligibility
groups, except the medically needy, for
which pregnancy status and income are
the only factors of eligibility. The
following sections of the Act are
included under the proposed § 435.116:
1931 (low-income families);
1902(a)(10)(A)(i)(III) (qualified pregnant
women); 1902(a)(10)(A)(i)(IV),
1902(a)(10)(A)(ii)(IX), and 1902(l)
(poverty-level related pregnant women);
1902(a)(10)(A)(ii)(I) (pregnant women
who meet AFDC financial eligibility
criteria); and 1902(a)(10)(A)(ii)(IV)
(institutionalized pregnant women).
Under the proposed rule, paragraphs
(a) through (c) set forth the basis and
basic provisions for coverage of
pregnant women under § 435.116. We
propose at § 435.116(c) that each State
will establish an income standard in its
State plan for coverage of pregnant
women. The minimum income standard
is 133 percent FPL, unless a higher
income standard, at or below 185
percent FPL, was in effect for pregnant
women on December 19, 1989 (section
1902(l)(2)(A) of the Act). The maximum
income standard is the higher of:
• The highest effective income level
(including any disregard of a block of
income), converted to a MAGIequivalent income standard, in effect
under the State plan or waiver of the
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State plan as of March 23, 2010 or
December 31, 2013, if higher, for
coverage of pregnant women under the
sections of the Act identified above; and
• 185 percent FPL.
We are also codifying current law to
add a definition of ‘‘pregnant woman’’
in § 435.4, incorporating the post
partum period.
While we propose to consolidate
various eligibility categories for
pregnant women, States continue to
have flexibility under the statute to
provide different benefits to certain
pregnant women or to provide all
pregnant women with full Medicaid
coverage, as many States do today.
Thus, under clause (V) in the matter
following section 1902(a)(10)(G) of the
Act, pregnant women eligible for
Medicaid under sections
1902(a)(10)(A)(i)(IV),
1902(a)(10)(A)(ii)(IX), and 1902(l) of the
Act are only covered for services related
to pregnancy or to a condition which
may complicate the pregnancy. In
accordance with section 1902(a)(10)(B)
of the Act, all other pregnant women
eligible for coverage under the sections
of the Act listed in § 435.116(a) are
eligible for all services that the State
covers under the State plan, regardless
of whether the service is related to
pregnancy or to a condition that may
complicate pregnancy.
However, States currently have the
flexibility to provide full Medicaid
coverage as pregnancy-related services
for all pregnant women. Thus, we
propose at § 435.116(d) that pregnant
women are covered for full Medicaid
coverage, unless a State elects to
provide only the pregnancy-related
services described at § 435.116(d)(3) for
pregnant women whose income exceeds
an income limit established by the State
for full coverage. States have flexibility
under existing regulations at
§ 440.210(a)(2) to establish a policy that
all services covered under the State plan
are related to pregnancy or to a
condition that may complicate
pregnancy. Therefore, States will not
have to establish an income limit for full
coverage for pregnant women under
§ 435.116(d)(4), but may elect to provide
full coverage for all pregnant women.
Reflected at proposed paragraph (d)(3),
States also may elect to cover certain
enhanced pregnancy-related services, as
specified in § 440.250(p), for pregnant
women only.
(3) Infants and Children Under age 19
(§ 435.118)
Section 2001(a)(4) of the Affordable
Care Act amends section 1902(l)(2)(C) of
the Act to provide Medicaid to children
ages 6 through 18 with household
income at or below at least 133 percent
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FPL. This amendment eliminates certain
of the age-based differences in Federal
Medicaid eligibility rules for children,
which currently provide for a minimum
income standard of 100 percent FPL for
coverage of children ages 6 through 18
(although many States have
implemented optional coverage at
higher levels), and means that all
children and adults under age 65 with
household income at or below 133
percent FPL will be eligible for
Medicaid. Section 205(b) of the
Medicare and Medicaid Extenders Act
of 2010 clarifies that this amendment is
effective January 1, 2014. If some or all
of these children are covered under a
separate CHIP before this provision
takes effect, these children will move to
coverage under Medicaid. Such a
change, however, will not affect States’
ability to claim enhanced FMAP under
title XXI for these children.
Currently, there are many different
mandatory and optional eligibility
categories for children. To simplify the
eligibility rules, we propose to include
under § 435.118 all mandatory and
optional eligibility groups for which age
under 19 and income are the only
factors of eligibility. The following
sections of the Act are included under
proposed § 435.118: 1931 (low-income
families); 1902(a)(10)(A)(i)(III) (qualified
children who meet AFDC financial
eligibility criteria); 1902(a)(10)(A)(i)(IV)
and 1902(a)(10)(A)(ii)(IX) (infants);
1902(a)(10)(A)(i)(VI) (children ages 1
through 5); 1902(a)(10)(A)(i)(VII)
(children ages 6 through 18); and
1902(a)(10)(A)(ii)(IV) (institutionalized
children).
Proposed § 435.118(a) through (c) set
forth the basis and eligibility criteria for
children, as explained above. We
propose in § 435.118(c) that each State
will establish income standard(s) in its
State plan for coverage of children by
age group. There is no resource test. The
minimum income standard for all age
groups is 133 percent FPL, unless, for
infants per section 1902(l)(2)(A) of the
Act, a higher income standard, at or
below 185 percent FPL, was in effect on
December 19, 1989. The maximum
income standard for each age group is
the higher of:
• The highest effective income level
for the age group (including any
disregard of a block of income)—
converted to a MAGI-equivalent
standard—in effect under the State plan
or waiver as of March 23, 2010 or
December 31, 2013; or
• For infants, 185 percent FPL.
A State may not otherwise increase its
income standard above the levels
specified because, effective January 1,
2014, States may no longer apply new
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income disregards in determining
eligibility for individuals whose
eligibility is based on MAGI. Coverage
at higher income levels can be
implemented through adoption of the
new optional group at proposed
§ 435.218.
The maintenance of effort (MOE)
provisions of the Affordable Care Act at
section 2001(b) maintain the minimum
income standards for children at the
levels in effect on March 23, 2010; these
standards are maintained for children
until September 30, 2019. These
proposed regulations do not address the
MOE provisions specified in sections
1902(a)(74) and 1902(gg) of the Act, as
added by section 2001(b) of the
Affordable Care Act. As a condition of
receiving Federal financial
participation, States must comply with
these provisions, which are being
addressed through subregulatory
guidance.
Other Conforming Changes to Existing
Regulations
Revisions are proposed at § 435.4 to
the definition of ‘‘families and children’’
to delete references to AFDC rules.
Definitions are proposed for ‘‘agency,’’
‘‘caretaker relative,’’ ‘‘dependent child,’’
and ‘‘pregnant woman.’’ Definitions
related to implementation of the
Affordable Care Act are proposed for
‘‘advance payments of the premium tax
credit,’’ ‘‘Affordable Insurance Exchange
(Exchange),’’ ‘‘effective income level,’’
‘‘electronic account,’’ ‘‘household
income,’’ ‘‘insurance affordability
program,’’ ‘‘MAGI-based income,’’
‘‘minimum essential coverage,’’
‘‘modified adjusted gross income
(MAGI),’’ ‘‘secure electronic interface,’’
and ‘‘tax dependent’’.
B. Financial Methodologies for
Determining Medicaid Eligibility Based
on MAGI Under the Affordable Care Act
Section 2002 of the Affordable Care
Act, as amended by section 1004 of the
HCERA, creates a new section
1902(e)(14) of the Act, which provides
that effective January 1, 2014, financial
eligibility for most individuals shall be
based on MAGI and ‘‘household
income,’’ as defined in section 36B(d)(2)
of the IRC (hereinafter referred to as
‘‘section 36B definitions’’). In this
preamble, ‘‘MAGI-based methodologies’’
refers both to the rules governing the
determination of the MAGI of an
individual or a married couple filing a
joint tax return, as well as to the
determination of total household
income. Similarly, reference to the
determination of income eligibility
‘‘based on MAGI’’ refers to
determinations based on household
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51155
income using MAGI-based
methodologies.
The adoption of MAGI-based
methodologies to determine income
represents a significant simplification
for the Medicaid program, eligibility for
which has historically been linked to
programs providing cash assistance to
low-income populations. We are
considering permitting States to convert
to MAGI-based methodologies prior to
2014 through section 1115
demonstrations.
Proposed § 435.603 sets forth
proposed methodologies to implement
MAGI in determining Medicaid
eligibility for affected individuals
effective January 1, 2014. Our proposed
methodologies codify the section 36B
definitions of MAGI and household
income, except in a very limited number
of cases discussed below. At proposed
§ 435.603(i), we identify those
populations excepted under the
Affordable Care Act from application of
MAGI-based methodologies; for these
populations pre-Affordable Care Act
Medicaid financial methodologies—
generally set forth in existing
regulations at § 435.601 and § 435.602—
will continue to apply.
1. Point-in-Time Measurement of
Income (Budget Periods) (§ 435.603(h))
Under pre-Affordable Care Act
Medicaid rules, per section
402(a)(13)(A) of former title IV–A of the
Act, income eligibility for Medicaid is
based on current income actually
available to the individual in any given
month. MAGI, as defined in section 36B
of the IRC, is determined on the basis of
annual income. The Affordable Care Act
addresses this issue by adding section
1902(e)(14)(H)(i) of the Act to provide
that the use of MAGI in determining
eligibility for Medicaid shall not be
‘‘construed as affecting or limiting the
application of the requirement under
this title to determine an individual’s
income as of the point in time at which
an application for medical assistance is
processed.’’ Moreover, section
1902(a)(17) of the Act provides that
States use eligibility standards and
methodologies that are ‘‘reasonable,’’
‘‘consistent with the objectives of [the
Act],’’ and take into account only such
income as is ‘‘determined in accordance
with standards prescribed by the
Secretary, available to the applicant or
recipient[.]’’
In this proposed rule, we refer to the
‘‘point in time’’ rules referenced in the
statute as the ‘‘budget period’’ (that is,
monthly versus annual income) based
upon which income eligibility is
determined. At proposed
§ 435.603(h)(3), we are retaining the
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current flexibility afforded States to take
into account future changes in income
that can be reasonably anticipated (as
may be the case with certain seasonal
workers or someone with a signed
employment contract or layoff notice).
Such anticipated changes would be
determined in accordance with the
verification regulations at § 435.940 et
seq. Uncertain changes in future income
(for example, someone who is looking
for, but has not secured, a job) may not
be considered under the option reflected
at proposed § 435.603(h)(3). Actual
changes in income—including
deviations from reasonably anticipated
fluctuations in income—must still be
reported to, and acted upon by, the
agency in accordance with § 435.916(c)
and (d).
To promote flexibility, administrative
simplification and continuity of
coverage for beneficiaries already
enrolled in Medicaid, we propose at
§ 435.603(h)(2) to give States the
additional flexibility, for individuals
eligible for Medicaid based on MAGI, to
maintain eligibility as long as annual
income based on MAGI methods for the
calendar year remains at or below the
Medicaid income standard. This gives
States the option to align with the
annual eligibility period applied in the
Exchanges and to minimize the extent to
which individuals experiencing
relatively small fluctuations in income
bounce back and forth between
programs.
We believe that these flexibilities will
help address some of the challenges that
will arise due to the reliance on
monthly income for purposes of
eligibility for Medicaid versus annual
income for purposes of eligibility for
advance payments of premium tax
credits. In particular, if a State does not
opt to take into account a reasonably
predictable drop in future income,
someone with current monthly income
above the Medicaid income standard,
but projected annual income below 100
percent FPL could be determined both
ineligible for Medicaid (until their
monthly income actually dropped) and
for advance payments of the premium
tax credit for enrollment through the
Exchange (because, with very limited
exceptions, individuals with income
below 100 percent FPL are not eligible
for advance payments of the premium
tax credit). We solicit comments on how
best to prevent a gap in coverage,
including whether to ensure that State
Medicaid agencies take into account a
predictable future drop in income.
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2. Changes to Medicaid Financial
Methods
Under pre-Affordable Care Act
Medicaid rules for families and
children, essentially all money received,
from whatever source, is counted as
income in the month in which it is
received, unless explicitly excluded or
disregarded under the Act, disregarded
at State option, or excluded under other
Federal statutes. A ‘‘household’’ (for
purposes of determining family size and
whose income is counted) generally
consists of parents and the children
with whom they are living. Other nonlegally responsible relatives and
unrelated individuals living together are
not included, nor are spouses or parents
living apart from the rest of the family,
which means that the income of such
individuals is not deemed available to
the Medicaid applicant. Under preAffordable Care Act Medicaid rules,
inclusion of stepparents in a stepchild’s
household depends on State law
relating to obligations to support
stepchildren. A stepparent’s income is
considered available to his or her
spouse since spouses are legally
responsible for each other.
Section 36B of the IRC, and § 1.36B–
1 of the IRS proposed premium tax
credit rule, define ‘‘MAGI, ’’ ‘‘household
income,’’ and ‘‘family size.’’ See also
section 152 of the IRC and Internal
Revenue Service (IRS) Publication 501
regarding rules for claiming ‘‘qualifying
children’’ and ‘‘qualifying relatives’’ as
tax dependents. To be eligible to receive
advance payments of a premium tax
credit for the purchase of coverage
through an Exchange, married couples
generally must file jointly.
As discussed in section II.I of this
proposed rule, sections 1413 and 2201
of the Affordable Care Act direct the
creation of a seamless, simplified
system of coordinated eligibility and
enrollment between insurance
affordability programs, and in most
instances, section 36B definitions of
‘‘MAGI’’ and ‘‘household income’’ are
applied to Medicaid to promote
seamless coordination. In some
situations, the application of these new
rules will have the impact of
constraining Medicaid eligibility, but
consistent with the statute, we have
applied the 36B rules because of the
impact on coordination. In a few limited
situations in which the potential
adverse impact of adopting the section
36B definitions could be significant
(albeit for a relatively small group of
individuals), and the impact on
coordination minimal, we propose,
consistent with the statute, retention of
current Medicaid rules.
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3. Provisions of Proposed Rule
Implementing MAGI Methods
Proposed § 435.603(a)(1) and (2) set
forth the basis and scope of this section.
At proposed § 435.603(a)(3), we
implement section 1902(e)(14)(D)(v) of
the Act, as added by section 2002(a) of
the Affordable Care Act, which specifies
that, in determining ongoing eligibility
of individuals enrolled in the Medicaid
program as of January 1, 2014, the
financial methodologies based on MAGI
shall not be applied until the next
regularly-scheduled redetermination of
eligibility after December 31, 2013 or
March 31, 2014, whichever is later, if
such individual otherwise would lose
eligibility as a result of the shift to
MAGI-based methodologies before such
date.
Consistent with the 36B definition,
we propose in § 435.603(b) to define
‘‘family size’’ as equal to the number of
persons in the individual’s household
(as defined in paragraph (f) of this
section and discussed below); ‘‘tax
dependent’’ is defined in proposed
revisions to § 435.4, and cross
referenced at proposed § 435.603(b), as
an individual for whom another
individual properly claims a deduction
for a personal exemption under section
151 of the IRC for a taxable year.
Proposed § 435.603(c) sets forth the
basic rule that, except for eligibility
determinations exempt from MAGI
methodologies, financial eligibility for
Medicaid must be based on household
income as defined in § 435.603(d).
Consistent with the section 36B
definition of household income,
proposed § 435.603(d)(1) provides that,
for purposes of determining Medicaid
eligibility under § 435.603, ‘‘household
income’’ is the sum of the income based
on MAGI-based methods of every
individual who is: (1) included in the
individual’s household; and (2) required
to file a tax return under section 6012
of the IRC, except that, also consistent
with section 36B definitions, the MAGIbased income of a child who files a tax
return, but is not required to file, is not
included in household income under
proposed § 435.603(d)(2). The MAGIbased income of adults as well as
children who are not included in the
household of their parent(s) is always
counted in determining the household
income of the adult or such child as
well as the household income of their
spouse and children with whom they
are living (if any).
a. Proposed Methods for Counting
Income Based on MAGI (§ 435.603(e))
In general, we propose income
counting rules at § 435.603(e) that are
the same as the section 36B definitions
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to ensure streamlined eligibility rules
and avoid coverage gaps. There are
some differences in the treatment of
several types of income under the IRC
as compared to pre-Affordable Care Act
Medicaid rules, in which the changes
occasioned by the adoption of the
section 36B definitions would have
varying effects on the Medicaid
eligibility of potential beneficiaries.
Given the general directive to apply the
section 36B definitions and the value of
alignment, these proposed rules
generally codify the section 36B rules
and definitions. This is the case with
respect to the treatment of child support
payments, depreciation of business
expenses, and capital gains and losses.
Under this regulation as proposed, we
also are applying the section 36B rules
and definitions of Social Security
benefits under title II of the Act. Such
benefits count as income for the purpose
of determining eligibility for Medicaid
under pre-Affordable Care Act treatment
of income, but certain amounts of Social
Security benefits are not counted as
income under the 36B definition of
MAGI. The section 36B treatment of
Social Security benefits may increase
State Medicaid costs, as some
individuals who receive Social Security
benefits would gain Medicaid eligibility
using the 36B definitions. The
Administration is concerned about this
unintended consequence and is
exploring options to address it,
including a modification of the section
36B treatment of Social Security
benefits through regulation. We seek
comment on this issue, including how
any modification of the proposed
regulation may affect eligibility for
premium tax credits for enrollment in a
qualified health plan through the
Exchange and how any potential gaps in
coverage that may be created by such
modification could be minimized.
There are three types of income for
which we propose to codify current
Medicaid rules. We solicit comments on
these proposed policies.
The first is lump sum payments,
which consist of non-recurring income
received on a one-time-only basis (for
example, insurance settlements, back
pay, State tax refunds, inheritance, and
retroactive benefit payments). Under
section 36B definitions, taxable ‘‘lump
sum’’ payments are included in
computing MAGI in the year the lump
sum is received. Currently in Medicaid,
most States count lump sum payments
as income in the month received and,
for any amounts retained, as a resource
in months following. Because of the
statutory directive to consider point-intime (that is, current monthly) rather
than annual income for determination of
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Medicaid eligibility, and the challenges
in amortizing a lump sum payment over
time to pay for coverage, we propose in
§ 435.603(e)(1) to count lump sum
payments of taxable income as income
only in the month received.
Second, certain types of educational
scholarships and grants (for example,
work-study arrangements and other
situations in which the individual has
to provide a service) are generally
counted as taxable income under the
IRC, but not counted as income under
current Medicaid rules. To avoid lowincome students having to forgo either
Medicaid or this education-related aid,
we propose in § 435.603(e)(2) to retain
the Medicaid rules for this type of
income.
Third, American Indian and Alaska
Native (AI/AN) income is the subject of
special treatment and protections in
multiple provisions of titles XIX and
XXI of the Act. Most recently, the
Recovery Act added section 1902(ff) to
the Act (applied also to CHIP through
the addition of section 2107(e)(1)(c) of
the Act) to broaden exemptions related
to certain AI/AN financial interests to
ensure that low-income AI/AN
individuals have access to Medicaid.
There are certain instances where the
IRC and the section 36B definition of
MAGI are identical to or more liberal
than current Medicaid rules with regard
to income exclusions for AI/AN
populations, and therefore, are adopted
in the proposed rule. However, there are
several instances in which the IRC treats
as taxable income distributions from AI/
AN trust properties, which are excluded
from income for purposes of Medicaid
and CHIP eligibility under the Recovery
Act and other current law. In these
instances, we propose at § 435.603(e) to
codify current Medicaid treatment of
AI/AN income, including distributions
from Alaska Native corporations and
settlement trusts; distributions from any
property held in trust, or otherwise
under the supervision of the Secretary
of the Interior; distributions resulting
from certain real property ownership
interests; payments from other
ownership interests or usage rights that
support subsistence or a traditional
lifestyle; and student financial
assistance provided under the Bureau of
Indian Affairs education programs.
In addition, section 1902(B)(e)(14)(B)
of the Act, codified at § 435.603(g),
prohibits the continued use of any asset
test or income or expense disregards for
individuals whose financial eligibility is
based on MAGI (other than a disregard
of 5 percent of the FPL to be applied to
every such individual under section
1902(e)(14)(I) of the Act.) In order to
account for the general elimination of
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51157
income disregards and to ensure
continued coverage at pre-Affordable
Care Act levels, per section
1902(e)(14)(A) and (E), States will
convert current income standards for
eligibility groups under which financial
eligibility will be based on MAGI to a
‘‘MAGI-equivalent’’ income standard.
Separate guidance will be issued
regarding the methodologies States may
employ to determine such MAGIequivalent income standards.
Application of the statutory across-theboard 5 percent disregard is reflected in
proposed § 435.603(d)(1).
Detailed guidance on the treatment of
all types of income under the new
MAGI-based methodologies will be
provided in subregulatory guidance.
b. Proposed Rules for Determining
Household Composition Under MAGI–
Based Methods (§ 435.603(f))
(1) Household Composition for Tax
Filers (§ 435.603(f)(1)) and Their Tax
Dependents (§ 435.603(f)(2))
Our proposed rules for household
composition are divided into two
categories: those for individuals filing
taxes (§ 435.603(f)(1)) and their tax
dependents (§ 435.603(f)(2)); and those
for individuals who neither file a tax
return nor are claimed as a tax
dependent on someone else’s tax return,
whom we refer to as ‘‘non-filers’’
(§ 435.603(f)(3)).
After analyzing the differences
between the section 36B definitions and
current Medicaid rules, we believe that
for most families, the section 36B
definitions and current Medicaid rules
yield the same household. However,
there are a relatively small number of
situations in which application of the
section 36B definitions yields a different
household than current Medicaid rules,
including the following:
(1) Families in which the parents
claim as tax dependents children age 21
or older.
(2) Families in which the parents
claim as tax dependents children living
outside of the home.
(3) Families with stepchildren/
stepparents (in States without a law
requiring stepparents to support their
stepchildren.
(4) Families in which one or more
children are required to file a tax return.
(5) Families in which one member is
supporting and claiming as a tax
dependent extended family members or
unrelated individuals, including
children other than their own biological
or adopted children.
(6) Children claimed as a tax
dependent by a non-custodial parent.
(7) Pregnant women.
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(8) Married couples who do not file
jointly.
In the first four types of households
identified, consistent with the general
statutory directive to apply the section
36B definitions to Medicaid, we are
proposing at § 435.603(f)(1) to adopt the
household composition rules embodied
in the section 36B definitions. Doing so
will result in some loss of Medicaid
eligibility compared to pre-2014
Medicaid rules. However, maintaining
different rules for the insurance
affordability programs for these
household types would undermine
simplicity and coordination, which
benefits consumers and States alike, and
add to States’ and potentially families’
administrative burden.
For the fifth type of household
identified (for example, a grandparent
caring for a grandchild claimed as a tax
dependent), the income of the claimed
tax dependent is likely to be quite low,
making them likely eligible for
Medicaid based on their income alone.
However, in such situations adoption of
the section 36B definitions for
household composition for determining
the Medicaid eligibility of the tax
dependent could significantly affect
both the taxpayer and the relative or
unrelated individual whom the taxpayer
has no legal responsibility to support,
putting such taxpayers in the position
either of: (1) Forgoing a tax advantage
(including, in some cases, an Earned
Income Tax Credit) so as to enable the
tax dependent to apply for Medicaid on
his own; or (2) assuming financial
responsibility for purchasing health care
for such individual—a responsibility
which they do not have under current
law. Accordingly, we propose at
§ 435.603(f)(2)(i) to codify current
Medicaid rules in determining the
eligibility of qualifying relatives claimed
as tax dependents by another taxpayer.
MAGI-based definitions would be used
in determining household composition
for purposes of the taxpayer’s eligibility,
per proposed § 435.603(f)(1). It is also
important to note that, reflected in
proposed § 435.603(d)(3) and consistent
with current Medicaid rules, actually
available cash support provided by the
non-legally responsible relative is
counted as income to the claimed tax
dependent. The purpose of retaining the
Medicaid household rules as a backstop
in these situations is to prevent the
attribution of income from non-legally
responsible relatives when that income
is not in fact available to the tax
dependent. We do not believe that this
proposal would disrupt coordination or
create a gap in coverage.
Regarding households in which a
child is claimed as a tax dependent by
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a non-custodial parent, we are
proposing at § 435.603(f)(2)(iii) to apply
rules based on pre-Affordable Care Act
Medicaid principles of parents’ legal
responsibility for the children with
whom they are living. By applying the
rules for non-filers in this situation, as
proposed in these rules, these children
would be treated as members of the
custodial parent’s household for
Medicaid eligibility purposes, and the
income of the custodial parent (and
other members of the custodial parent’s
household required to file a tax return)
would be counted in determining the
child’s Medicaid eligibility.
Alternatively, the child could enroll in
coverage through the Exchange in the
child’s State of residence as a member
of the non-custodial parent’s household.
(See discussion in section II.A.4 (b) of
the preamble for the accompanying
Exchange proposed rule.) We
specifically solicit comments on the
proposed handling of the household
composition for these children.
Under pre-2014 Medicaid rules, a
pregnant woman is considered as a
household of two for purposes of
determining eligibility. States have the
option to count a pregnant woman as
two in determining the family size of
other members of a pregnant woman’s
household (for example, her spouse or
other children). Under the section 36B
definition of family size, pregnant
women count as one person for
purposes of eligibility for advance
payments of the premium tax credit, but
if the child is born by the end of the
calendar year, the annual premium tax
credit would be for two persons.
Counting the pregnant woman as a
household that will be comprised of two
for Medicaid eligibility purposes
essentially anticipates the change in
household size that will occur after the
birth. Applying the 36B definitions
would result in some women being
enrolled, with advance payments of the
premium tax credit, in a qualified health
plan through the Exchange who, after
giving birth, will be eligible for
Medicaid. Therefore, the proposed
definition of family size in § 435.603(b)
retains current Medicaid rules for
pregnant women to promote continuity
of coverage for the family and to ease
State administrative burden.
Married couples who file separately
are not eligible for premium tax credits.
However, there is no similar provision
in title XIX of the Act with respect to
Medicaid eligibility. Therefore, in such
situations, we propose at § 435.603(f)(4)
to codify current Medicaid rules to
include each spouse in the household of
the other and to count the MAGI-based
income of each spouse required to file
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a tax return in determining the other’s
household income, regardless of
whether the couple files a joint tax
return. We recognize that at times two
legally married individuals may live
apart. Therefore, consistent with current
Medicaid rules, the proposed rule also
limits the inclusion of spouses in each
other’s household to those who are
living together.
In some cases, a child may be living
with both parents, but the parents do
not file, or are not married and therefore
cannot file, a joint tax return. Consistent
with current Medicaid principles of
legal responsibility, we propose at
§ 435.603(f)(2)(ii) to apply the proposed
rules for non-filers in the case of
children living with such parents, so
that both parents, if living with the
child, will be included in the child’s
household and their income counted in
determining the child’s eligibility.
(2) Household Composition for NonFilers (§ 435.603(f)(3))
The IRC contains provisions regarding
filing thresholds—ranging from $9,350
in 2010 (86 percent FPL) for a single
individual to $19,800 for a married
couple filing jointly with one spouse 65
or older (137 percent FPL)—below
which individuals are not required to
file. Individuals below these thresholds
may file a tax return, but for non-filers,
section 36B of the IRC does not
specifically address household
composition.
To be eligible for a premium tax
credit, spouses must file jointly and
(except in cases of divorce or separation
in which the non-custodial parent is
permitted to claim a child) parents who
file can claim their children under 19
who are living with them (or under age
24 if a full time student) as a qualifying
child. See IRS Publication 501. The
current Medicaid principle that parents
are legally responsible for their children
and that spouses are legally responsible
for each other is consistent with section
36B of the IRC. In the case of Medicaid,
parents are assumed to be financially
responsible for their children up to age
21; this does not vary with the child’s
student status.
Under either section 36B of the IRC or
pre-Affordable Care Act Medicaid rules,
spouses living together are considered
to be part of the same household for
eligibility purposes, and proposed
paragraph § 435.603(f)(3) similarly
specifies that spouses living together be
included in the same household. We
considered several alternatives
regarding when children who are living
with their parent(s), but are not claimed
as a tax dependent on such parent’s tax
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return, should be included in the
parent’s household.
Applying pre-Affordable Care Act
Medicaid rules making parents
financially responsible for children who
are under age 21 could result in a gap
in coverage for children aged 19 and 20
who are not in school and are not
claimed as dependents on their parents’
tax return, but whose parents do file a
tax return and have household income
above the Medicaid income standard for
19 and 20 year-olds. (Coverage for 19
and 20-year olds, in most States, will be
under the new group for adults with
household income at or below 133
percent FPL). On the other hand,
adopting the IRC rule allowing parents
to claim as a qualifying child their
children only until age 19, unless a fulltime student, could result in an increase
in Medicaid eligibility for 19 and 20year olds who are not full-time students
and are living with their parents, as
compared to pre-Affordable Care Act
Medicaid rules. Adopting the IRC rule
with respect to adult children ages 21–
23 who are full-time students could
result in a decrease in Medicaid
eligibility and an imposition of legal
responsibility for certain adult children
not consistent with current law.
In balancing these considerations, we
propose at § 435.603(f)(3), to treat
spouses/parents (including stepparents)
and all children (including stepchildren
and stepsiblings) under age 19 or, if a
full-time student, under age 21, who are
living together, as members of the same
household. This proposed policy will
avoid the gap in coverage for 19 and 20
year olds, discussed above, while
limiting any unnecessary increase in
Medicaid eligibility. Children who are
not living with their parents, or who are
over the specified age limit, would not
be included in their parents’ household,
and as with tax filing households,
individuals other than a spouse,
biological, adopted, or step-parent, child
or sibling would not be included in the
same Medicaid household under this
proposed rule. We specifically solicit
comments on the proposed rule for
household composition of non-filers at
§ 435.603(f)(3).
(3) Retention of Existing Financial
Methods (§ 435.603(i))
Section 1902(e)(14)(D) of the Act
provides that the financial
methodologies based on MAGI will not
apply in certain situations. In those
cases, eligibility will be determined
using the rules in effect prior to the
Affordable Care Act, codified in existing
regulations at § 435.601 and § 435.602.
Proposed § 435.603(i) sets out six
exceptions:
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• Individuals eligible for Medicaid on
a basis that does not require a
determination of income by the
Medicaid agency. This exception from
use of MAGI-based methods includes,
but is not limited to, individuals
receiving or deemed to be receiving SSI,
individuals receiving assistance under
title IV–E of the Act, and individuals for
whom the agency is relying on a finding
of income made by an Express Lane
Agency under section 1902(e)(13) of the
Act.
• Individuals who qualify for medical
assistance on the basis of being blind or
disabled. This exception applies only to
those individuals for whom the
determination of eligibility is made on
the basis of being blind or disabled.
Individuals who are blind or who have
disabilities can also be covered under
the new mandatory eligibility group for
adults (codified at proposed § 435.119)
with MAGI-based household income at
or below 133 percent of FPL. To the
extent that their income exceeds that
level, current financial methodologies
will be used to determine their
eligibility for coverage on the basis of
being blind or disabled under an
optional eligibility group for blind or
disabled individuals.
In proposed § 435.603(i)(3), we
identify the most common of the
eligibility groups for blind and disabled
individuals excepted from MAGI
methods under the Act. We are not
listing coverage provided to individuals
receiving SSI in so-called ‘‘criteria
States’’ because they are encompassed
under proposed § 435.603(i)(1)(iii)(A).
(These individuals are receiving SSI but
the State does not have an agreement
under section 1634 of the Act under
which the Social Security
Administration makes a determination
of Medicaid eligibility for the State.) We
also are not specifically identifying
children under age 18 who were
receiving SSI as of the date of enactment
of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996
(PRWORA) (August 22, 1996), who
would continue to receive SSI but for
the enactment of section 211 of that Act
and who are eligible for Medicaid in
accordance with section
1902(a)(10)(A)(i)(II) of the Act. While
financial eligibility for continued
coverage of these children will be
excepted from MAGI, most, if not all, of
the affected children will have reached
age 18 as of January 1, 2014, the
effective date for the transition to MAGIbased methods. We seek comment as to
whether there might be children still
eligible under this mandatory coverage
group as of 2014, and therefore, whether
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51159
they should be identified in these
regulations.
• Individuals age 65 or older are
categorically excepted from MAGI
methods under section
1902(e)(14)(D)(i)(II) of the Act. We
recognize that the exception of all
elderly individuals from MAGI
methodologies for all eligibility groups
could result in States having to retain
application of AFDC financial
methodologies in a small number of
cases in which an elderly individual is
being evaluated for coverage on the
basis of being a parent or caretaker
relative, for which age is not a factor.
We solicit comments on possible
approaches we might adopt to avoid this
result—for example, interpreting the
exception to apply only in the case of
elderly individuals when age is a
condition of eligibility or of applying
SSI methodologies (which will continue
to be used for most MAGI-excepted
groups) in determining the eligibility of
elderly individuals for coverage as a
caretaker relative.
• Individuals whose eligibility is
being determined on the basis of the
need for long-term care services,
including nursing facility services or a
level of care equivalent to such services.
Similar to the exceptions from MAGI for
determinations based on being blind or
disabled, we propose to apply this
exception in the case of individuals
whose eligibility is based on the need
for or receipt of such services.
Individuals otherwise eligible for
Medicaid under an eligibility group to
which MAGI-based methods apply (for
example, children eligible under
proposed § 435.118) will not be
excepted from application of MAGIbased methods in determining ongoing
eligibility under such group simply
because they may need long-term care
services.
• Individuals eligible for assistance
with Medicare cost sharing under
section 1902(a)(10)(E) of the Act. We
propose to interpret this exception to
apply only to the determination of
eligibility for Medicare cost sharing
assistance.
• Medically needy individuals
eligible under section 1902(a)(10)(C) of
the Act. This exception also applies
only to the determination of eligibility
for medically-needy coverage.
Individuals who meet the eligibility
criteria for coverage under another
eligibility group—for example, the new
adult group—are not excepted from
application of MAGI-based methods for
purposes of determining their eligibility
for such other groups simply because
they would qualify for coverage as a
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medically needy individual if not
eligibility under such other group.
Section 1902(e)(14)(D)(iii) of the Act
provides that MAGI-based methods
shall not be used in determining
eligibility for Medicare Part D premium
and cost sharing subsidies under section
1860D–14 of the Act. Because such
subsidies are not a form of Medicaid
and determinations for Part D cost
sharing subsidies are not performed
under the authority of the Medicaid
statute, we are not proposing to include
regulations regarding this exception in
these rules.
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C. Residency for Medicaid Eligibility
Defined
We propose to simplify Medicaid’s
residency rules to promote achievement
of the coordinated eligibility and
enrollment system established under
sections 1413 and 2201 of the
Affordable Care Act and discussed in
section II.I of this proposed rule. We
propose to redesignate and revise
paragraphs § 435.403(h) and § 435.403(i)
to § 435.403(i) (rules for individuals
under age 21) and (h) (rules for
individuals age 21 and older), which set
parameters for States to determine who
is a State resident. These revisions are
not significantly different than the
current rules. We do not propose
changes to our current regulations
regarding individuals living in
institutions, receiving Federal foster
care or adoption assistance under title
IV–E of the Act, or adults who do not
have the capacity to state intent. Note
that policies regarding verification of
residency are proposed at § 435.956(c)
and discussed in section II.H.5 of this
proposed rule.
1. Residency Definition for Adults (Age
21 and Over) (§ 435.403(h))
We propose to strike the term
‘‘permanently and for an indefinite
period’’ from the definition for adults in
redesignated § 435.403(h)(1) and (h)(4),
and replace the term ‘‘remain’’ with
‘‘reside.’’ An adult’s residency will be
determined based upon where the
individual is living and has intent to
reside, including without a fixed
address, or the State which the
individual entered with a job
commitment or seeking employment
(whether or not currently employed).
While proposing to remove the phrase
‘‘permanently or for an indefinite
period’’ and use the term ‘‘reside,’’ we
are maintaining existing policy that an
individual must intend to remain living
in the State in which he or she is
seeking coverage. Persons visiting a
State for personal pleasure or purposes
of obtaining medical care are not
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residents of the State visited. By
removing the term ‘‘living’’ in the State
or replacing the term ‘‘remain’’ with
‘‘reside,’’ we do not intend to have any
policy impact on State policy. Indeed,
we note that section 1902(b)(2) of the
Act refers to individuals who ‘‘reside in
the State’’. We are removing the word
‘‘living’’ from the definition in order to
simplify the language. An individual
must still maintain present intent to
reside in the State being claimed as the
State of residence; a State would not be
required to recognize an intent to reside
at some future point in time. We have
retained the term ‘‘living’’ for
individuals who do not have the
capacity to state intent, as we are not
modifying the regulations for that
population.
Our proposal to remove language
regarding permanency and ‘‘an
indefinite period’’ will help to facilitate
coordination of eligibility
determinations across and between
programs and is also consistent with
long-standing statutory requirements.
Under section 1902(b)(2) of the Act,
States may not exclude from coverage
an individual who resides in the State
‘‘regardless of whether or not the
residence is maintained permanently or
at a fixed address[.]’’
2. Residency Definition for Children
(Under Age 21) (§ 435.403(i))
For individuals who are emancipated
or married, we propose language to
align the residency rules with the
proposed definition for adults.
Accordingly, at redesignated
§ 435.403(i)(1), we propose to strike the
term ‘‘permanently and for an indefinite
period’’ and to replace the word
‘‘remain’’ with ‘‘reside.’’
We propose in § 435.403(i)(2) to
combine and consolidate two different
definitions of residency currently set
forth in paragraphs (h)(2) and (h)(3) for
unemancipated individuals under age
21: (1) those whose Medicaid eligibility
is based on a disability and (2) those
who are not disabled and not living in
an institution or receiving foster care or
adoption assistance under IV–E of the
Act. We eliminate the cross-reference to
the AFDC rules at 45 CFR 233.40 and for
both groups of children we propose to
apply a similar definition as that
proposed for most adults, but without
the ‘‘intent’’ component, as individuals
under age 21 may not legally be able to
express intent. Under the proposed rule,
States may not determine residency of a
child based solely on the residency of
the parent.
Our proposal will simplify State
administration and make the rules
clearer to the public. Our proposal to
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allow children to establish residency to
the same extent as adults when a parent
or caretaker is seeking or has confirmed
employment is intended to ensure a
consistent approach for migrant,
seasonal workers and other families
living in a State while employed or in
search of employment. The proposed
definition also allows flexibility for
families in which children attend school
in a State other than where the parents
live; such children may be considered
residents of the parents’ ‘‘home State,’’
if the parent expresses the requisite
intent. However, we do not change
States’ current flexibility to determine
whether students ‘‘reside’’ in a State, as
long as each individual has the
opportunity to provide evidence of
actual residence. The proposed rule
excludes children who are visitors for
pleasure or for purposes of obtaining
medical care. Parents, caretakers, and
persons acting responsibly on behalf of
a child may attest to where the child
resides, under new § 435.956(c).
While we do not believe our proposed
changes significantly affect Federal
guidance on residency, we seek
comments on the proposed
modifications to § 435.403(h) and (i),
particularly on the impact of this
proposed rule on children eligible for
Medicaid based on disability. We also
seek comments on whether to change
the current State residency policy with
regard to individuals living in
institutions and adults who do not have
the capacity to express intent.
D. Application and Enrollment
Procedures for Medicaid
1. Availability of Program Information
(§ 435.905)
Section 2201 of the Affordable Care
Act adds a new section 1943(b)(1)(A) to
the Act which directs States to develop
procedures that enable individuals to
apply for, renew, and enroll in coverage
through an Internet Web site. Section
1943(b)(4) directs States to establish a
Web site (which must be linked to the
Web site established by the Exchange
operating in the State) that will allow
individuals to obtain information
regarding coverage under Medicaid and
CHIP and compare such coverage to that
available through the Exchange. Thus,
we propose to amend § 435.905 to
ensure that program information be
made available electronically through a
Web site in addition to providing
information to applicants both orally
and in writing. We propose to modify
§ 435.905(b) to eliminate specific
requirements regarding quantity and
electronic availability of bulletins and
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pamphlets, as we do not believe these
are necessary in regulations.
2. Applications (§ 435.907)
To support States in developing a
coordinated eligibility and enrollment
system for all insurance affordability
programs, section 1943(b)(3) and section
1413 of the Affordable Care Act direct
the Secretary to develop and provide
States with a single, streamlined
application. The single application, to
be used for all insurance affordability
programs and available through a
variety of formats including on-line and
phone applications, will build on the
successes many States have had in
developing simplified applications.
Accordingly, we propose to amend
current regulations at § 435.907 to
reflect use of the new single,
streamlined application. The Secretary
will develop the data elements for the
application in collaboration with States
and consumer groups. As permitted in
section 1413(b)(1)(B) of the Affordable
Care Act, proposed § 435.907(b)(2)
provides States the option to develop
and use an alternative streamlined
application, subject to review and
approval by the Secretary. Under the
law, those who are limited English
proficient (LEP) and persons with
disabilities must have equal access to
health care and the benefits. We intend
to address the readability and
accessibility of applications, forms and
other communications with applicants
and beneficiaries in future guidance.
In § 435.907(c), we propose two
alternative approaches related to
applications for individuals who may
qualify for coverage on a basis other
than MAGI. First, we propose that States
may use supplemental forms to gather
additional information, such as
information pertaining to resources,
needed to make an eligibility
determination. This approach would
permit anyone seeking coverage to begin
by completing the same single,
streamlined application as all other
applicants. Second, we propose to
permit States to develop and use an
alternative single, streamlined
application form designed specifically
to capture information needed to
determine eligibility for individuals
whose eligibility is not determined
based on MAGI. Under the statute and
proposed 435.907(c), such supplemental
and alternative forms are subject to the
Secretary’s approval. We seek comment
on both of the proposed approaches as
well as other alternatives to ensure a
simple application process.
In § 435.907(d), we explain that the
agency must establish procedures to
allow persons seeking coverage to file
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an application through a variety of
means including online, in person, over
the phone and by mail. Applications
may be submitted in person, but under
this proposed rule, particularly in light
of the seamless coordination process
required for enrollment in Medicaid and
the Exchange, in person interviews
cannot be required for the individuals
whose eligibility is based on MAGI.
For individuals not seeking coverage
for themselves (‘‘non-applicants’’), to
ensure privacy we propose in
§ 435.907(e)(1) to codify the longstanding policy against requiring such
individuals to provide Social Security
numbers (SSNs) or information
regarding their citizenship, nationality,
or immigration status. To promote
enrollment of eligible applicants, States
may request an SSN of a non-applicant
on a voluntary basis. Proposed
§ 435.907(e)(2) codifies existing policy
grounded in Title VI of the Civil Rights
Act of 1964, the Privacy Act, and
Medicaid confidentiality provisions at
section 1902(a)(7) of the Act to allow
States to request an SSN of a nonapplicant only if: (1) Providing an SSN
is voluntary; (2) use of a non-applicant’s
SSN is limited to processing the
applicant’s eligibility or for other
functions necessary to the
administration of the State’s plan; and
(3) the State provides notice that
provision of an SSN is voluntary and
indicates how the SSN will be used.
In support of the proposed rule, we
note that sections 1411(g) and 1414(a)(2)
of the Affordable Care Act specify that
taxpayer information may only be used
for eligibility determinations and other
functions directly related to the
administration of benefits. Section
1902(a)(7) of the Act directs States to
have safeguards that restrict the ‘‘use or
disclosure of information concerning
applicants and recipients only for
purposes directly connected with the
administration of the [State] plan
* * *’’ Non-applicant information used
to determine an applicant’s eligibility is
considered to be information
‘‘concerning’’ the applicant or recipient;
thus, this information must be
appropriately safeguarded.
We propose to continue the current
policy that Medicaid applicants and
beneficiaries must provide an SSN, if
the individual has one. Under our
current regulations at § 435.910, if an
individual does not have an SSN, the
agency must assist the individual in
obtaining one. For background and a
detailed discussion of the current policy
on the collection of SSNs, see the TriAgency Guidance issued in conjunction
with the Administration for Children
and Families and the Food Nutrition
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Service, in September 2000, at https://
www.hhs.gov/ocr/civilrights/resources/
specialtopics/tanf/triagencyletter.html.
Section 1943(b)(1)(A) of the Act
directs Medicaid agencies to permit
enrollment and reenrollment in the
State plan or under a waiver through
electronic signature. Accordingly, we
propose in § 435.907(f) that States must
accept applications signed through the
use of electronic signature techniques,
including telephonically recorded
signatures, as well as handwritten
signatures transmitted by fax or other
electronic means. This is consistent
with current practice in most States.
3. Assistance With Application and
Redetermination (§ 435.908)
Some of the individuals eligible for
coverage in 2014 may need assistance
with the application and renewal
process. Therefore, we propose to
amend current § 435.908(b) to ensure
that the agency provides assistance
through a variety of means to any
individual seeking help with the
application or redetermination process.
This is consistent with current State
practice and is in accordance with
section 1902(a)(19) of the Act.
We are proposing that States have
flexibility to design the available
assistance, while assuring that such
assistance is provided in a manner
accessible to individuals with
disabilities and who are LEP. In
addition, section 1943(b)(1)(F) of the
Act directs States to conduct outreach to
vulnerable and underserved populations
eligible for Medicaid. Such outreach
and assistance will be particularly
important for those who are newly
eligible, as well as for people with
disabilities, underserved racial and
ethnic minorities and other groups. We
will provide technical assistance and
subregulatory guidance to further
address application and renewal
assistance to meet the needs of the
multiple populations served by the
program.
E. MAGI Screen (§ 435.911)
This section of the preamble and the
proposed rules at § 435.911 describe the
process for applying a new simplified
test for determining eligibility based on
MAGI—which is facilitated by the
simplified eligibility categories,
including the new adult coverage group,
discussed in section II.A of this
proposed rule—as well as the steps
States will take to ensure that
individuals who do not meet the
simplified test are evaluated for
Medicaid eligibility on other bases and
for potential eligibility for other
insurance affordability programs.
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Proposed § 435.911(a) sets forth the
statutory basis for this section. In
proposed § 435.911(b) we set forth
several pertinent definitions, including
‘‘applicable modified adjusted gross
income standard,’’ which will be at least
133 percent FPL, but in some States may
be higher for certain individuals,
including parents or other caretaker
relatives, pregnant women or children.
Proposed § 435.911(c) describes the
key steps in the proposed streamlined
eligibility process. Under
§ 435.911(c)(1), for every individual
who has submitted an application and
who meets the non-financial criteria for
eligibility (or for whom the agency is
providing a reasonable opportunity to
provide documentation of citizenship or
immigrations status in accordance with
sections 1903(x), 1902(ee) and 1137(d)
of the Act), the Medicaid agency would
determine whether such individual has
household income at or below the
applicable MAGI standard. This means
that States will not need to review
whether an individual who meets the
applicable MAGI standard (for example,
133 percent FPL for the new adult
group) is also eligible as a disabled or
medically needy individual, both of
which typically entail a more involved
eligibility determination.
For individuals with household
income at or below the applicable MAGI
standard, the agency would provide
Medicaid benefits promptly and without
undue delay. Benefits will be addressed
in subsequent guidance.
Some individuals with household
income above the applicable MAGI
standard may be eligible for Medicaid
on another basis. In some States, for
example, some individuals may be
eligible based on disability or need for
long-term care services, even if their
income exceeds the applicable MAGI
standard, and individuals eligible for
Medicare may be eligible for assistance
with Medicare premiums and cost
sharing charges. In accordance with
§ 435.911(c)(2), for each individual who
is not eligible for Medicaid based on
MAGI under § 435.911(c)(1), the
Medicaid agency shall collect additional
information, consistent with proposed
§ 435.907(c), as may be needed to
determine Medicaid eligibility on other
such other bases.
We note that the MAGI screen
proposed for State Medicaid agencies is
the same process as that at proposed 45
CFR 155.305(c) of the Exchange
Proposed Rule published elsewhere in
this Federal Register; however, the
Exchange will not be required to
undertake Medicaid eligibility
determinations based on factors other
than MAGI. Under proposed
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§ 435.1200(e)(2) and the Exchange
Proposed Rule at 45 CFR 155.345, the
Medicaid agency will retain
responsibility for making such
determinations, although the State can
establish procedures whereby the
Exchange will undertake such other
determinations in certain
circumstances, consistent with
regulations at § 431.10 and § 431.11, as
revised in and discussed in section J of
this proposed rule.
Proposed § 435.911(c)(2)(iii) specifies
that the agency must follow the policies
of proposed § 435.1200(g) to assess
individuals determined not eligible for
Medicaid based on MAGI for potential
eligibility for other insurance
affordability programs and to facilitate
seamless transfer of the individual’s
electronic account to these other
programs. Under proposed
§ 435.1200(g)(2), evaluation of
individuals for Medicaid eligibility
based on blindness or disability in
accordance with proposed
§ 435.911(c)(2) should occur at that
same time as evaluation for potential
eligibility for premium tax credits for
enrollment through the Exchange.
We are not proposing specific
timeliness standards for the
determination of eligibility under
proposed § 435.911. In collaboration
with States, we will be developing
performance standards and metrics for
the streamlined and coordinated
eligibility and enrollment system. These
metrics will also support the standards
and conditions described in the Federal
Funding for Medicaid Eligibility
Determination and Enrollment
Activities final rule (76 FR 21950)
published in the April 19, 2011 Federal
Register.
F. Coverage Month
In proposed § 155.410 of the Exchange
proposed rule, enrollment through the
Exchange for individuals terminated
from Medicaid can begin at the earliest
on the 1st day of the month following
the date the individual loses Medicaid
and is determined eligible for
enrollment through the Exchange. If the
individual loses Medicaid eligibility
and is determined eligible for
enrollment through the Exchange after
the 22nd day of the month, enrollment
through the Exchange begins at the
earliest on the first day of the second
month following such date. To promote
coordination with coverage through the
Exchange, we are considering adding a
provision to the regulations to extend
Medicaid coverage until the end of the
month that the appropriate termination
notice period ends. Certain exceptions—
such as the death of a beneficiary—
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would apply. This is the current
practice in many States which now end
Medicaid coverage at the end of a month
for administrative convenience or to
align with coverage offered by
participating health plans paid on a per
capita per month basis, as permitted
under current regulations. We believe
that providing coverage through the end
of the month is similar to existing
regulations at redesignated § 435.915(b),
which allows States to make eligibility
effective from the beginning of a month.
We invite comments on this potential
approach to coverage, its likely impact
on maintaining continuous coverage,
whether the costs of this approach
outweigh the benefits, or whether we
should retain the current policy that
provides State flexibility to end
coverage at any time during a month.
G. Verification of Income and Other
Eligibility Criteria (§ 435.940 Through
§ 435.956)
In this section, we discuss changes to
42 CFR part 435 subpart J to make
verification processes more efficient,
modernized and coordinated with the
Exchange. In general, the proposed rules
maximize reliance on electronic data
sources, shift certain verification
responsibilities to the Federal
government, and provide States
flexibility in how and when they verify
information needed to determine
Medicaid eligibility. The proposed
changes draw from successful State
systems and are aligned with those
proposed at § 155.315 and § 155.320 of
the Exchange proposed rule. The major
changes are:
• In accordance with section 1413(c)
of the Affordable Care Act, State
Medicaid agencies will use a system
established by the Secretary pursuant to
her authority under sections 1411(c) and
1413(c) of such Act, through which all
insurance affordability programs can
corroborate or verify certain information
with other Federal agencies (for
example, citizenship with the Social
Security Administration (SSA),
immigration status through the
Department of Homeland Security
(DHS), and income data from the IRS.)
This system will reduce administrative
burden on State Medicaid agencies and
Exchanges.
• Consistent with current policy,
State Medicaid agencies may accept
self-attestation of all eligibility criteria,
with the exception of citizenship and
immigration status. To ensure program
integrity, States must comply with the
requirements of section 1137 of the Act
to request information from trusted data
sources when useful to verifying
financial eligibility.
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• We propose that in verifying
eligibility States will rely, to the
maximum extent possible, on electronic
data matches with trusted third party
data sources. Additional information,
including paper documentation, may be
requested from individuals when
information cannot be obtained through
an electronic data source or is not
‘‘reasonably compatible’’ with
information provided by the individual.
These changes align eligibility
verification methods for Medicaid with
those used for advance payments of
premium tax credits and other
insurance affordability programs. This
proposal would apply to the specific
financial and non-financial information
referenced in these rules, as well as to
any additional information the agency
finds it necessary to verify in order to
determine eligibility, regardless of
whether that information is specifically
referenced in the regulation.
• A new section at § 435.956 relates
to requests by the agency for
information about non-financial
eligibility factors.
• Finally, we have deleted a number
of prescriptive provisions that are in
current regulations as to when or how
often States must query certain data
sources, or when certain State wage
agencies must provide data to the State
Medicaid agency. We do not believe that
this level of specificity regarding State
use of data sources is necessary, nor do
we believe it is appropriate to include
in Medicaid regulations requirements
that bind other agencies, such as State
wage agencies.
These and other proposed revisions
are discussed in more detail below.
1. Basis, Scope, and General
Requirements (§ 435.940 and § 435.945)
At § 435.940, we add statutory
citations to the basis and scope of the
income and eligibility verification
regulations to include, in addition to
section 1137 of the Act, sections
1902(a)(4), 1902(a)(19), 1903(r)(3) and
1943 of the Act, as well as section 1413
of the Affordable Care Act.
At § 435.945(a), consistent with 42
CFR part 455, we are specifying that
nothing in this proposed rule shall
prevent a State from acting to ensure
program integrity. Program integrity is a
top priority and should be considered in
commenting on the proposed rule.
Consistent with current policy, at
§ 435.945(b), we add language to
expressly permit States to accept
attestation of information related to
eligibility, including income, age, birth
date and State residency, without
requesting paper documentation. The
exceptions to this provision are
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citizenship and immigration status, as
these are subject to separate statutory
requirements. States must continue to
comply with the provisions of section
1137 of the Act relating to income
information in accordance with rules set
out in this section.
Redesignated § 435.945(c) directs the
agency to request and use information
in accordance with the appropriate
sections of the regulations. We modify
existing cross references to reflect other
changes proposed and add cross
references to the new § 435.949 and
§ 435.956. In addition, we have deleted
references in § 435.945(c) and
throughout the regulation to verifying
‘‘medical assistance payments,’’
‘‘amount of medical assistance
payments’’ and ‘‘benefit amount’’ as the
reference to the verification of
‘‘eligibility’’ is sufficient.
We removed the list of programs with
which the State Medicaid agency must
exchange information at § 435.945(d)
and instead include a reference to those
programs listed in 1137(b) of the Act, as
well as the child support enforcement
program under Part IV–D of the Act
(which is also referenced in section
1137) and SSA. Pursuant to sections
1413 of the Affordable Care Act and
1943 of the Social Security Act, we have
added insurance affordability programs
as programs with which the agency
must exchange information.
We have not changed the rules for
reimbursement arrangements between
agencies for data exchanges at
redesignated § 435.945(e), except for an
updated cross reference and citing to
section 1137(a)(7) of the Act.
Redesignated § 435.945(f) specifies
that before a request for information
from a third-party data source is
initiated, an individual must receive
notice of the information being
requested and its use. Consistent with
current State practice, we anticipate that
this notice would be provided as part of
the application process. We have
deleted the current exception to this
notice requirement when an
individual’s eligibility has been
determined by another agency because,
under our revised rule, proper notice is
required only when the agency itself
will be requesting data from another
agency or program. The reporting
requirements at redesignated
§ 435.945(g) remain unchanged;
however the regulatory citations relating
to MEQC and documentation have been
updated.
Existing § 435.945(g), regarding a
State Wage Information Collection
Agency (SWICA) that does not use the
quarterly wages reported by employers
under section 1137 of the Act, has been
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deleted, as we believe these
requirements are not within the purview
of the State Medicaid agency.
Per section 1413(c) of the Affordable
Care Act, we add a new § 435.945(h)
(renumbering the next paragraph) to
require that data exchanged
electronically under this section must
be sent and received via secure
electronic interfaces which, as defined
in proposed § 435.4, must be consistent
with 42 CFR part 433.
Redesignated § 435.945(i), pertaining
to written agreements between agencies
engaged in data exchanges, has been
modified to eliminate specific
requirements regarding the precise
content of such agreements and the
timing and frequency of data exchanges
to provide States greater flexibility. This
flexibility will facilitate coordination
with Exchanges and other insurance
affordability programs and allow States
to take full advantage of the increased
automation of electronic data matching
enabled through the provision of
enhanced Federal funding for the
development and implementation of
such systems available under 42 CFR
part 433 subpart C.
2. Verification of Financial Eligibility
(§ 435.948)
Under sections 1137 and 1902(a)(46)
of the Act, certain Federally-funded,
State-administered programs, including
Medicaid, are required to conduct
electronic data matches to obtain
income information from the State
quarterly wage reports and
Unemployment Insurance Benefits, the
IRS, and the SSA to verify financial
eligibility for benefits, if such
information may be useful in verifying
eligibility for Medicaid, as determined
by the Secretary.
However, not all data sources are
useful in all situations and under
section 1137(a)(4)(C). The use of
information identified in section 1137 of
the Act ‘‘shall be targeted to those uses
which are most likely to be productive
in identifying and preventing
ineligibility * * * and no State shall be
required to use such information to
verify the eligibility of all recipients.’’ In
addition to the data sources specifically
listed in section 1137 of the Act, many
States also rely on other data matches,
which they find useful to verify income.
We believe that States are in the best
position to determine the usefulness of
the available data sources in specific
cases. Therefore, we propose at
§ 435.948(a) to delegate to the State
Medicaid agency the discretion afforded
to the Secretary of the HHS under
section 1137(a)(2) of the Act to
determine when the information
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identified in section 1137 of the Act is
useful to verifying financial eligibility
for an individual and must be requested.
The sources of data which States much
check, if useful, remain unchanged,
except as follows:
• For the reasons discussed above,
specific references to the timing and/or
frequency with which information must
be requested are deleted;
• Public Assistance Reporting
Information System (PARIS) is added as
a new data source given the requirement
in 1903(r)(3) of the Act that all
eligibility determination systems must
conduct data matching through PARIS;
• We eliminate reference to the
former AFDC program; and
• We replace reference to ‘‘Food
Stamps’’ with ‘‘Supplemental Nutrition
Assistance Program’’ to reflect the new
name under the Food, Conservation and
Energy Act of 2008.
As noted above and discussed in more
detail below in relation to proposed
§ 435.949, the Secretary is required to
establish a system through which all
insurance affordability programs can
verify certain information with other
Federal agencies. At new § 435.948(b),
we propose that, to the extent available,
States must access needed information
when available through the system
established by the Secretary, consistent
with sections 1943(b)(3) and 1902(a)(4)
of the Act.
At § 435.948(c)(1), we provide that
information not available through the
service established by the Secretary
under § 435.949 may be obtained
directly from the agency or program
housing the information. At
§ 435.948(c)(2), we retain the current
policy in paragraph (c) of the existing
regulations that information be
requested by SSN, but clarify that, when
an SSN is not available, the agency
attempt to obtain needed information
using other personally identifying
information otherwise available in the
individual’s account, as described in
§ 435.4. Note that when an SSN is not
available, the agency must assist the
individual in obtaining a SSN in
accordance with § 435.910.
States may request and use alternate
data sources, as permitted at proposed
§ 435.948(d), subject to Secretarial
approval. Such alternative sources
should reduce administrative costs and
burdens on individuals and States,
maximize accuracy, and minimize
delay. Also, we make explicit existing
policy that use of any such alternative
data source must meet applicable
requirements relating to the
confidentiality, disclosure,
maintenance, or use of information.
Finally, consistent with section 1413 of
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the Affordable Care Act, we add that the
use of an alternative data source
facilitate coordination between all other
insurance affordability programs.
3. Verification of Information From
Federal Agencies (§ 435.949)
Section 1413(c) of the Affordable Care
Act directs the Secretary of HHS, in
consultation with the Secretary of the
Treasury, the Secretary of Homeland
Security and the Commissioner of
Social Security, to establish a system of
verification, using secure electronic
interfaces, through which all State
health coverage programs can verify
information needed to determine
eligibility. Section 1411(c) of the
Affordable Care Act specifically directs
that the system enable electronic
verification of household income and
family size with the IRS, citizenship
data with SSA, and immigration status
with DHS.
By enabling access to multiple
Federal sources though a single inquiry,
insurance affordability programs can
receive prompt, reliable data through
the same service, thereby alleviating
multiple data inquiries that the State
might otherwise have to make. Since all
of the insurance affordability programs
will rely on certain common sources
(that is, SSA, DHS and IRS), once such
information is gathered and evaluated
by one program, reevaluation or reverification of data will not be
necessary, and thus, not permitted by
another program (unless an individual
reports a change in circumstances).
We propose at § 435.949(a) to specify
the Federal agencies from which
information will be available through
the Secretary, including SSA, DHS and
the IRS. We propose in § 435.949(b)
that, if data included in § 435.949 is
available through the Secretary, States
would be required to obtain such data
through the service established by the
Secretary. Other applicable regulations,
including those set forth at § 435.948,
§ 435.956 and § 435.960, remain in
effect for information, which cannot be
requested through the Secretary.
We propose § 435.949(c) to codify
section 1413(c)(3) of the Affordable Care
Act, which provides that the Secretary
may modify the methods used in the
verification system established if she
determines that modifications would
reduce the administrative costs and
burdens on individuals or agencies;
ensure accurate and timely verification;
comply with applicable requirements
for the confidentiality, disclosure,
program integrity, and maintenance or
use of the information, including the
requirements of section 6103 of the IRC;
and promote coordination among
insurance affordability programs.
Section 435.949(c) is proposed to be
consistent and coordinated with
§ 155.315 of the proposed Exchange
rule.
4. Use of Information and Requests for
Additional Information (§ 435.952)
We are proposing changes to
§ 435.952, which describes the
appropriate use of information. We are
proposing to eliminate vague language
at the end of § 435.952(a) regarding the
requirement to independently verify
information ‘‘* * * if determined
appropriate by agency experience.’’ We
expect processes to occur in real time
wherever possible and we will be
defining more detailed standards and
other performance metrics, with State
and stakeholder input, in subsequent
Federal guidance. Accordingly, we also
are proposing to delete the specific
timeliness requirements contained in
the current regulation at § 435.952(c),
which now requires agency action
within 45 days from the date new
information is received.
Under § 435.952(b), as revised, if
information provided by an individual
is reasonably compatible with
information that the agency has
obtained from other trusted sources, the
agency must act on such information
and may not request additional
information from the individual. To
establish an appropriate balance
between reliance on electronic
verification and paper documentation,
we propose to establish a ‘‘reasonable
compatibility’’ standard governing when
additional information, including paper
documentation, can be requested from
applicants and beneficiaries. Under
proposed § 435.952(c), no further
information may be required from the
individual unless the agency is unable
to obtain information through electronic
data matching or the information
obtained is not reasonably compatible
with that provided by the individual. In
such cases, the agency may contact the
individual and accept the individual’s
explanation without further
documentation, if reasonable, or the
agency may request additional
information, including paper
documentation. ‘‘Reasonably
compatible’’ does not necessarily mean
an identical match for the data, only
that the information is generally
consistent. Since what is ‘‘reasonably
compatible’’ may vary depending on the
particular circumstances, we are
proposing to provide States flexibility to
apply this standard. Under § 435.948(d),
if the individual fails to respond to a
request for additional information
permitted under the proposed rule, the
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agency shall proceed to deny, terminate,
or reduce Medicaid only after notice
and appeal rights have been provided in
accordance with part 431, subpart E.
Sections 435.953 and 435.955 of the
current regulations are deleted in the
proposed rule. Provisions contained in
§ 435.953(a) and § 435.955(a) through (c)
and (f) are revised and incorporated into
§ 435.948 and § 435.952, in accordance
with the discussion above. We propose
to remove the remaining requirements
in § 435.953(b) through (d) (relating to
detailed information the State must
submit for the Secretary’s approval to
exclude specific data requests) and the
detailed requirements in § 435.955(a)
and (d), (e) and (g) (relating to the
additional provisions regarding
information released by a Federal
agency, including State reporting
requirements and requests for a waiver
from the Federal agency’s Data Integrity
Board). We believe that the detailed
nature of these provisions may
unnecessarily hamper development of
an efficient, modernized and
coordinated system and that such
details are best developed in
collaboration with States and addressed
through subregulatory guidance.
5. Verification of Other Non-Financial
Information (§ 435.956)
We propose a new § 435.956 to
address verifying non-financial
information. As with financial
information, to the extent non-financial
information is available through the
electronic service established by the
Secretary, States would use that service
under proposed § 435.949(b).
Under the proposed rule, at
§ 435.956(c), States may use attestation
(including attestation of someone acting
responsibly on behalf of the individual)
or electronic data sources to determine
State residency, in accordance with
§ 435.945(b) and § 435.952. Under
proposed § 435.956(c), documents that
provide information regarding
immigration status should be used as a
source of evidence to verify satisfactory
immigration status, but may not, by
themselves, be used to demonstrate lack
of residency. For example, a temporary
or time-limited immigration status, such
as Temporary Protected Status (TPS),
does not necessarily establish that the
individual is not a State resident
because TPS is routinely renewed. The
proposed rule relating to residency does
not diminish States’ responsibility to
ensure that only individuals with valid
and satisfactory immigration status are
determined eligible for and enrolled in
Medicaid; if an individual has a
temporary immigration status, the
agency must ensure that the individual’s
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Medicaid eligibility is reviewed at the
appropriate time.
Proposed § 435.956(d) simply crossreferences current policy at § 435.910(f)
and (g) regarding issuance and
verification of SSNs.
Current Federal rules regarding
verification of pregnancy vary based on
the woman’s eligibility category, but
verification of pregnancy is not required
in all cases under current rules.
Verification (except by self-attestation)
may not be required for pregnant
women eligible for pregnancy related
services under section
1902(a)(10)(A)(i)(IV) or (ii)(IX) of the
Act, but pregnant women must provide
medical verification of pregnancy to be
eligible for full Medicaid coverage as a
qualified pregnant woman (with very
low-income below the State’s former
AFDC standard) under section
1902(a)(10)(A)(i)(III) of the Act or under
section 1931 of the Act, if medical
verification was required under the
State’s AFDC program in effect on July
16, 1996.
In light of the proposed regulations at
§ 435.116, which combine these
different eligibility categories to achieve
greater simplicity in the program, we
believe a verification rule for the
combined group is needed. Thus, we are
exercising the authority provided in
section 1902(e)(14)(A)of the Act to
propose application of the selfattestation verification rule under
section 1902(a)(10)(A)(i)(IV) or (ii)(IX) of
the Act in determining eligibility under
§ 435.116. Although a change in federal
guidelines, we do not believe that this
will have significant practical impact for
States, as we believe most pregnant
women today are covered under the
eligibility groups for which medical
verification is already not required.
Proposed § 435.956(e) reflects this
policy, providing that the agency must
rely on the woman’s attestation of
pregnancy, unless the agency has other
information (for example, claims
history) that is not reasonably
compatible with her attestation. To
promote coordination of eligibility rules
and procedures with the Exchange, we
also propose at § 435.956(e) to codify
the widespread State practice of
accepting attestation of household
composition unless the State has
information which is not reasonably
compatible with such attestation.
In proposed § 435.956(f), in the
situations when age is a factor of
eligibility, States may apply the same
proposed verification procedures and
options, as are available for other
eligibility criteria verification, in
accordance with § 435.945(b) and
§ 435.952.
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When agencies obtain information
regarding residency, SSN, pregnancy,
age, and birth date in accordance with
paragraphs (c) through (f) that is not
reasonably compatible with the
information or attestation provided by
an individual, they must take reasonable
steps to reconcile discrepancies that
would affect eligibility, following the
process set out in § 435.952(c) and (d).
H. Periodic Redetermination of
Medicaid Eligibility (§ 435.916)
Consistent with section 1943(b)(3) of
the Act and sections 1413(a) and
1413(c)(2) of the Affordable Care Act,
which aim to ensure that individuals
remain enrolled for as long as they meet
eligibility standards, we propose to
amend § 435.916 to establish simplified,
data-driven renewal policies and
procedures for individuals whose
eligibility is based on MAGI, consistent
with ensurance of program integrity.
States are increasingly re-engineering
their renewal processes, recognizing
that the traditional process, which
involves a new application and
documentation, may be unnecessary
and can be burdensome for families and
agencies. In addition, many eligible
beneficiaries lose coverage at renewal
for procedural reasons, only to reapply,
and to regain eligibility, soon after
losing coverage. This churning on and
off of coverage is administratively costly
and burdensome for the agency, health
plans, and consumers, and is disruptive
to continuity of care and efforts to
achieve quality and efficiency in the
delivery of care. This rule proposes
renewal procedures that are consistent
with those that will operate for the
premium tax credit and that mirror the
practices many States have adopted as
they have sought to simplify the
enrollment process and promote
continuity of coverage.
Under current Federal policy,
eligibility must be redetermined at least
once every 12 months, and although
States can have a shorter regular
redetermination period, very few States
do so today. According to a 2011 50State survey by the Kaiser Family
Foundation, all but two States currently
have a 12-month renewal period for
children and all but five also provide
12-month renewal periods to parents.
Consistent with this State trend and the
annual redetermination procedures for
individuals eligible for tax credits to
purchase coverage through the
Exchange at § 155.335 of the Exchange
proposed rule, we propose at
§ 435.916(a)(1) that States schedule
regular redeterminations or renewals for
beneficiaries whose eligibility is based
on MAGI once every 12 months.
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Consistent with current policy,
eligibility should be redetermined more
frequently if a beneficiary reports a
change in circumstance that may affect
continued eligibility, or the agency
obtains information (for example,
through a data match from other
program records) that suggests the need
for an eligibility review. States maintain
authority and flexibility to establish
procedures that ensure program
integrity.
In recent years, States also have
increasingly adopted measures to
streamline the renewal process,
including the use of administrative,
telephone and online renewals.
Consistent with this State trend, under
the proposed process at § 435.916(a),
States would not need a renewal form
from all individuals, further
streamlining the process for individuals
and States. Similar to the proposed
verification processes at initial
application, discussed in section II.H. of
this proposed rule, the proposed
renewal procedures maximize the use of
current third-party data matching to
verify continued eligibility. Thus, at
§ 435.916(a)(2), we propose to codify the
longstanding policy (see https://
www.cms.gov/smdl/downloads/
smd040700.pdf) that agencies renew
eligibility for beneficiaries by first
evaluating information available to the
agency in the electronic account or from
other reliable data sources. If the
information available to the agency is
sufficient to make a determination of
continued eligibility, including
information that establishes that the
individual or family continues to reside
in the State, coverage shall be renewed
on the basis of this information and the
agency would send the appropriate
notice to the beneficiary without
requiring any further action. This
eliminates the need for and
administrative burden of a renewal form
or a signed returned notice and
unnecessary requests for information
already on hand.
State experience with this type of
renewal process shows that it reduces
the number of eligible beneficiaries who
lose coverage for procedural reasons
while maintaining program integrity.
Beneficiaries must correct any
inaccurate information contained in the
determination notice and would be
permitted to do so through a variety of
means, including online, in person, by
telephone, or via mail. As noted below,
if any information is missing or is not
reasonably compatible with ongoing
eligibility, the agency must take further
action to complete the renewal process.
If the agency cannot determine that
the individual remains eligible through
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the process described above, we propose
in § 435.916(a)(3) a process in which the
agency would provide the individual
with a pre-populated renewal form
containing information that is relevant
to the renewal and available to the
agency. The agency would then provide
the individual with a reasonable
period—these rules propose at least 30
days—to furnish necessary information
and to correct any inaccurate
information either in person, online, by
telephone, and via mail. We seek
comments on this proposed process.
At § 435.916(a)(3)(ii), we propose that
the agency verify the information
reported by the beneficiary in
accordance with § 435.945 through
§ 435.956, as revised in these proposed
rules, including, at State option,
reliance on self-attestation consistent
with those sections. In
§ 435.916(a)(3)(iii), to avoid unnecessary
reapplications for coverage, we also
propose a reconsideration period for
individuals who lose coverage for
failure to return the renewal form.
Individuals who return the form within
a reasonable period after coverage is
terminated would be redetermined
without the need for a new application.
We considered specifying a 90-day
reconsideration period to align with the
3-month retroactive assistance period
provided under section 1902(a)(34) of
the Act, but did not specify a particular
length of time in this proposed rule. We
seek comments on the use and length of
a specified reconsideration period.
Finally, consistent with section 1413
of the Affordable Care Act, we propose
at § 435.916(a)(4) that for beneficiaries
no longer eligible for Medicaid, the
agency assess the individual for
eligibility in other insurance
affordability programs and transmit the
electronic account and other pertinent
data to the appropriate program for a
determination of eligibility in
accordance with proposed
§ 435.1200(g).
We have not proposed amending the
renewal procedures for beneficiaries
eligible on a basis other than MAGI
(reflected in current regulations at
redesignated § 435.916(b)), but seek
comment on extending the renewal
procedures proposed in § 435.916(a) to
such individuals.
We propose to expand the standards
under redesignated § 435.916(c) to
include options for permitting all
beneficiaries to report changes online,
over the telephone, by mail or in person.
Given the evolving reliance on methods
for communication that go beyond the
in-person interview, we solicit comment
on whether more modernized
procedures to report changes should be
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available to both the MAGI and MAGIexcepted populations.
We note that we will be modifying the
Payment Error Rate Measurement
(PERM) and Medicaid Eligibility Quality
Control (MEQC) regulations to ensure
that both the PERM Medicaid eligibility
review and MEQC processes take into
account these rules and procedures,
including the use of authoritative data
sources in redetermining eligibility. We
also note that any State expenditures
(before the end of 2015) for system
changes necessary to adopt these
renewal procedures should be subject to
the enhanced (90 percent) match as
outlined in the Federal Funding for
Medicaid Eligibility Determination and
Enrollment Activities final rule
published in the April 19, 2011 Federal
Register (76 FR 21950), provided these
systems meet the standards and
conditions set forth in that rule.
I. Coordination of Eligibility and
Enrollment Among Insurance
Affordability Programs—Medicaid
Agency Responsibilities (§ 435.1200)
We propose to add a new subpart M,
Coordination between Medicaid and
other insurance affordability programs,
including a new § 435.1200 to delineate
the State Medicaid agency’s
responsibilities in effectuating such
coordination. Proposed § 435.1200 also
includes policies previously included in
§ 431.636, Coordination of Medicaid
with the State CHIP. Section 435.1200(a)
and (b) set forth the basis for and
definitions used in the proposed
section.
1. Basic Responsibilities (§ 435.1200(c))
Proposed § 435.1200(c) sets forth the
basic responsibilities of the State
Medicaid agency. Proposed
§ 435.1200(c)(1) specifies that the
Medicaid agency must participate in the
coordinated eligibility and enrollment
system described in section 1943 of the
Act. As discussed, most individuals will
be evaluated for eligibility in the
Exchange, Medicaid, and CHIP using a
coordinated set of rules and these
programs will work together to ensure
that eligible applicants are enrolled in
the appropriate program, no matter
where their application originates. For
example, an individual who directly
applies for and is determined ineligible
for Medicaid would be immediately
assessed for eligibility for advance
payment of the premium tax credit and
coverage through the Exchange. That
individual would not need to file a new
application in order to participate in
Exchange coverage, if eligible.
Integration among these programs will
help to avoid duplication of costs,
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processes, data, and effort on the part of
both the State and the individual.
We expect the use of a shared
eligibility service to adjudicate
placement for most individuals. The
shared eligibility service would
coordinate determination and renewal
requirements for eligibility in each of
the insurance affordability programs. It
may include processes such as those
used for collecting and verifying
applicant information, including
verification of citizenship and
immigration status and certain income
information as well as determining and
renewing eligibility. Regardless of an
applicant’s point of entry (directly
online at home, with a navigator or
community organization/assister,
through the mail, or through a consumer
assistance office established by the
Exchange), this shared eligibility service
would be used whenever the single
streamlined application for enrollment,
discussed in section II.E.2 of this
proposed rule, is initiated or whenever
a renewal occurs.
We note that shared systems and the
Medicaid functions they perform are
eligible for enhanced Federal financial
participation (FFP) of 90 percent for
development (through December 31,
2015) and 75 percent for operations (no
time limit) if certain conditions and
standards are met. For additional
information, see the April 19, 2011 final
rule establishing enhanced funding for
Medicaid eligibility and enrollment
activities. Such systems are subject to
cost allocation principles, per OMB
Circular A–87 and guidance from CMS.
In addition, the entities and agencies
performing functions on behalf of one
another that involve the use or
disclosure of an individual’s health
information will be required to comply
with the applicable business associate
provisions of the Privacy and Security
Rules under the Health Insurance
Portability and Accountability Act of
1996.
Section 435.1200(c)(2) proposes that
State Medicaid agencies enter into one
or more agreements with the Exchange
and other insurance affordability
programs as necessary to ensure
coordination of eligibility and
enrollment, including coordination with
a Basic Health Program if applicable.
Details about the Basic Health Program
will be included in forthcoming
guidance. States may also use such
agreements to coordinate related
activities, such as health plan
management.
States may design these agreements in
different ways that reflect their
governance structures. We see three
broad options. First, one or more of the
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entities (the Exchange, Medicaid or
CHIP agencies) could enter into an
agreement whereby some or all of the
responsibilities of each entity are
performed by one or more of the others.
Second, a State could develop a fully
integrated system whereby the
responsibilities of all entities are
performed by a single integrated entity.
Third, each entity could fulfill its
responsibilities and establish strong
connections to ensure the seamless
exchange of information and data. We
solicit public comments on these
different working relationships and the
best mechanisms to facilitate States’
ability to coordinate eligibility and
enrollment.
We note that relationships between
the State Medicaid program and other
insurance affordability programs must
be established in accordance with
section 1902(a)(5) of the Act, which
specifies that a single State agency will
administer or supervise the
administration of the Medicaid program.
When the Exchange or other entity is
performing delegated functions, it must
at all times conduct such business
consistent with the rules adopted by the
Medicaid agency. This is further
discussed in section II.J of this proposed
rule.
At § 435.1200(c)(3), we propose that
the State Medicaid agency must certify
criteria necessary for the Exchange to
use in determining Medicaid eligibility
based on MAGI. This includes the
applicable Medicaid MAGI standard for
parents and caretaker relatives, other
adults, pregnant women, and children,
as well as the criteria for determining
satisfactory immigration status, in
accordance with the Medicaid State
plan. We invite public comment on
other eligibility rules or criteria that
should be certified by the Medicaid
agency for Medicaid eligibility
determinations made by the Exchange.
MAGI methodologies and Medicaid
eligibility based on the applicable MAGI
standards are discussed in sections
II.B.3 and II.E of this proposed rule.
2. Internet Web Site (§ 435.1200(d))
Section 1943 of the Act says that no
later than January 1, 2014, States shall
establish an Internet Web site, linked to
the Web sites of other insurance
affordability programs, through which
individuals may obtain information,
apply for, and enroll in Medicaid. To
accomplish this, States could, for
example, create one enrollment Web site
for information and enrollment in all
insurance affordability programs, or
they could establish a broad health care
Web site that includes health insurance
coverage, health care services and
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supports, and health education
information from a broad array of
entities. Additionally, a State could
establish a Medicaid presence on an
existing State Web site. This Web site
must be coordinated with the Exchange
Web site as described at § 155.205 of the
Exchange proposed rule.
Proposed § 435.1200(d) gives
individuals the option to apply for or
renew their eligibility for Medicaid
online. A Web site that connects an
individual directly into the Medicaid
eligibility determination system is
eligible for enhanced FFP under the
April 2011 final rule establishing
enhanced funding for Medicaid
eligibility and enrollment activities, if
the system in its totality, including the
Web site, meets certain standards and
conditions. Additional information on
Web site specifications will be provided
in forthcoming guidance.
Because the Internet Web site may
serve as the primary mechanism
through which individuals
communicate with the agency, it must
be accessible to individuals with
disabilities and persons who are limited
English proficient (LEP). At
§ 435.1200(d)(2) we propose that the
agency must ensure accessibility of Web
resources in accordance with the
Americans with Disabilities Act and
section 504 of the Rehabilitation Act,
and must take reasonable steps to
provide meaningful access for LEP
persons. Accessibility needs of LEP
persons may be met by providing
language assistance services, such as
translated information and ‘‘taglines’’
that inform LEP persons of the ability to
talk to a multilingual staff person or an
interpreter.
Web sites, interactive kiosks, and
other information systems would be
viewed as being in compliance with
section 504 if they meet or exceed
section 508 standards, which ensure
that Federal agencies’ electronic
information technology is accessible to
people with disabilities. The latest
Section 508 guidelines issued by the US
Access Board can be accessed at
https://access-board.gov/sec508/
standards.htm, and W3C’s Web Content
Accessibility Guidelines (WCAG) 2.0
can be accessed at https://www.w3.org/
TR/WCAG20/.
3. Provision of Medical Assistance for
Individuals Found Eligible for Medicaid
by an Exchange (§ 435.1200(e))
Consistent with sections 1413 and
2201 of the Affordable Care Act, under
the coordinated system proposed in
these rules, if the Exchange finds that an
individual is eligible for Medicaid, the
State Medicaid agency must enroll the
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individual without further
determination of eligibility. This
enrollment is subject to the rules
established by the agency. We note that
the State Medicaid agency has the
responsibility to facilitate health plan
selection for enrolled individuals, but
may arrange with the Exchange to
undertake this function. This could
include providing the individual with
available health plan options and
transmitting enrollment transactions to
the health plan, if applicable.
As discussed in section II.B.3 of this
proposed rule, for most individuals,
eligibility for Medicaid would be
determined based on MAGI. As
described in the Exchange proposed
rule, the scope of the final eligibility
determinations made by the Exchanges
is limited to those based on individuals
having MAGI-based income at or below
the applicable MAGI standard. Note that
in certain circumstances the State may
establish procedures whereby the
Exchange will undertake Medicaid
eligibility determinations on other
bases. Individuals who are not eligible
for Medicaid based on MAGI, would be
screened, using information provided
on the application, for potential
Medicaid eligibility on other bases. As
appropriate, their applications and other
relevant information would be
transmitted to the Medicaid agency for
a full Medicaid eligibility
determination. See section 155.345 of
the Exchange proposed rule for
additional information. Further, all
applicants have the right to request and
receive a full determination of eligibility
on bases other than MAGI from the State
Medicaid agency.
Section 435.1200(e) describes the
standards for the Medicaid agency to
promptly and efficiently enroll
individuals determined to be Medicaid
eligible by the Exchange. To accomplish
this, we propose that the agency
establish procedures to receive, via
secure electronic interface from the
Exchange, the finding of Medicaid
eligibility and the individual’s
electronic account, including all
application information. We recognize
that an actual transfer of data may not
occur, as the Medicaid agency and the
Exchange may be utilizing a shared
eligibility system. However, the legal
responsibility for the electronic
accounts and for further action, as
appropriate, will transfer from the
Exchange to the Medicaid agency. We
expect processes to occur in real time
whenever possible and, as noted earlier,
we will be defining more detailed
standards and other performance
metrics, with State and stakeholder
input, in subsequent Federal guidance.
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4. Transfer of Applications From Other
Insurance Affordability Programs to the
State Medicaid Agency (§ 435.1200(f))
To ensure a coordinated eligibility
and enrollment process as directed by
the Affordable Care Act and address
existing coordination rules for separate
CHIP and Medicaid agencies in section
2102(b)(3)(B) of the Act, we propose a
new § 435.1200(f). This provision
includes and revises provisions
previously covered under
§ 431.636(b)(1) through (b)(3). Under
proposed § 435.1200(f), the State
Medicaid agency must adopt procedures
to promptly determine the eligibility of
individuals assessed as potentially
Medicaid-eligible by other insurance
affordability programs and, if eligible, to
enroll them without delay.
Under this proposal, individuals with
household income below the applicable
MAGI level who are assessed as
potentially Medicaid eligible by another
insurance affordability program would
be quickly and easily enrolled in
Medicaid. Because all insurance
affordability programs will be utilizing
a common process for MAGI-based
eligibility determinations, an individual
assessed by such a program as
potentially Medicaid eligible based on
MAGI should receive a seamless
determination from the Medicaid
agency, and no further action should be
required of the applicant. For
individuals with household income
above the applicable MAGI standard,
who are either assessed by an insurance
affordability program as potentially
eligible on a basis other than MAGI, or
who request an eligibility determination
on another basis, we propose that the
Medicaid agency must conduct a full
Medicaid eligibility determination in
the same manner as if their application
had been submitted directly to the
agency.
We propose that the Medicaid agency
establish procedures to receive the
electronic account of any individual
determined potentially Medicaid
eligible by another insurance
affordability program, and to promptly
and without undue delay conduct an
eligibility determination in accordance
with the provisions set forth in
§ 435.911(c). The agency must not
request any information already
obtained, or duplicate any eligibility
verifications already performed, by the
other insurance affordability program
and included in the individual’s
electronic account. Once the Medicaid
determination is complete, we propose
that the agency notify the insurance
affordability program of the
determination of Medicaid eligibility or
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ineligibility. Issues related to the notices
needed to effectuate coordinated
eligibility will be addressed in future
rulemaking.
5. Evaluation of Eligibility for Other
Insurance Affordability Programs
(§ 435.1200(g))
Section 1943(b)(1)(C) of the Act
directs States to ensure that any
individual who applies for, but is
determined ineligible for, Medicaid or
CHIP is screened for eligibility for
advance payment of the premium tax
credit, cost sharing reductions, and
enrollment in a qualified health plan
offered through the Exchange.
Therefore, in § 435.1200(g)(1), we
propose that the Medicaid agency must
assess potential eligibility for other
insurance affordability programs when
the agency determines that an
individual is not eligible for Medicaid.
While the Affordable Care Act does
not provide express authority for
Medicaid to make eligibility
determinations for coverage through the
Exchanges, sections 1943(b)(2) of the
Act and 1413(d)(2) of the Affordable
Care Act do permit the agency to enter
into a contract with the Exchange to do
so. Absent such an agreement, the
agency must promptly transfer the
electronic account of individuals
screened as potentially eligible, via
secure electronic interface, to the
Exchange so that such individuals can
receive an immediate eligibility
determination and, if eligible, be
enrolled without delay. This provision
assumes that verification of any
information required only for eligibility
in the Exchange, such as access to
affordable employer-sponsored
insurance, will be completed by the
applicable program once the applicant’s
case is transferred. (Under current law
and regulations, States also have the
flexibility to have the State Medicaid
agency administer some or all of the
administrative functions for a separate
CHIP, including the determination of
eligibility for such program.)
We further propose that the electronic
account transferred include the
determination of ineligibility made by
the Medicaid agency as well as all
information provided on the single
streamlined application and, as
appropriate, verified by the State
Medicaid agency. We note again that an
actual transfer of data may not be
necessary, but legal responsibility for
the case will transfer from Medicaid to
the appropriate program. We also note
that the Exchange cannot reverse a
determination of Medicaid ineligibility
made by the Medicaid agency.
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In this and the Exchange proposed
rule, we propose that individuals
determined ineligible for Medicaid
based on MAGI, for whom the Medicaid
agency is evaluating eligibility on the
basis of being blind or disabled, may
enroll in other insurance affordability
programs while a final Medicaid
determination is pending. Once the
Medicaid determination is completed, if
the individual is Medicaid-eligible, such
coverage would be terminated in favor
of Medicaid, but if not Medicaideligible, coverage would continue
through the other program. This avoids
unnecessary delays in coverage for
individuals whose Medicaid eligibility
determination process may be lengthy,
while avoiding any overlap in coverage
for those eventually determined
Medicaid eligible based on blindness or
disability. Proposed § 435.1200(g)(2)
reflects the Medicaid agency’s
responsibilities in effectuating this
policy. We note that proposed 26 CFR
1.36B(2)(c)(2)(iii)(B) in the Treasury
proposed rule specifies that if an
individual receiving advance payments
of the premium tax credit is approved
for Medicaid coverage, the individual is
treated for purposes of eligibility for
such credit, as eligible for minimum
essential coverage no earlier than the
first day of the first calendar month after
such coverage is approved; thus, an
applicant who is being evaluated by the
Medicaid agency for eligibility based on
blindness or disability and who is
provided with advance payments of the
premium tax credit in the interim would
not be liable to repay such advance
payments upon retroactive approval of
Medicaid during the period for which
advance payments were paid.
Since it would be inefficient and
confusing to transfer and enroll
individuals in other coverage, only to be
disenrolled from such coverage days or
even a few weeks later for enrollment in
Medicaid, we propose to limit
application of the policy described to
individuals whom the Medicaid agency,
in accordance with procedures in
proposed § 435.911(c)(3), is evaluating
for eligibility on the basis of being blind
or disabled.
J. Single State Agency (§ 431.10 and
§ 431.11)
As discussed in section II.I above, to
ensure a fully coordinated eligibility
determination and enrollment process,
the Exchange proposed rule provides
that Exchanges will make Medicaid
eligibility determinations to effectuate
Section 1943(b)(B). For numerous
reasons, including the coordinated
enrollment process, we anticipate that
States will want to consider different
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ways to achieve integration across
Exchanges, Medicaid agencies and
CHIP.
Under Medicaid’s ‘‘single State
agency’’ requirement in section
1902(a)(5) of the Act, as codified in
§ 431.10 and § 431.11, States must
identify a ‘‘single State agency to
administer or to supervise the
administration’’ of the Medicaid
program (that is, the Medicaid agency).
This ensures that there is a single point
of responsibility and accountability for
proper administration of the State
Medicaid program, including for
eligibility determinations.
We note, however, that the statute at
1902(a)(5) specifically permits and in
some cases requires the single State
agency to delegate the authority to make
eligibility determinations to certain
other agencies. Current regulations
provide for such delegation of eligibility
functions in § 431.10(c). The regulations
at § 431.10(e) provide that, in delegating
any single State agency functions, the
Medicaid agency retain authority to
exercise administrative discretion in the
administration or supervision of the
plan, and that if other State or local
agencies perform services for the
Medicaid agency, they must not have
the authority to change or disapprove
any administrative decision of the
Medicaid agency, or otherwise
substitute their judgment for that of the
Medicaid agency in the application of
policies, rules and regulations issued by
the Medicaid agency. It is our
understanding that the use of this
delegation authority is widespread
across the nation, and in some States,
multiple State agencies separate and
apart from the State Medicaid agency, as
well as county agencies make Medicaid
eligibility determinations on behalf of
the single State agency and under its
supervision. In all instances, the single
State agency is responsible under the
statute to set the rules for the program,
and to ensure that the determinations
made are consistent with the statute.
Related section 1902(a)(4) of the Act
requires a State plan to provide for
certain methods of administration,
including the establishment of
personnel standards on a merit basis.
We have historically advised States that
public employees must make Medicaid
eligibility determinations. This position
has been based on the premise that
certain activities in the eligibility
determination process cannot be
delegated to private entities because
they involve discretion or value
judgment that are inherently
governmental in nature, and in such
instances we have stated that State merit
system employees must be utilized. In
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addition, there have been concerns
about whether States that contract out
their eligibility determination capacity
would be able to effectively monitor and
if necessary bring that capacity back ‘‘in
house’’ if policy implementation issues
arose.
Section 1413(d)(2)(B) of the
Affordable Care Act reaffirms the single
State agency requirement by providing
that nothing in the law ‘‘changes any
requirement under Title XIX that
eligibility for participation in a State’s
Medicaid program must be determined
by a public agency.’’ The proposed
regulation is consistent with this
provision. Simultaneously, we solicit
comments on how these statutory
provisions should apply in the context
of Exchanges making Medicaid
eligibility determinations and simpler,
more uniform eligibility criteria.
In this rule, we propose to allow
Medicaid agencies to delegate eligibility
determinations for individuals whose
eligibility will be determined according
to MAGI to Exchanges that are public
agencies. Specifically, we propose to
permit Exchanges that are public
agencies to make Medicaid eligibility
determinations as long as the single
State Medicaid agency retains discretion
in the administration or supervision of
the plan. We note that if Exchanges are
established as a non-governmental
entity as allowed by the Affordable Care
Act, the coordination provisions in the
law may mean the co-location of
Medicaid State workers at Exchanges or
other accommodations to ensure
coordination is accomplished. We
solicit comment on approaches to
accommodate the statutory option for a
State to operate an Exchange through a
private entity, including whether such
entities should be permitted to conduct
Medicaid eligibility determinations
consistent with the law.
In § 431.10(c)(1)(iii), we propose to
permit Medicaid single State agencies to
delegate their MAGI eligibility
determination function to Exchanges
operated by governmental entities,
provided the single State agency
remains solely responsible for setting
eligibility policies and is accountable
for ensuring the program operates
consistently with such polices. In
§ 431.10(c), we propose that the single
State agency be responsible for ensuring
that eligibility determinations are made
consistent with its rules and that
corrective actions are instituted as
appropriate; that there is no conflict of
interest by any agency delegated the
responsibility to make determinations;
that eligibility determinations are made
in the best interest of beneficiaries; and
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that it guard against improper incentives
or outcomes.
We further propose to add new
§ 435.10(d)(l) through (5), and a
conforming change to the introductory
text at § 431.10(d), to provide that
agreements between single State
agencies and agencies making
determinations must state the quality
control and oversight plans by the single
State agency to review determinations
made by agencies making Medicaid
eligibility determinations; that the
agencies making Medicaid eligibility
determinations report to the single State
agency; that confidentiality and security
requirements in accordance with
sections 1902(a)(7) and 1942 of the Act
for all beneficiary data are met; and that
all agencies making Medicaid eligibility
determinations meet the requirements of
1902(a)(4) relating to personnel
standards.
Finally, we would retain the
requirement in § 431.10(e) that
Medicaid agencies may not delegate the
authority to exercise administrative
discretion or issue policies and rules on
program matters; that the authority must
not be impaired if subject to review by
other entities; and that other entities
must not have the authority to change
or disapprove any administrative
decision of that agency, or otherwise
substitute their judgment for that of the
Medicaid agency for the application of
policies, rules and regulations issued by
the Medicaid agency.
Emcdonald on DSK2BSOYB1PROD with PROPOSALS2
K. Provisions of Proposed Regulation
Implementing Application of MAGI to
CHIP
Section 2101(d) of the Affordable Care
Act revises section 2102(b)(1)(B) of the
Act to ensure that, effective January 1,
2014, that States base income eligibility
for CHIP on MAGI and household
income, as defined in section 36B of the
IRC, consistent with section 1902(e)(14)
of the Act. Below we outline proposed
changes to existing sections (§ 457.10,
§ 457.301, § 457.305 and § 457.320) of
the CHIP regulations, as well as the
addition of new § 457.315, to implement
the CHIP MAGI components of the law.
1. Definitions and Use of Terms
(§ 457.10 and § 457.301)
We propose a nomenclature change,
replacing the term ‘‘family income’’
with ‘‘household income’’ wherever it
appears in 42 CFR part 457, and adding
a definition for ‘‘household income.’’
We propose to modify the term
‘‘Medicaid applicable income level’’ to
clarify that the 1997 Medicaid
applicable income level used in CHIP
will also be converted to a MAGIequivalent income level, consistent with
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guidance provided by the Secretary
under sections 1902(e)(14)(A) and (E) of
the Act. We are also adding other new
terms related to the proposed
regulations.
2. State Plan Provisions (§ 457.305)
Section 2102(a)(5) of the Act directs
States to include a description of their
income eligibility standards in their
State plan. We propose to add a
reference to the new § 457.315 on
application of MAGI and household
income.
3. Application of MAGI and Household
Definition (§ 457.315)
Under section 2102(b)(1)(B)(v) of the
Act, as added by section 2101(d)(1) of
the Affordable Care Act, beginning
January 1, 2014, States will use
‘‘modified adjusted gross income’’
(MAGI) and ‘‘household income,’’ as
those terms are defined in section
36B(d)(2) of the IRC, to determine
eligibility for CHIP, and for other
purposes for which an income
determination is needed, ‘‘consistent
with section 1902(e)(14)’’ of the Act,
which governs the application of MAGI
and ‘‘household’’ income in Medicaid
and which is implemented at proposed
§ 435.603 of these rules. In addition,
section 2107(e)(1)(F) of the Act, as
added by section 2101(d)(2) of the
Affordable Care Act, states that section
1902(e)(14) be applied to CHIP ‘‘in the
same manner’’ as it is applied to
Medicaid.
Currently, States use different
methods for defining income and
household composition under CHIP.
Many States operate their programs
through expansions of Medicaid
coverage. Among States with separate
CHIP programs, some follow Medicaid
financial methodologies while others
rely on different methods, including
gross income tests. While we recognize
that the statutory application of MAGI
rules to CHIP represents a change for
some States, doing so is consistent with
broader goals of coordination across
programs. The adoption of MAGI-based
methodologies to determine income for
CHIP represents a necessary alignment
with other insurance affordability
programs and is particularly important
for families both because children will
be moving among different programs as
family circumstances changes and
because CHIP-eligible children will
often be in families where the parent is
eligible for a premium tax credit
through the Exchange. Because the
statute provides that CHIP apply the
new MAGI methodologies in the same
manner as Medicaid, we propose at
§ 457.315 that, in determining financial
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eligibility for CHIP, States use the
methodologies for determining
household composition and income as
those proposed for Medicaid at
§ 435.603(b)–(h), as well as the
exception, codified at proposed
§ 435.603(i)(1), to permit States to rely
on a finding of income made by an
Express Lane Agency in accordance
with section 2107(e)(1)(E) of the Act. As
discussed in section II.B. of this
proposed rule, our proposed MAGIbased methods for determining
Medicaid eligibility mirror the section
36B definitions of MAGI and household
income, except in a very limited number
of situations.
For a more detailed discussion of the
proposed financial methodologies based
on MAGI to be applied to both CHIP and
Medicaid, see section II.B.1 and II.B.3 of
this proposed rule.
4. Other Eligibility Standards
(§ 457.320)
As discussed in section II.B.3.a and
consistent with current practice in
almost all State CHIPs, assets will no
longer be considered in determining
financial eligibility for Medicaid or
CHIP. Section 457.320(a) lists the
various eligibility standards States may
adopt for one or more groups of
children. We propose eliminating
‘‘resources’’ and ‘‘disposition of
resources’’ in conformance with the law.
The Affordable Care Act also
eliminates the use of income disregards
other than a disregard of 5 percent of
income specified under section
1902(e)(14)(I) of the Act. This means
that, as of 2014, States no longer will be
able to raise their effective income
standards for their CHIPs through the
use of a ‘‘block of income’’ disregard.
The maximum income standard will be
the higher of 200 percent FPL, 50
percentage points above the applicable
Medicaid income level defined in
section 2110(b)(4) of the Act and
§ 457.301, and the effective income
standard in effect in the State (taking
into account any income disregards
adopted) as of December 31, 2013,
converted to a MAGI-equivalent income
standard in accordance with section
1902(e)(14)(A) and (E) of the Act.
5. Clarifications Related to MAGI
Nothing in this regulation affects
existing rules regarding family size in
States that take up the CHIP ‘‘unborn
child option’’ (per the existing
definition of child at § 457.10). In States
that provide coverage under the option
at § 457.10, the unborn child is counted
in family size.
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L. Residency for CHIP Eligibility
(§ 457.320)
CHIP regulations currently allow
States the option to adopt eligibility
standards related to residency. The
following changes to the regulations
governing residency standards for
separate CHIPs are proposed to ensure
coordination between all insurance
affordability programs. Further
discussion on the rationale behind the
proposed changes can be found in
section II.C of this proposed rule.
We propose at § 457.320(d) to modify
the definition of residency for noninstitutionalized children who are not
wards of the State under CHIP to
reference the Medicaid definition for
children at proposed § 435.403(i). As
under § 435.403(i), for purposes of CHIP
eligibility, a child under the proposed
rule is considered a resident of the State
in which he or she resides (for example,
with a parent or caretaker and including
without a fixed address), or in which a
parent or caretaker is employed or
seeking employment, including seasonal
workers. The provisions of the proposed
rule are not intended to effect a
significant change in policy, and are
discussed in more detail in section
II.C.2 of this proposed rule. The
provision at § 435.403(m) of the
Medicaid rule, involving situations in
which two or more States dispute a
child’s State of residence, is also
applied under the proposed rule to
CHIP; under that provision, physical
location governs.
Emcdonald on DSK2BSOYB1PROD with PROPOSALS2
M. CHIP Coordinated Eligibility and
Enrollment Process
Section 2101(e) of the Affordable Care
Act adds section 2107(e)(1)(O) to the
Act to apply to CHIP the same
enrollment simplification standards
described for Medicaid under the new
section 1943 of the Act. These standards
build on existing practices and
provisions in section 2102(b)(3)(B) of
the Act relating to coordinated
eligibility and enrollment between
Medicaid and CHIP. The regulatory
amendments proposed correspond to
proposed changes and additions to
Medicaid at § 435.905 through
§ 435.908, § 435.916, § 435.917,
§ 435.940 through § 435.956, and
§ 435.1200, discussed more fully at
sections II.D, II.E, II.G, II.H, II.I, and II.K
of this proposed rule. We seek
comments for CHIP on the issues raised
in these corresponding sections for
Medicaid.
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1. Applications and Outreach Standards
(§ 457.330, § 457.334, § 457.335 and
§ 457.340)
We propose revisions to § 457.330
similar to those proposed for Medicaid
at § 435.907 to implement the use of a
single, streamlined application for all
insurance affordability programs, which
builds on the successful experience
many States have had with joint
Medicaid-CHIP applications.
We propose adding § 457.335 and
modifying § 457.340(a) to set forth
standards for the availability of program
information and application assistance,
similar to those proposed for Medicaid
at § 435.905 and at § 435.908, discussed
in section II.E.3 of this proposed rule.
We propose removing the mention of
enrollment caps in § 457.340(a) to
support the role of CHIP agencies in
accepting the single streamlined
application and screening for all
insurance affordability programs
regardless of whether CHIP enrollment
is capped. To implement section
1943(b)(4)of the Act, relating to the
establishment of Web sites to facilitate
application and enrollment in all
insurance affordability programs, we
propose adding § 457.335 similar to the
rule proposed for Medicaid at
§ 435.1200(d), discussed in section II.I.
of this proposed rule.
We propose to revise § 457.340(b) to
specify that all CHIP agencies require
applicants who have an SSN to provide
it. We recognize that the Privacy Act
makes it unlawful for States to deny
benefits to an individual based upon
that individual’s failure to disclose his
or her Social Security number, unless
such disclosure is required by Federal
law or was part of a Federal, State or
local system of records in operation
before January 1, 1975. However,
section 1414(a)(2) of the Affordable Care
Act authorizes the Secretary to collect
and use SSNs where necessary to
administer the provisions of, and
amendments made by, the Affordable
Care Act. We believe such section
provides the authority for the
requirement of SSNs when applicants
are using the coordinated system and
streamlined application designed by the
Secretary under section 1413 of the
Affordable Care Act. However, similar
to Medicaid, non-applicants cannot be
required (but may be requested) to
provide an SSN. Consistent with
Medicaid regulations at § 435.910, the
CHIP agency must not deny or delay
services to an otherwise eligible
applicant pending issuance or
verification of an applicant’s SSN.
We propose revisions to the effective
date of eligibility in § 457.340(f) to
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ensure that the method adopted by the
State for determining the effective date
of coverage will provide for a
coordinated transition of children
between programs as family
circumstances change, without gaps or
overlaps in coverage.
2. Determination of CHIP Eligibility and
Coordination With Exchange and
Medicaid (§ 457.348 and § 457.350)
We propose to add new coordination
rules at § 457.348 to mirror the rules for
Medicaid agencies at proposed
§ 435.1200(e) and (f), and to coordinate
with the rules in 45 CFR § 155.345 of
the Exchange proposed rule. Proposed
§ 457.348(a) and (b) would ensure that
State CHIP agencies promptly enroll
individuals determined eligible for
CHIP by the Exchange, without
requiring additional information or
making further determinations, and
promptly determine the eligibility of
(and, if eligible, enroll) individuals
determined potentially eligible for CHIP
by the State Medicaid agency.
Consistent with current CHIP policy,
proposed § 457.348(c) clarifies that
CHIP agencies may enter into
arrangements with the State Medicaid
agency to accept that agency’s
determinations of CHIP eligibility.
We also propose revisions to
regulations at § 457.350, which
currently relate to the responsibilities of
the CHIP agency to coordinate with
Medicaid. The proposed revisions are
consistent with those proposed for
Medicaid agencies at § 435.1200(g),
discussed in section II.I.5 of this
preamble, and 45 CFR § 155.345 of the
Exchange rule, discussed in section
II.A.1 of the Exchange preamble.
Two of the proposed revisions to
§ 457.350 warrant particular mention.
First, the standards at § 457.350, as
revised, apply to all individuals who are
included as applicants on the single
application—for example, parents and
other adults in the household. Second,
at § 457.350(j), we propose that, for
children who do not appear Medicaid
eligible based on MAGI, but whom the
CHIP agency identifies as potentially
eligible for Medicaid on another basis,
such as disability, the CHIP agency both
transmit the application and all
pertinent information to the Medicaid
agency for a full Medicaid evaluation
and continue to process the CHIP
determination, enrolling the child, if
eligible, in the program unless and until
the child is determined eligible for
Medicaid. This is consistent with the
process proposed for the Exchange at 45
CFR 155.345 in the Exchange proposed
rule and with the responsibilities of the
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Medicaid agency at proposed
§ 435.1200(f).
We anticipate significant variation in
how States choose to operationalize the
coordination of CHIP with other
insurance affordability programs, and
we will work with States to achieve the
high level of integration of processes,
which will be needed to effectuate the
coordination required and to avoid
duplication of costs and reduce
administrative burden on States,
children, and their families. At
proposed § 457.350(k), we note that
CHIP agencies may enter into
arrangements with the Exchange to
make eligibility determinations for
advanced premium tax credits in
accordance with section 1943(b)(2) of
the Act.
3. Periodic Redetermination of CHIP
Eligibility (§ 457.343) and Coverage
Months
Under sections 1943(b)(3) of the Act
and sections 1413(a) and 1413(c)(2) of
the Affordable Care Act, we propose to
add new policies at § 457.343 to
implement the data-driven renewal
procedures for CHIP proposed for
Medicaid at § 435.916. For a fuller
discussion of the proposed renewal
process, which we believe is consistent
with current renewal processes in many
States; see section II.G of this proposed
rule. The proposed data-driven
verification system is also consistent
with the system proposed for the
premium tax credit determinations
conducted by the Exchange.
In proposed 45 CFR § 155.410 of the
Exchange proposed rule published on
July 15, 2011, eligibility begins on the
first day of the following month for all
qualified health plan selections made by
the 22nd of the previous month, and on
the first day of the second following
month for all qualified health plan
selections made between the 23rd and
last day of a given month. Similar to
Medicaid, we are seeking comment on
a provision that would continue CHIP
coverage until the end of the month
following the end of the appropriate
termination notice period, subject to
certain exceptions. This policy, which
we believe is the policy currently in
operation in most CHIPs, would prevent
a gap in coverage for an individual or
family moving from CHIP to the
Exchange. Further discussion of this
issue can be found at section II.G. of this
proposed rule.
4. Verification of Eligibility (§ 457.380)
Consistent with the provisions of
section 1413(c)(3)(A) of the Affordable
Care Act (applicable to CHIP through
sections 1943(b)(3) and 2107(e)(1)(O) of
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the Act), we propose revising § 457.380,
based on section 1413 of the Affordable
Care Act, relating to verification of
eligibility for separate CHIPs consistent
with the rules proposed for the
Exchanges and Medicaid. Consistent
verification procedures prevent gaps in
coverage caused by different programs
operating under different rules.
To better align all insurance
affordability programs, we reference
specific verification methods for
residency and income. Proposed
§ 457.380(c) references proposed
regulations for verification of residency
for purposes of Medicaid eligibility at
§ 435.956(c), which also align with
proposed Exchange regulations at 45
CFR 155.315(c). At proposed
§ 457.380(d), we require separate CHIPs
to verify income in accordance with
proposed Medicaid regulations at
§ 435.948, which are coordinated with
proposed Exchange regulations at 45
CFR 155.320. As described in
§ 435.945(b) and § 435.948, States may
continue to choose to accept selfdeclaration of income, but must also
request information from third-party
data sources in accordance with
§ 435.948 and to continue to comply
with program integrity requirements.
States are not required under § 435.948
to request third-party financial
eligibility information that the State
determines is not useful to verifying the
financial eligibility of the applicant. For
other eligibility criteria, we propose in
§ 457.380(a) and (e) to continue to allow
CHIPs to develop reasonable verification
procedures, including reliance on selfdeclaration or attestation (except when
verifying citizenship or immigration
status). However, we explicitly provide
that States accept self-attestation of
pregnancy and household membership,
as proposed for Medicaid in
§ 435.956(e), unless the State has other
information that is not reasonably
compatible with the attestation. We also
provide standards for verifying age and
date of birth.
The Affordable Care Act envisions a
data-driven verification system in order
to improve the application experience
for families while maintaining strong
program integrity. Mirroring standards
being proposed for Medicaid at
§ 435.952 and the Exchange at 45 CFR
155.315, we propose adding § 457.380(f)
to clarify that the State may only request
additional information if it is not
available electronically. Consistent with
proposed Medicaid regulations at
§ 435.948(b), we propose in § 457.380(g)
that States must use the electronic
service established by the Secretary
under proposed § 435.949 if reliable
electronic data needed for verification is
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available. In proposed § 457.380(h), we
affirm that program integrity
responsibilities for CHIP are not affected
by this proposed regulation.
Finally, we propose adding
§ 457.380(i), similar to proposed
§ 435.948(f) and § 435.949(c) of the
Medicaid regulation, and to enable
States, with approval from the
Secretary, to modify the verification
procedures used by its program. We
solicit comments on alternative
verification methods that may help
improve coordination between CHIP
and other insurance affordability
programs.
5. Ministerial Changes (§ 457.80,
§ 457.300, § 457.301, § 457.305 and
§ 457.353)
We are also proposing a number of
ministerial changes necessary to bring
other sections of the current CHIP into
conformance with the proposed changes
and revisions described above,
including revisions to § 457.80,
§ 457.300, § 457.301, § 457.305 and
§ 457.353.
N. FMAP for Newly Eligible Individuals
and for Expansion States
The Affordable Care Act provides for
a significant increase in the FMAP for
medical assistance expenditures for
individuals determined eligible under
the adult group in the State and who are
considered to be ‘‘newly eligible’’, as
defined in section 1905(y)(2)(A) of the
Act. The increased FMAP specified in
section 1902(y)(1) of the Act is not
available for the medical assistance
expenditures for any individual who is
not considered newly eligible. Under
section 1905(y)(2) of the Act, an
individual is newly eligible if the
individual would not have otherwise
been determined eligible for Medicaid
under the eligibility provisions of the
Medicaid State plan, demonstrations, or
waivers in effect in the State as of
December 1, 2009.
1. Availability of FMAP (§ 433.10(c))
We propose to amend 42 CFR part 433
to add new provisions at § 433.10(c) to
indicate the increases to the FMAPs as
available to States under the Affordable
Care Act. The following describes these
new FMAP provisions.
a. Newly Eligible FMAP (§ 433.10(c)(6))
In § 433.10, we propose to add a new
paragraph (c)(6) to indicate the
increased FMAP rates available to States
beginning January 1, 2014, for the
medical assistance expenditures of
individuals determined eligible under
the adult group who are considered to
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be newly eligible, as defined in section
1905(y)(2)(A) of the Act.
b. Expansion State FMAP (§ 433.10(c)(7)
and § 433.10(c)(8))
In § 433.10, we propose to add new
paragraphs (c)(7) and (8) to indicate the
availability of additional FMAP rates for
expansion States.
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(1) 2.2 Percentage Point Increase in
FMAP (§ 433.10(c)(7))
Per section 1905(z)(1) of the Act, we
propose to add § 433.10(c)(7) to indicate
the availability of a general 2.2
percentage point increase to the base
FMAP of a State (as determined under
section 1905(b) of the Act) for certain
expansion States, as defined in section
1905(z)(3) of the Act. The general 2.2
percentage increase to the base FMAP is
available only to a State that: (1) Meets
the definition of expansion State; (2)
does not qualify for any payments for
the full increased FMAP for individuals
who are newly eligible; and (3) has not
been approved by the Federal
government to use amounts of their DSH
allotments for the costs of providing
medical assistance or other health
benefits coverage under a demonstration
that was in effect on July 1, 2009. Only
for States that meet these 3 conditions,
the base FMAP would be increased by
2.2 percentage points for all
expenditures in CYs 2014 and 2015 (to
which the base FMAP would apply).
Since by definition, the base FMAP plus
2.2 percentage points would only be
available and applicable for
expenditures for individuals who are
not newly eligible, such general increase
would be available for all individuals in
such States.
(2) Expansion State FMAP
(§ 433.10(c)(8))
The increased FMAP discussed in
section II.N.1.a. of this proposed rule is
available for individuals in the adult
group who are considered to be newly
eligible. We propose to add
§ 433.10(c)(8) to indicate an additional
FMAP rate will be available for
expansion States for the expenditures
for certain nonpregnant childless adults
who are determined eligible under the
adult group, and who are not considered
to be newly eligible, as defined in
section 1905(y)(2)(A) of the Act.
Beginning in CY 2014 and each year
thereafter, the expansion State FMAP
for medical assistance for individuals
described in the adult group who are
nonpregnant childless adults is equal to
the base FMAP for the State increased
by a certain percentage determined in
accordance with a formula specified in
section 1905(z) of the Act, as amended
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by the Affordable Care Act. This new
expansion State FMAP is equal to the
base FMAP plus a ‘‘transition
percentage’’ multiplied by the difference
between the Newly Eligible FMAP
provided to States beginning in CY 2014
and the expansion State’s base FMAP.
The transition percentage is as follows:
• 50 percent in CY 2014;
• 60 percent in CY 2015;
• 70 percent in CY 2016;
• 80 percent in CY 2017;
• 90 percent in CY 2018; and
• 100 percent in CY 2019 and every
year thereafter.
The following illustrates how the
expansion State’s FMAP would be
calculated:
Example. In CY 2019, assume the
expansion State’s base FMAP is 60
percent. In CY 2019 the Newly Eligible
FMAP is 93 percent. Therefore, in this
example, in CY 2019 the expansion
State FMAP would be 93 percent,
calculated as follows:
E = F + (T × (N ¥ F))
E = Expansion State FMAP
F = Expansion State’s Base FMAP
T = Transition Percentage
N = Newly Eligible FMAP
93% = 60% + (100% × (93% ¥ 60%))
Beginning in 2020 both the expansion
State FMAP and the newly eligible
FMAP will be 90 percent.
2. Methodology (§ 433.206(a) and
§ 433.206(b))
One of the key steps in simplifying
the eligibility determination process for
individuals and States involves
developing a methodology that ensures
the Federal government will pay the
appropriate FMAP rate for both ‘‘newly
eligible’’ individuals as well as for
expenditures that are subject to the
expansion State FMAP rate. As
discussed above, the Affordable Care
Act provides for streamlined eligibility
and enrollment policies and processes
that are a departure from the more
complex pre-Affordable Care Act
Federal Medicaid eligibility policy, but
the pre-Affordable Care Act rules retain
relevance for the purposes of
determining the appropriate FMAP rate
for expenditures beginning in CY 2014.
Although the new MAGI rules are used
for purposes of determining eligibility
for the adult group, the newly eligible
FMAP is not available for all
individuals whose eligibility will be
determined using MAGI; rather the
newly eligible FMAP is only available
for those members of the adult group
who are determined to be newly eligible
as discussed in this regulation. In order
for States to determine which
beneficiaries are ‘‘newly eligible’’ and
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which are not, States must evaluate a
large group of beneficiaries against the
State’s pre-Affordable Care Act
eligibility rules. To do so on a case-bycase basis would require States to
operate two eligibility systems or
processes—one simplified system for
the purpose of determining eligibility,
and another different and more complex
system to assign the appropriate FMAP
rate. The two sets of rules would, in
turn, require Exchanges as well as State
Medicaid agencies to collect from
applicants information in excess of what
is required for States to determine
eligibility either for Medicaid or
premium tax credits available through
the Exchange.
Running two distinct eligibility
systems would pose challenges to
applicants, States, and the Federal
government. Applicants would have to
report and verify income, assets, and
deductions under pre-Affordable Care
Act rules, even though that information
would no longer be required to
determine eligibility. Similarly, States
and the Federal government would have
to seek and verify information not
needed for eligibility determinations,
resulting in excess administrative
burden and inefficiency, a result
counter to the goals of the Affordable
Care Act.
Because a double eligibility system is
burdensome and costly to States and the
Federal government, a barrier to
enrollment for eligible individuals and
families, and would likely lead to
inaccurate determinations, we have
identified possible alternate approaches
for determining the appropriate FMAP
rate. Specifically, this proposed rule
discusses the potential revision of
regulatory provisions in part 433 to
propose three alternative methodologies
which States could use for claiming
expenditures at the appropriate FMAPs:
The regular FMAP, the newly eligible
FMAP and the expansion State FMAP
for individuals eligible for Medicaid
beginning in CY 2014 under the
provisions in sections
1902(a)(10)(A)(i)(VIII) and 1905(y) and
(z) of the Act as amended by the
Affordable Care Act. The proposed rules
would not permit FFP for the costs of
maintaining dual eligibility systems for
the adult group. HHS plans to test, with
States, each of the proposed
methodologies and possibly others
suggested through the comment process.
Once the rules are finalized, CMS will
provide technical support to States as
they adopt an identified methodology.
In developing the proposed claiming
methods, in consultation with States
and subject matter experts, we
identified and applied certain principles
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to assure that each method will
accurately reflect the application of the
appropriate FMAP. These principles are
also the criteria against which we will
measure the feasibility of the
approaches proposed in this proposed
rule and others that may be proposed
during the comment period. First, any
methodology must provide as accurate
and valid application of the applicable
FMAPs to actual expenditures as
possible in the determination of the
appropriate amounts of Federal
payments for such expenditures. The
methodology must not include a
systemic bias in favor of either the
States or the Federal government.
Second, any allowable methodology
should minimize administrative
burdens and costs to States, the Federal
government, individuals, and the health
care system. Third, any methodology
must be developed and applied
transparently by both the Federal
government and States. Fourth, any
method must take into consideration the
practical programmatic and operational
goals of the Medicaid program. Finally,
in order to ensure that the States claim
expenditures at the correct FMAP, any
methodologies used by the States
should include sufficient data to
identify, associate and reconcile
expenditures with the related eligibility
group to which the FMAPS apply. With
these principles in mind, we propose
that States work in partnership with the
Federal government on technical
support and review as well as ongoing
monitoring, verification, and adjustment
by States and the Federal government.
HHS plans to monitor State
implementation and operations closely
and could require adjustments and
changes to processes as necessary to
ensure that systems are implemented in
an unbiased and accurate way. HHS is
exploring mechanisms to verify
methodology results, including on-site
reviews, sampling and confirmation
with outside data sources, which could
identify issues resulting in improper
levels of FMAP being claimed. HHS will
define procedures as needed to ensure
accurate reporting and verification of
computations to determine the
applicable FMAP potentially including
enhanced monitoring and prospective or
retrospective FMAP adjustments. States
and the Federal government each have
a strong interest in an accurate,
simplified system, and we expect to
undertake these efforts in full
partnership with States.
Given the principles discussed above,
we are considering three main
approaches to identifying newly eligible
individuals for purposes of applying the
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correct FMAP rate in the development
of States’ claims for Federal funding in
Medicaid: (1) Using upper income and
other thresholds across categorical
eligibility groups, taking into account
the December 2009 eligibility standards
in effect under State plans, waivers or
demonstrations and applicable
disregards and adjustments, to
approximate, in the aggregate, the
December 2009 standards; (2) using a
sampling methodology across
individuals in the adult group and
related Medicaid expenditures to make
a statistically valid extrapolation of who
is newly eligible and their related
expenditures; or (3) using an
extrapolation from available data
sources to determine the proportion of
individuals covered under the new
adult group who would not have been
eligible under the eligibility criteria in
effect under the State plan or applicable
waiver as of December 1, 2009,
validating and adjusting the estimate,
based on sampling or some other
mechanism, going forward. We seek
comment on these three approaches.
At § 433.206(a), we propose that a
State may opt to use any of the specified
alternatives discussed below. As
discussed further, these specific options
may not ultimately be the methods
available, as we expect to modify,
narrow or combine the proposed
approaches in the final rule depending
upon public comment and testing for
feasibility. We are specifically interested
in input as to what other options should
be considered, and whether it is
advisable for States to choose from
among different methods or for HHS to
identify a single method that all States
would use.
If selection is available, we propose at
§ 433.206(b) that a State provide notice
to CMS of which methodology it plans
to use at least two calendar years prior
to the first day of the calendar year in
which the State will use that particular
method, except for 2014 as discussed
below. For example, a State would
provide notice to CMS of the
methodology it plans to use for CY 2017
no later than December 31, 2014. For the
initial year (CY 2014), States would give
notice to CMS no later than one year
prior to the beginning of the calendar
year, January 1, 2013. This allows States
time to determine which method best
meets their needs in that context and to
make preparations for the systems and
eligibility determination modifications
needed for the initial years. We further
propose that once a State selects a
methodology, it must use that method
for a 3-year period, at a minimum,
subject to necessary monitoring and
adjustment. This will allow stability in
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the process and allow for the provision
of appropriate allocation of resources
within the State and at the Federal level.
We request comments on this minimum
3-year period.
As noted above, we are proposing to
not provide the option of maintaining
double eligibility systems and
completing a determination for each
individual under obsolete eligibility
rules for purposes of determining the
appropriate FMAP because we believe
that this is neither necessary nor
efficient. Rather, we propose to rely on
one or more alternate methodologies.
3. Alternative 1: 2009 Eligibility
Standard Threshold
The ‘‘threshold methodology’’ would
allow States to use upper-income
thresholds, as well as proxies for other
eligibility criteria (such as assets or
disability status) across categorical
eligibility groups, taking into account
the December 1, 2009 eligibility
standards, to determine whether an
individual is considered to be newly
eligible for purposes of assigning a
Federal matching rate. This
methodology would use information the
individual supplied on their
application, and other appropriate data
sources, subject to appropriate
verification and documentation
requirements, to assign the individual to
one of the categories that the Affordable
Care Act subsumed into the adult group,
such as certain parents and caretaker
relatives, 19 and 20 year olds, and
childless adults, and to then apply
simplified eligibility criteria based on
the rules in effect December 1, 2009 to
identify those who would have been
eligible under the December 1, 2009
criteria. This option requires States to
apply the December 1, 2009 eligibility
criteria, but in a simplified manner, to
each Medicaid beneficiary who is
included in the adult group. Based on
the threshold combined with proxies,
the individual would be determined to
be newly eligible or an individual who
would have been eligible based on the
December 2009 eligibility standards.
As previously noted, States will need
to establish income eligibility
thresholds for MAGI populations to be
eligible for Medicaid under the State
plan, demonstration or a waiver of the
plan using MAGI that are not less than
the effective income eligibility levels
that applied under the State plan,
demonstration or waiver on the date of
enactment of the Act (‘‘income standard
conversion’’). States using the threshold
methodology similarly could convert
the income standards in effect as of
December 1, 2009 for other optional
eligibility groups (for example, based on
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disability) to MAGI-equivalent
standards, against which the MAGIbased income of an individual eligible
under the new adult group would be
compared for the purpose of
determining whether such individual
would have been eligible under the
optional group and thus is newly
eligible or not. CMS will solicit State
input and providing further guidance
and technical support on the income
standard conversion process.
We propose that States employing this
threshold methodology would also
establish, subject to CMS approval,
proxies of eligibility criteria in place
prior to CY 2014 that are not related to
income, such as disability status and
asset value. For disability, for example,
proxies could be based on receipt of
SSDI, screening questions included in
the application process (for example,
‘‘Have you had an accident or illness
serious enough that it has caused and is
still causing you to miss work for an
extended period of time?’’), retroactive
claims review (to determine individuals
with significant medical problems),
some other method, or such methods in
combination (for example, use of both a
screening question and retrospective
claims review). States would have to be
clear with applicants that this
information would not be used for an
eligibility determination purposes. We
are requesting comments on what
methods or proxies could be used by
States for disability status as well as
whether there are any special
considerations which must be
considered in the identification or use
of appropriate proxies for States that
apply a more restrictive definition of
disability than the SSI program.
Although we are looking for proxies
for disability determinations to
determine whether to claim enhanced
FMAP for an individual or not, we are
also considering the possibility of using
only actual disability determinations to
ascertain the appropriate FMAP. Thus,
if an individual underwent an actual
disability determination and was found
to be disabled, and met other criteria
associated with a pre-Affordable Care
Act optional eligibility category for the
disabled such that he or she would have
been eligible as disabled in December
2009, that individual would not be
newly eligible. This proposal would be
feasible to the extent that it is
reasonable to expect that individuals
with disabilities have sufficient
incentives to undergo disability
determinations, most likely to obtain
disability-related cash benefits, such
that a proxy is not necessary. We are
soliciting comments on whether
adequate incentives do exist such that
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no additional proxies for a disability
determination need be applied.
For the reasons noted, we are also
proposing that States using the
threshold methodology identify
thresholds or proxies for estimating
whether individuals in the adult group
meet any asset test that was applied to
the applicant’s coverage category in
December 2009. The State would also
propose procedures for obtaining the
information needed to compare the
situation of individuals in the adult
group to the proxy. For example a State
might include a few simple questions
during the application process to enable
comparison against the proxy, for
example, ‘‘Excluding your primary
residence and automobile, are your
assets, including any savings or
checking accounts, stocks, bonds, or
other liquid assets, greater than X
dollars?’’ States could also use
information on tax returns to obtain
information about assets via interest or
dividend income. We also are interested
in comments regarding the feasibility of
using the Asset Verification System
(AVS), required for all States under
section 1940 of the Act as a tool to
obtain asset data on individuals in the
adult group without asking for it
directly.
We also considered proposing that the
threshold methodology be limited to an
individual’s income and not the assets/
resources when comparing the
individual against the December 2009
eligibility criteria. This would allow
States to not collect asset information no
longer needed for eligibility purposes
and it is consistent with analysis
showing that only very small numbers
of people with income in this range will
have disqualifying assets. However,
without evaluating assets, all
individuals whose incomes are below
the income threshold would not be
newly eligible, even though it is
possible that some would not have been
eligible under the pre-Affordable Care
Act rules. Thus, if assets are not
considered there could be individuals
who would be newly eligible, but for
whom the State could not claim
enhanced match. We believe this
methodology has merit as we recognize
there is a burden on States and to
beneficiaries in including an asset proxy
and that a significant portion of lowincome individuals do not have assets
in excess of those thresholds. We invite
comment on both approaches.
In lieu of additional questions on an
application for coverage asking about
assets, we are also considering allowing
States to develop an estimate based on
actual data on the proportion of
individuals applying for coverage who
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failed eligibility for a specific group in
effect as of December 1, 2009 due to
possession of assets exceeding the asset
limit. For example, if the State had an
optional disability group in December
2009 with a resource test, and 15
percent of applicants were denied
coverage in that group because their
assets exceeded the resource, the State
could assume that 15 percent of the
disabled individuals with incomes
below the converted December 2009
standard in the adult group would also
fail the asset test. The State would
therefore estimate the percentage of
individuals who were disabled in the
adult group would be newly eligible.
We are interested in comments as to
whether States have reliable data upon
which this calculation could be made.
We also propose that once an
individual is determined to be either a
newly eligible individual or an
individual who would have been
eligible under the December 2009
standards for FMAP determination
purposes, the determination would be
applicable throughout the 12-month
eligibility period after a person is
determined eligible. Our proposal is
based on the observation that changes in
income occur in both directions and are
not biased in one direction or the other.
Our proposal is also based on the goal
of achieving administrative simplicity,
which can best be obtained through a
single annual FMAP determination for
an individual who remains enrolled in
Medicaid, whether continuously
enrolled or not, rather than requiring a
State to potentially make many such
determinations over the course of a year.
Finally, we do not believe that States
need to consider whether an individual
would have been eligible under a spend
down for a medically needy category
under section 1902(a)(10)(C) of the Act
in considering whether someone would
have been eligible under standards in
effect in December 2009. This is because
we believe that there is inherent
uncertainty in determining whether and
when a spend down would have been
met. An individual who is not yet
‘‘medically needy’’ because he or she
has not yet met the spenddown
requirements would not be considered
to be eligible for Medicaid under the
December 2009 standards. However, if
an individual does qualify by meeting
the medically needy income standard
without a spenddown, the State could
not claim enhanced FMAP for that
individual.
The threshold methodology would
require ongoing monitoring,
verification, and adjustment. States
using the threshold methodology would
need to work with CMS to verify this
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methodology for a sample of cases
within the first 2 years of use to test
whether the threshold methodology is
accurate and valid. We propose to
undertake a periodic review, working
collaboratively with States to evaluate
the accuracy of the threshold
methodologies and make adjustments to
improve the accuracy of the threshold,
as needed. We propose that adjustments
to the methodology would be
prospective only. Once a State has an
approved methodology, that
methodology would apply unless and
until a review process indicated that
adjustment was necessary. Finality and
certainty are important for the operation
of the program.
4. Alternative 2: Statistically Valid
Sampling Methodology (§ 433.210)
At § 433.210, we are proposing the
standards for States to use sampling to
extrapolate the correct expenditures for
which the State would receive the
FMAP rate for newly eligible
individuals established under the
Affordable Care Act. Sampling is the
statistical practice of selecting a random
and unbiased subset of Medicaid
eligible individuals and their related
expenditures. We believe that a
statistically valid sampling plan is a
transparent, and widely accepted
methodology of allocating costs. OMB
Circular A–87 revised establishes
principles and standards for
determining costs for Federal awards
carried out through grants, cost
reimbursement contracts, and other
agreements with State and local
governments and Federally-recognized
Indian tribal governments. We propose
that States using this methodology
would use a statistically valid sampling
methodology meeting the requirements
of OMB A–87.
To ensure consistency, we propose to
specify the additional standards States
would need to use to perform a
statistically valid sample of the
population of individuals covered under
the new eligibility group created by the
Affordable Care Act, to determine the
proportion that would not have been
eligible based on the State’s December
2009 eligibility standards, and therefore
be newly eligible. We propose to specify
standards within this regulation as well
as in accompanying guidance relating to
sample size and specifics of sampling
techniques, etc. We believe this will
allow HHS to work with States to refine
specific sampling requirements and
procedures as we gain experience over
time. For example, we anticipate the
sample size requirements may evolve as
we gain experience with actual data
becoming available and tested over
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time. We also believe that guidance on
the inclusion of specific demonstrationrelated issues would be best provided
through subregulatory guidance to allow
better consideration of State-specific
issues, as well as to provide an
opportunity to refine the specific
methodologies and requirements.
For all individuals selected for the
sample, the State would perform the
equivalent of a full eligibility
determination using the eligibility
standards in place in that State as of
December 2009. Each individual in the
sample would be determined to be
either a newly eligible individual or an
individual who would have been
eligible under the December 2009
standards. We propose that States
should submit their sampling plans to
CMS with adequate time for review and
approval in advance of implementation,
preferably not later than the first day of
the calendar year for which the State
will implement that plan.
We propose that the State would pull
the claims for each selected individual
to determine actual expenditures for the
sample. The State would determine the
proportion of actual expenditures in the
sample that were for newly eligible
individuals and extrapolate this
proportion to the population sampled to
determine the correct allocation of
expenditures for which the State would
make a claim at the FMAP rate for
newly eligible individuals established
under the Affordable Care Act. We
believe this methodology would most
accurately determine a weighted
expenditure proportion from actual
claims to apply to the adult group.
We also considered using a
methodology in which a per capita
expenditure would be determined for
the adult group. States would apply this
per capita expenditure amount
proportionately to determine the
appropriate FMAP claiming. We believe
this methodology may allow for greater
ease of administration, but seek
comment on whether this would reflect
a fair allocation of expenditures to each
distinct population.
We propose that States would perform
a statistically valid sample for the year
in which the State is claiming. This
sample would be based on the entire
adult group population, from which the
State would randomly select Medicaid
eligible individuals on a monthly basis,
in accordance with CMS’ sampling
guidelines. Once individuals are
determined in that month of review to
be either a newly eligible individual or
an individual who would have been
eligible under the December 2009
standards, the State would apply that
eligibility determination throughout the
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entire year for the purpose of FMAP
determination. Our proposal is based on
the observation that switches occur in
both directions and are not biased in
one direction and the administrative
simplicity that can be obtained through
a single annual determination is
preferred.
The State would pull all medical
expenditures for the prior 12 months for
the individual. If the individual is
enrolled exclusively in a managed care
organization (MCO), for which the State
makes a capitated monthly payment to
an MCO, the State would consider the
risk-adjusted monthly payment to the
MCO as the full medical assistance
expenditure for that individual for each
month the individual is so enrolled.
Otherwise, the medical expenditures for
each individual are equal to the actual
expenditures made to providers for
items and services provided to that
individual. It does not include any
Medicaid supplemental payments that
are not associated with medical
assistance payments made for specific
items and services provided to a specific
individual.
We propose that the State complete
the sampling and related expenditure
analysis no later than 2 years after the
completion of the designated year. The
State will retroactively apply the FMAP
to the correct year and make any
necessary prior period adjustments to
the CMS–64 expenditure report to
assure accurate Federal funding. We
will work with States to meet the
proposed time frame to ensure their
ability to claim the enhanced funding.
We propose that the State would
claim based on the most recent data for
the current year. We understand that the
State will not have accurate data based
on the actual year’s enrollment and
expenditures until after the finish of
that year. Therefore, we propose to
allow States to make interim claims for
the FMAP rate for newly eligible
individuals established under the
Affordable Care Act. These claims
would be based on the most recent year
for which a State has statistically valid
data. For example, in CY 2020, if a State
had a completed sample for CY 2018,
but was finalizing its sample and related
extrapolation for CY 2019, the State
would use the data from the CY 2018
sample and apply the FMAP according
to the CY 2018 findings. Once the State
completes the CY 2020 sample, it will
retroactively adjust the CY 2020
expenditures claimed on the CMS–64 to
incorporate the actual data from 2020
(the process for CYs 2014 and 2015 is
discussed below). We solicit comment
on this estimation and reconciliation
process.
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We propose that States will continue
to sample on an annual basis for the first
consecutive three years the State
implements a sampling methodology.
For all following years, we propose that
the State would sample on a 3-year
basis.
For the initial years (CYs 2014 and
2015), we propose to allow States to
calculate and apply a reasonable
estimate of the expenditures claimed at
the Newly Eligible and expansion State
FMAP rates established under the
Affordable Care Act and make the
retroactive adjustment described above
based on CY 2014 data extrapolated
using the State’s sampling methodology.
We would allow States to create a
reasonable estimate in one of two ways:
(a) Based on a State’s statistically valid
sample of low-income populations that
reasonably approximates the expected
Medicaid adult group; or (b) based on a
HHS developed estimate of the
proportion of newly eligibles and per
capita expenditures for the projected
newly eligibles that HHS would develop
and test in collaboration with States by,
for example, using a combination of
Medical Expenditure Panel Survey
(MEPS) and Medical Statistical
Information System (MSIS) data, or
other existing data sources. In the first
option, we propose to allow States to
calculate the projected per capita
expenditures for the newly eligible
population based on a sample of the
low-income population of those
individuals enrolled in and appearing to
be potentially eligible for Medicaid as of
CY 2014. The States would use the
sampling methodology guidelines
applied to the population of State
residents (Medicaid enrollees and other
low-income individuals) that
approximated the expected Medicaid
eligible adult group. We propose that
States submit a sampling plan
demonstrating compliance with OMB
Circular A–87 and, other requirements
specified within this rule and other
CMS sampling guidance. The
methodology must include not only a
description of the population from
which the sample will be pulled prior
to CY 2014, but also how the chosen
population approximates the adult
group. States would complete the
sample and expenditure extrapolation
in accordance with a sampling plan
prior to January 1, 2014.
We propose that States use data from
the sample to calculate the projected
proportion of newly eligible
individuals, as well as per capita
expenditures for such individuals. The
State would use MSIS data and
Medicaid experience to estimate
expenditures for the ‘‘would have been
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eligible’’ population. The State would
use this information to determine the
appropriate estimated expenditure
proportions to claim at the respective
FMAP rates for the initial years.
We propose to allow Federal match
based on the estimate until the actual
data became available and sampled in
accordance with the methodology
established above. The State would
make a retroactive claims adjustment on
the CMS–64 based on the actual data
from CY 2014.
Alternatively, in the second option we
propose to allow States to use a CMS
established estimate of the proportion
and per capita expenditures for the
projected newly eligible for CY 2014
based on currently available Statespecific data (for example using MEPS
data, a combination of MEPS and MSIS
data, or other existing data sources). We
propose to establish the proportion of
newly eligible individuals and per
capita expenditure amounts that each
State could use in estimating FMAP for
the initial years. We would publish the
estimates for State use for CY 2014 no
later than January 1, 2013 to ensure
States have sufficient time to
incorporate the data and create
reasonable estimates.
We propose to provide Federal match
based on the estimate until the actual
data became available and sampled in
accordance with the CMS-established
sampling requirements established in
this regulation and in future
subregulatory guidance or validated in
another way. If sampling were chosen as
a validation method, we propose to
require that States would implement a
statistically valid sample methodology
throughout CYs 2014 and 2015 to
determine the correct proportion of
newly eligibles and expenditures to
claim at the 100 percent FMAP for CYs
2014 and 2015, respectively. The State
would make a retroactive adjustment
based on the actual data from CY 2014.
We consider this concept to be similar
to an interim rate payment
methodology. It allows for the State to
receive the increased FMAP rate for a
reasonable estimate of newly eligible
individuals and settle to actual
expenditures when the data is available.
We are soliciting comments on this
approach.
5. Alternative 3: Use of a FMAP
Methodology Based on Reliable Data
Sources (§ 433.212)
We are also proposing an option for
States to use State specific estimates
established by the Secretary using
reliable data sources such as MEPS data
or State MSIS data. This option is
described in proposed § 433.212.
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Under this model, States would use
the estimated proportions in claiming
FFP for medical assistance expenditures
for newly eligible individuals. Because
the model and estimated proportions
would be available prior to each year,
the State would claim expenditures and
draw down Federal funds in real time.
There would be no need for a retroactive
adjustment. Rather, the verification to
actual claims beginning in CY 2016
would apply to correcting for future
years by adjusting the model.
We have reviewed current Federal
analytic models created for other
purposes to determine if they could
estimate the potential impact of
eligibility changes in the Affordable
Care Act. We believe these models may
have merit and may be an appropriate
starting point for creating estimates for
payment purposes beginning CY 2014.
We are also considering a model in
which HHS develops an algorithm to
determine, for each State, the
appropriate percentages of Medicaid
enrollees with a given set of
characteristics (such as income, age,
assets, family structure, disability
status) who would be considered newly
eligible or not newly eligible under the
December 2009 eligibility rules for
purposes or applying the related FMAP.
The algorithm would estimate for
example, that 90 percent of the adults
with a child with income between 100
percent and 110 percent of the FPL in
a specific State would not have been
eligible under the old rules. Then, the
State would count the number of adult
Medicaid enrollees in CY 2014 who had
a child and whose income was between
100 percent and 110 percent of FPL, and
would receive the Newly Eligible FMAP
for 90 percent of their expenditures, and
the base FMAP for 10 percent.
We propose to review, evaluate, and
potentially expand upon existing
models to develop an acceptable
estimate to be the basis for determining
FMAP. We are specifically interested in
receiving comments on the data sources
that should be considered for inclusion
in the model. We believe MSIS and
MEPS data likely to be the most useful
and relevant data sources available
consistently for all States. We propose
to not limit the data sources we may
choose to review and incorporate into a
predictive model as long as the data
sources are relevant, accurate and
available in a timely manner to both the
Federal government and the State. We
believe the modeling process, as well as
the data sources used to create the
specific models must be fully tested,
transparent and readily available to
States.
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We further propose that we would
annually establish a model to
reasonably predict in an unbiased way
the appropriate proportion of
expenditures (that is, State-specific
rates) to determine the amount each
State could claim using the ‘‘Newly
Eligible’’ FMAP. We propose to solicit
and integrate public input into the
development of the final modeling
estimate. The State-specific rates would
be finalized and made public no later
than October 1 of the year prior to the
calendar year in which the State would
implement the methodology. For CY
2014, we would establish and publish
the State-specific rates by October 1,
2012.
We solicit comments on the potential
of creating accurate State specific
estimates given the available data
sources and the limitations of each. We
also are requesting comments on other
possible approaches to compensate for
the potential limits on State-specific
data to create robust accurate estimates
at the State level.
Beginning in CY 2016, we propose to
integrate validation measures, such as
statistically valid sampling
methodologies, into the model to verify
and assure the data accuracy. This
verification of actual claims would
apply to correcting for future years by
adjusting the model. For example, we
would work with selected States in each
year to pull a random sample of
Medicaid enrolled individuals in the
adult group. We would then work with
the State to apply the State’s December
1, 2009 eligibility standards to
determine the proportion of individuals
that are newly eligible and the
proportion that would have been
eligible under the standards at that time.
We would then determine actual
expenditures for those individuals to
determine the appropriate proportion of
expenditures to be claimed at the Newly
Eligible FMAP rate. We propose that
such sampling methodology be
transparent to States. We further
propose to employ a public notice and
comment process to assure the
integration of State and other
stakeholder concerns into a final
verification system.
6. Additional Methodology Approaches
We are requesting comments and
suggestions on hybrid approaches that
incorporate all of the alternatives listed.
We believe that the above-described
alternatives could be combined, so as to
achieve the benefits, while mitigating
the downside of each. Thus, sampling
could be used to verify and improve
upon the accuracy of the estimates made
under the threshold methodology or as
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stated above in the other data source
methodology. While sampling might be
necessary in the initial years, as
confidence in the accuracy of the other
method increased, sampling could be
required on a less frequent basis (for
example, once every 3 to 5 years),
thereby diminishing the burden
otherwise imposed by sampling, or we
could see using the threshold
methodology for simpler, more straightforward cases and sampling for more
complicated ones. We invite comments
on using a hybrid approach.
In addition, regardless of which
approach is ultimately employed, we
intend to monitor the effects and impact
of that method over time and make
refinements as necessary. We are
interested in assuring that the
alternatives proposed are viable in the
sense that States can implement them in
a meaningful way. We solicit comments
on how each method may be
operationalized and what challenges or
obstacles a State may face in doing so.
We also seek comment on analytical
approaches that CMS should consider
using when comparing the relative
feasibility, validity, and reliability of the
methods proposed above.
III. Collection of Information
Requirements
Under the Paperwork Reduction Act
of 1995, we are required to provide 60day notice in the Federal Register and
solicit public comment before a
collection of information requirement is
submitted to the Office of Management
and Budget (OMB) for review and
approval. In order to fairly evaluate
whether an information collection
should be approved by OMB, section
3506(c)(2)(A) of the Paperwork
Reduction Act of 1995 requires that we
solicit comment on the following issues:
• The need for the information
collection and its usefulness in carrying
out the proper functions of our agency.
• The accuracy of our estimate of the
information collection burden.
• The quality, utility, and clarity of
the information to be collected.
• Recommendations to minimize the
information collection burden on the
affected public, including automated
collection techniques.
This proposed rule would implement
provisions of the Affordable Care Act
that expand access to health coverage
through improvements in Medicaid and
CHIP; ensure coordination between
Medicaid, CHIP, and the new Affordable
Insurance Exchanges (which are
proposed in a separate NPRM under RIN
0938–AR25); and simplify the
enrollment and renewal processes.
Taken together, the policies proposed in
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this rule would result in a reduction in
burden for individuals applying for or
receiving coverage, as well as for States.
Although there are short-term burdens
associated with implementation of this
proposed rule, over time the Medicaid
program would be made substantially
easier for States to administer and for
individuals to navigate by streamlining
Medicaid eligibility, simplifying
Medicaid and CHIP eligibility rules for
most individuals, and creating a
coordinated process that results in a
seamless enrollment experience across
Medicaid, CHIP, and the new affordable
insurance Exchanges.
At the same time, CMS is undertaking
a number of business process, structural
and system improvements designed to
support modernized IT systems and
streamline the manner in which it
works with States and to minimize
burdens in review and approval
processes. A new reliance on automated
information sources and data-sharing
across agencies and programs will
facilitate enrollment and renewal. In
addition, the business process,
structural and data system
improvements underway at CMS are
designed to create an environment
where a significant proportion of the
interactions between States and the
Federal government can take place
through a Web-based information portal.
For example, we anticipate that CMS
will have developed a Web-based
system for States to submit the State
plan amendments that will be needed to
implement the Medicaid and CHIP
programmatic modifications and that
the system itself, for submission,
review, and approval will be
significantly more streamlined. It is not
possible at this point to quantify the
impact of these changes in terms of
burden, but we believe that the
estimates included in this collection of
information discussion likely overstate
the actual burden on States. The
foundation for this is established
through a final rule that enables States
to receive a 90 percent Federal matching
rate for design, development,
installation or enhancement of
eligibility determination systems
through December 31, 2015, for those
States meeting a series of specified
standards and conditions. In addition,
enhanced funding at a 75 percent
Federal matching rate is available for
States to maintain and operate their
eligibility systems, subject to the
conditions noted above. The estimates
of the impact of these changes and the
additional Federal support in this area
are discussed in more detail in the final
rule published on April 19, 2011 (76 FR
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21950) entitled ‘‘Federal Funding for
Medicaid Eligibility Determination and
Enrollment Activities.’’
Information collection requirements
(ICRs) are outlined below that involve
Medicaid and CHIP eligibility
determinations and enrollment. We are
soliciting public comment on each of
these issues for the following sections of
the proposed rule that contain ICRs. We
used data from the Bureau of Labor
Statistics to derive average costs for all
estimates of salary in establishing the
information collection requirements.
Salary estimates include the cost of
fringe benefits, calculated at 35 percent
of salary, which is based on the March
2011 Employer Costs for Employee
Compensation report by the U.S. Bureau
of Labor Statistics.
Finally, in calculating the estimates of
burden on States, it was important to
take into account the Federal
government’s contribution to the cost of
administering the Medicaid and CHIP
programs. The Federal government
provides funding based on a Federal
Medical Assistance Percentage (FMAP)
that is established for each State based
on the per capita income in the State as
compared to the national average.
FMAPs range from a minimum of 50
percent in States with higher per capita
incomes to a maximum of 76.25 percent
in States with lower per capita incomes.
States receive an ‘‘enhanced’’ FMAP for
administering their CHIP programs,
ranging from 65 to 83 percent. All States
receive a 50 percent FMAP for
administration. As noted above, States
also receive higher Federal matching
rates for certain services and now for
systems improvements or redesign, so
the level of Federal funding provided to
a State can be significantly higher. As
such, in taking into account the Federal
contribution to the costs of
administering the Medicaid and CHIP
programs for purposes of estimating
State burden with respect to collection
of information, we elected to use the
higher end estimate that the States
would contribute 50 percent of the
costs, even though the burden will
likely be much smaller.
The following provisions will be
addressed through separate PRA notices
and comment processes:
Medicaid and CHIP State Plans:
§§ 431.10(c) and (d); 431.11(d);
435.110(b); 435.116(b); 435.118(b);
435.119(b); 435.218(b); 435.403(h) and
(i); 435.603(a); 435.905(a) and (b);
435.948(d); 435.949(c); 435.1200(c), (d),
(e), (f), and (g); 457.80(c); 457.305(a) and
(b); 457.310(b); 457.320(d); 457.340(a),
(b), and (f); 457.343; 457.348(a), (b), (c),
and (d); 457.350(a), (b), (c), (f), (g), and
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(j); 457.380(a), (c), (d), (e), (f), (g), (h),
and (i); and 457.390;
Choice of Methodology for
Determining Expenditures Claimed at
FMAP Rate for Newly Eligibles:
§§ 433.206(b); 433.208(b); 433.210(a);
and 433.212(a);
Single, Streamlined Application:
§§ 435.907 and 457.330;
Collection of Applicant’s Social
Security Number: §§ 435.907(e) and
457.340(b); and
Revisions to CHIP Annual Reporting
Template System (CARTS): § 435.907(e),
§ 457.353.
A. ICRs Regarding Program Information
(§§ 435.905 and 457.335)
Amendments are proposed to
§ 435.905 for Medicaid and § 457.335 for
CHIP that would require Medicaid and
CHIP State agencies to disclose program
information to the public electronically.
These provisions are necessary to
ensure that Medicaid and CHIP program
information is available on the Internet
Web site where individuals and families
can explore their coverage options and
submit an application.
In a review of State Web sites, we
found that all 50 States and the District
of Columbia have Web sites for
Medicaid and CHIP and that nearly
every State already provides the
information specified in this proposed
rule. We also found that all States offer
access to their health insurance
applications online.
While these provisions are subject to
the PRA, we believe that the
requirement above is a usual and
customary practice in keeping with the
use of modern technology and,
therefore, presents no new burden.
States have always been required to
assure that applicants, providers, other
interested parties, and the general
public have access to information about
Medicaid and CHIP eligibility
requirements, available Medicaid
services, and the rights and
responsibilities of applicants and
beneficiaries.
B. ICRs Regarding Verification
(§§ 435.945, 435.948, 435.956, 457.350,
and 457.380)
The provisions propose guidelines for
verification of certain factors for
Medicaid and CHIP eligibility (for
example, income, State residency, SSNs,
and pregnancy status) and the sharing of
data among agencies. These proposed
amendments are necessary to facilitate
the determination of eligibility with
minimal paper documentation required
from individuals.
We expect that over the long-term,
these guidelines will reduce burden on
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States and individuals. The State of
Utah’s eFIND system provides an
example of a successfully streamlined
verification process. eFIND gathers data
from more than 15 Federal and State
sources including wage reporting, SSA,
the SAVE system, and child support to
verify Medicaid eligibility for applicants
in real time. The State has estimated
that eFIND has reduced the processing
time for an eligibility determination
from 17 minutes down to 3 minutes,
saving the State $2.1 million in the first
year.
The specific burden associated with
the written agreements for data sharing
is the time and effort necessary for the
State to modify existing agreements
with applicable agencies for the
collection of this information. We
estimate that 53 State Medicaid agencies
(the 50 States, the District of Columbia,
Northern Mariana Islands, and
American Samoa) will be subject to this
requirement. We estimate it will take
each State an average of 30 hours to
modify agreements with the appropriate
agencies. For the purpose of the cost
burden, we estimate it will take a health
policy analyst 20 hours, at $43 an hour,
and a manager 10 hours, at $77 an hour,
to complete the agreements. The
estimated cost burden for each State is
$1,630 [($43 × 20) + ($77 × 10)], for a
total cost burden of $86,390 [$1,630 ×
53] and a total annual hour burden of
1,590 hours [30 × 53]. Taking into
account the Federal contribution to
Medicaid and CHIP program
administration, the estimated State
share of these costs will be no more than
$43,195 [$86,390 × 50 percent].
D. ICRs Regarding Renewal (§§ 435.916
and 457.343)
These provisions discuss the
redetermination process for individuals
whose eligibility is based on MAGI.
These provisions are necessary to
facilitate the accurate and efficient
redetermination of Medicaid and CHIP
eligibility.
We estimate 53 Medicaid agencies
(the 50 States, District of Columbia,
Northern Mariana Islands, and
American Samoa) and an additional 43
CHIP agencies (States that have a
separate or combination CHIP) will be
subject to the provision above, for a total
of 96 agencies.
The burden associated with this
requirement is the time and effort
necessary for the State to develop and
automate renewal notices and perform
the revised recordkeeping related to
redetermining eligibility. Individuals
whose eligibility is based on MAGI
would need to provide any additional
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information for the State to complete a
redetermination of eligibility.
Research has indicated that 33–50
percent of people experience a change
in circumstance that may impact their
eligibility for coverage (Sommers and
Rosenbaum, Health Affairs 2011). Based
on this research we conservatively
estimate that of the approximately 51
million individuals enrolled in
Medicaid and CHIP whose eligibility
will be based on MAGI, half (25.5
million individuals) will have their
eligibility redetermined using the
information already available to the
agency. This approach greatly simplifies
the renewal process and will ultimately
reduce costs for States.
For example, the State of Louisiana
streamlined its renewal process through
a combination of administrative
renewal, ex-parte review and
conducting renewals over the telephone
in 2007. As a result, fewer than 10
percent of families actually complete
and submit a renewal form in order to
remain enrolled in Medicaid or CHIP
coverage. The State reports more than
$18 million in savings each year due to
these changes.
We estimate that it will take each
Medicaid and CHIP agency 16 hours
annually to develop, automate and
distribute the notice of eligibility
determination based on use of existing
information. For the purpose of the cost
burden, we estimate it will take a health
policy analyst 10 hours, at $43 an hour,
and a senior manager 6 hours, at $77 an
hour, to complete the notice. The
estimated cost burden for each agency is
$892 [(10 × $43) + (6 × $77)]. The total
estimated cost burden is $85,632 [96 ×
$892], and the total annual hour burden
is 1,536 hours [(10 + 6) × 96]. Taking
into account the Federal contribution,
the total estimated State costs would be
$42,816 [$85,632 × 50 percent].
The remaining half of the individuals
(25.5 million) will need to provide
additional information to the State so
that their eligibility can be renewed.
The proposed process is much less
burdensome than the processes
currently in place in many States that
require individuals to complete a new
application at renewal. We estimate that
it will take an individual 20 minutes to
complete the proposed streamlined
renewal process. The total annual hour
burden is 8.5 million hours [(20 minutes
× 25.5 million individuals)/60 minutes]
for 25.5 million individuals. We note
that the number of people who need to
provide additional information may be
smaller than our estimate, but we used
a higher end estimate to account for the
greatest potential impact on States and
individuals. Some States that employ a
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simplified renewal approach similar to
what is proposed in this rule are able to
renew coverage for nearly 80 percent of
beneficiaries without contacting the
individual or family.
States will keep records of each
renewal that is processed in Medicaid
and CHIP. The amount of time for
recordkeeping will be the same for
renewals based on information available
to the agency and renewals that require
additional information from
individuals. We estimate that it will
take the State agency 3 minutes (0.05
hour) at a rate of $25 per hour for the
average State eligibility worker to
conduct the required recordkeeping for
each of the 51 million renewals. The
total estimated annual hour burden is
2,550,000 hours or 26,562.5 hours per
agency [2,550,000/96]. At a rate of $25
per hour the total estimated cost burden
for recordkeeping is $63,750,000
[2,550,000 × $25] or $664,063 per
agency [$63,750,000/96]. Taking into
account the Federal contribution, the
total estimated State share of the costs
would be $31,875,000 [$63,750,000 × 50
percent].
E. ICRs Regarding Web Sites (§ 435.1200
and § 457.335)
Sections 435.1200 and 457.335
require Medicaid and separate CHIP
agencies to have a Web site that
performs the functions described in this
proposed rule.
We estimate that 53 Medicaid
agencies and an additional 43 CHIP
agencies (in States that have a separate
or combination CHIP) would be subject
to the provisions above. To achieve
efficiency, we assume that States will
develop only one Web site to perform
the required functions. Therefore, we
base our burden estimates on 50 States,
the District of Columbia, the Northern
Mariana Islands, and American Samoa
(53 agencies) and do not include the 43
separate CHIP programs.
The burden associated with this ICR
for information disclosure is the time
and effort necessary for the State to
develop and disclose information on the
Web site, develop and automate the
required notices, and transmit (report)
the application data to the appropriate
insurance affordability program.
We know that all States have Web
sites and printable applications online
and that 19 States have some ability to
enable individuals to renew their
coverage online. We estimate that it will
take each State an average of 320 hours
to develop the additional functionality
to meet the proposed requirements,
including developing an online
application, automating the renewal
process and adding a health plan
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selection function. We estimate that it
will take a health policy analyst 85
hours (at $43 an hour), a senior manager
50 hours (at $77 an hour), and various
network/computer administrators or
programmers 185 hours (at $54 an hour)
to meet the reporting requirements for
this subpart. We estimate the total cost
burden for a State to be $17,495 [(85 ×
$43) + (50 × $77) + (185 × $54)] for a
total estimated burden of $927,235 [53
× $17,495] and a total annual hour
burden of 16,960 hours for all 53
entities [(85 + 50 + 185) × 53]. Taking
into account the Federal contribution to
Medicaid and CHIP systems
development and administration efforts,
we estimate that the total State share of
costs would be $463,618 [$927,235 × 50
percent] at most. States that elect to
pursue these activities as part of a larger
systems redesign effort would have
significantly lower costs due to the
availability of the 90 percent FMAP.
We estimate that it will take each
State entity 16 hours annually to
develop and automate each of the two
required notices (32 total hours). For the
purpose of the cost burden, we estimate
it will take a health policy analyst
10 hours, at $43 an hour, and a senior
manager 6 hours, at $77 an hour, to
complete each notice. The estimated
cost burden of two notices for each
agency is $1,784 [$892 × 2]. The total
estimated cost burden is $94,552
[$1,784 × 53], and the total annual hour
burden is 1,696 hours [16 × 2 × 53] for
the notices.
We estimate that it will take network/
computer administrators or
programmers 150 hours (at $54 an hour)
to transmit the application data of
ineligible individuals to the appropriate
insurance affordability program and
meet this information reporting
requirement for each State (53). The
estimated cost burden for each agency is
$8,100 [150 × $54]. The total estimated
cost burden for 53 States is $429,300 [53
× $8,100], and the total annual hour
burden is 7,950 hours [150 × 53]. Taking
into account the Federal contribution,
the estimated total State share of costs
would be $214,650 [$429,300 × 50
percent].
The total estimated cost burden of the
provisions described above is
$1,451,087 [$927,235 + $94,552 +
$429,300], and the total annual hour
burden is 26,606 hours [16,960 + 1,696
+ 7,950].
F. ICRs Regarding Medicaid Statement
of Expenditures for the Medical
Assistance Program (CMS–64)
This action does not revise or impose
any new information collection
requirements or burden that would
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require additional OMB review of CMS–
64. OMB has approved the burden and
information collection requirements of
51181
CMS–64 under OMB control number
0938–0067.
TABLE 2—ANNUAL RECORDKEEPING AND REPORTING REQUIREMENTS
Regulation
section(s)
§§ 435.945, 435.948,
435.956, 457.350,
and 457.380 ...........
§§ 435.916 and
457.343 ...................
§§ 435.916 and
457.343 ...................
§§ 435.916 and
457.343 ...................
§§ 435.1200 and
457.335 ...................
Total ....................
Respondents
Burden per
response
(hours)
Responses
Total annual
burden
(hours)
Labor cost
of reporting
($)
Total cost
($)
State share
of costs
($)
53
1
30
1,590
1,630
86,390
43,195
96
1
16
1,536
892
85,632
42,816
25.5 million
1
8.5 million
........................
........................
........................
96
1
26,562.5
million
664,063
63,750,000
31,875,000
53
1
502
26,606
27,379
1,451,087
725,543
........................
........................
........................
........................
65,373,100
32,686,555
.33
..........................
1 2.55
Notes: All proposed collections are new; therefore the OMB Control Number is omitted from the table.
There are no capital or maintenance costs incurred by the proposed collections; therefore it is omitted from the table. Capital costs resulting
from the development or improvement of new electronic systems were addressed in the Federal Funding for Medicaid Eligibility Determination
and Enrollment Activities final rule (76 FR 21950).
Labor Cost figures are indicated here on a per Respondent basis.
The 1.4 average responses per Agency (that is, Respondent) are based on the total estimated number of agreements divided by the number
of respondents. The number of actual agreements will vary by State based on the governance structure of the State’s Medicaid, CHIP, and Exchange programs.
Emcdonald on DSK2BSOYB1PROD with PROPOSALS2
We have submitted a copy of this
proposed rule to the OMB for its review
of the rule’s information collection and
recordkeeping requirements. These
requirements are not effective until they
have been approved by the OMB.
To obtain copies of the supporting
statement and any related forms for the
proposed paperwork collections
referenced above, access CMS’ Web site
at https://www.cms.hhs.gov/Paperwork@
cms.hhs.gov, or call the Reports
Clearance Office at 410–786–1326.
We invite public comments on these
potential information collection
requirements. If you comment on these
information collection and
recordkeeping requirements, please do
either of the following:
1. Submit your comments
electronically as specified in the
ADDRESSES section of this proposed rule;
or
2. Submit your comments to the
Office of Information and Regulatory
Affairs, Office of Management and
Budget, Attention: CMS Desk Officer,
(CMS–2349–P) Fax: (202) 395–6974; or
E-mail: OIRA_submission@omb.eop.gov.
IV. Response to Comments
Because of the large number of public
comments we normally receive on
Federal Register documents, we are not
able to acknowledge or respond to them
individually. We will consider all
comments we receive by the date and
time specified in the DATES section of
this preamble, and, when we proceed
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with a subsequent document, we will
respond to the comments in the
preamble to that document.
V. Summary of Preliminary Regulatory
Impact Analysis
The summary analysis of benefits and
costs included in this proposed rule is
drawn from the detailed Preliminary
Regulatory Impact Analysis (PRIA),
available at https://www.cms.gov/
MedicaidEligibility/downloads/CMS2349-P-PreliminaryRegulatory
ImpactAnalysis.pdf.
A. Introduction
The Office of Management and Budget
has determined that this rule is
‘‘economically significant’’ for the
purposes of Executive Order 12866.
Therefore, we have prepared a PRIA that
presents the costs and benefits of this
rulemaking.
B. Need for This Regulation
This proposed rule would implement
provisions of the Affordable Care Act
related to Medicaid eligibility,
enrollment and coordination with the
Exchanges, CHIP, and other insurance
affordability programs. It also addresses
the current eligibility restrictions and
barriers to enrollment in the Medicaid
program which leave millions of lowincome Americans uninsured, and
which contribute to poor health
outcomes, financial stress, and high
health care and administrative costs. In
addition, this proposed rule sets out the
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increased Federal medical assistance
percentage (FMAP) rates relating to
‘‘newly eligible’’ individuals and certain
medical assistance expenditures in
expansion States’’ beginning January 1,
2014.
C. Summary of Costs and Benefits
The preliminary impact analysis uses
the estimates of the CMS Office of the
Actuary (OACT) and the estimates
prepared by the Congressional Budget
Office (CBO) and the staff of the Joint
Committee on Taxation. It provides both
estimates to illustrate the uncertainty
inherent in projections of future
Medicaid financial operations. Analysis
by OACT indicates that the proposed
rule would result in an estimated
additional 24 million newly eligible and
currently eligible individuals enrolling
in Medicaid by 2016.1 2 OACT notes that
such estimates are uncertain, since they
depend on future economic,
demographic, and other factors that
1 OACT’s original estimates for the financial
impact of the expansion of Medicaid eligibility
under the Affordable Care Act are documented in
an April 22, 2010 memorandum, ‘‘Estimated
Financial Effects of the Patient Protection and
Affordable Care Act, as Amended,’’ available at
https://www.cms.gov/ActuarialStudies/downloads/
PPACA_2010-04-22.pdf. These estimates have been
updated using later data, revised participation
assumptions, and later information on policy
decisions.
2 OACT’s estimates include approximately 2–3
million individuals with primary health insurance
coverage through employer-sponsored plans who
would enroll in Medicaid for supplemental
coverage.
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Emcdonald on DSK2BSOYB1PROD with PROPOSALS2
cannot be precisely determined in
advance. Similarly, the actual behavior
of individuals and the actual operation
of the new enrollment processes and
Affordable Insurance Exchanges will
affect enrollment and costs. The
Congressional Budget Office (CBO) has
estimated a net increase of 16 million
newly and previously eligible people
enrolled in Medicaid and CHIP in 2016
as a result of the new law as
implemented through this regulation.3
Some of the difference between OACT
and CBO’s projections can be explained
by different participation rate
assumptions, which are described
further in the more detailed PRIA.
Increased access to medical care and
the simplified enrollment process
proposed by this rule would benefit
both newly eligible and currently
eligible individuals by improving health
outcomes and providing financial
security. Additionally, the proposed
rule would benefit States and providers
by reducing uncompensated care costs,
shifting spending on either State-funded
health coverage or uncompensated care
to the Federal government. Finally, the
simplified Medicaid eligibility policies
will over time reduce administrative
burdens on State Medicaid agencies.
We anticipate that the proposed rule
would impose costs on a small number
of currently eligible individuals who
will become ineligible for Medicaid
coverage under the new eligibility
methodology. These individuals would
bear the cost of purchasing subsidized
insurance in the Exchanges, though
these costs may be offset by premium
tax credits.
OACT estimates that Federal
spending on Medicaid for newly and
currently eligible individuals who
enroll as a result of the changes made
by the Affordable Care Act would
increase by a total of $202 billion from
2012 through 2016. Reflecting
somewhat different participation
assumptions and other projection
factors, CBO estimates an increase in
federal spending of $162 billion over the
3 CBO. Analysis of Major Health Care Legislation
Enacted in March 2010. Statement of Douglas W.
Elmendorf. March 30, 2011—https://www.cbo.gov/
ftpdocs/121xx/doc12119/03-30-;
HealthCareLegislation.pdf The CBO estimates
exclude individuals with primary coverage through
employer-sponsored plans who enroll in Medicaid
for supplemental coverage.
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same period of time.4 OACT estimates
that State expenditures on behalf of the
additional individuals and families
gaining Medicaid coverage as a result of
the Affordable Care Act will total $2.7
billion in FY 2014, $4.0 billion in FY
2015, and $4.9 billion in FY 2016.5 For
both OACT and CBO, these estimates do
not consider offsetting savings to States
that will result, to a varying degree
depending on the State, from less
uncompensated care, less need for Statefinanced health services and coverage
programs, and greater efficiencies in the
delivery of care. Indeed, an Urban
Institute analysis estimates that the
costs to States will be more fully offset
by other effects of the legislation, for net
savings to States of $92 to $129 billion
from 2014 to 2019.6
D. Methods of Analysis
OACT prepared its estimate using
data on individuals and families,
together with their income levels and
insured status, from the Current
Population Survey and the Medical
Expenditure Panel Survey. In addition,
they made assumptions as to the actions
of individuals in response to the new
coverage options under the Affordable
Care Act and the operations of the new
enrollment processes and the Affordable
Insurance Exchanges. The estimated
Medicaid coverage and financial effects
are particularly sensitive to these latter
assumptions. Among those eligible for
Medicaid under the expanded eligibility
criteria established by the Affordable
Care Act, and who would not otherwise
have health insurance, OACT assumed
that 95 percent would enroll. This
assumption, which is significantly
higher than current enrollment
percentages, reflects OACT’s
4 CBO. Analysis of the Major Health Care
Legislation Enacted in March 2010. Statement of
Douglas W. Elmendorf. March 30, 2011—https://
www.cbo.gov/ftpdocs/121xx/doc12119/03-30HealthCareLegislation.pdf.
5 OACT estimates total gross additional State
expenditures of approximately $80 billion for FYs
2012 through 2021, offset by $35 billion in lower
State costs as a result of the transitional FMAP for
expansion States, for a net total increase of $45
billion. For comparison, CBO estimates net
additional State expenditures of about $60 million
for the same time frame.
6 M. Buettgens et al., ‘‘Consider savings as well
as costs: State governments would spend at least
$90 billion less with the ACA than without it from
2014 to 2019,’’ The Urban Institute, July 2011.
Available at https://www.urban.org/uploadedpdf/
412361-consider-savings.pdf.
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consideration of the experience with
health insurance reform in
Massachusetts and its expectation that
the streamlined enrollment process and
enrollment assistance available to
people through the Affordable Insurance
Exchanges will be very effective in
helping eligible individuals and families
become enrolled. Although CBO used
similar data and overall methodologies,
and also anticipates that the streamlined
enrollment process and Exchange
enrollment assistance will improve
applicants’ ability to become enrolled,
CBO has included a significantly
smaller from this factor than assumed
by OACT.7
E. Regulatory Options Considered
Alternative approaches to
implementing the Medicaid eligibility,
enrollment and coordination
requirements in the Affordable Care Act
were considered in developing this
proposed rule. However, it was
determined that these alternatives
would have created substantial
administrative burdens for States and
individuals, and created gaps in
coverage that would reduce the number
of people with insurance. We welcome
public comment regarding the potential
economic effects of the proposed rule.
F. Accounting Statement
For full documentation and
discussion of these estimated costs and
benefits, see the detailed PRA, available
at https://www.cms.gov/Medicaid
Eligibility/downloads/CMS-2349-PPreliminaryRegulatoryImpact
Analysis.pdf.
7 CBO’s specific take-up assumptions are not
available. Researchers at the Urban Institute have
approximated the participation rate assumed by
CBO. The Kaiser Family Foundation has
characterized this assumption as follows: ‘‘These
results assume moderate levels of participation
similar to current experience among those made
newly eligible for coverage and little additional
participation among those currently eligible. This
scenario assumes 57 percent participation among
the newly eligible uninsured and lower
participation across other coverage groups.’’ J.
Holohan and I. Headen, ‘‘Medicaid coverage and
spending in health reform: National and State-byState results for adults at or below 133% FPL,’’
Kaiser Commission on Medicaid and the
Uninsured, May 2010, available online at https://
www.kff.org/healthreform/upload/MedicaidCoverage-and-Spending-In-Health-ReformNational-and-State-By-State-Results-for-Adults-ator-Below-133-FPL.pdf.
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TABLE 3—ACCOUNTING STATEMENT: CLASSIFICATION OF ESTIMATED NET COSTS, FROM FY 2012 TO FY 2016
[In millions]
Transfers
Category
Year dollar
Units discount rate
Period covered
2012
Annualized Monetized Transfers from Federal Government to
States on Behalf of Beneficiaries.
Annualized Monetized Transfers from States on Behalf of
Beneficiaries.
Annualized Monetized Transfers from Federal Government to
States.
7%
3%
Primary Estimate .....................
$35,564
$37,324
FYs 2012–2016
Primary Estimate .....................
2,131
2,235
FYs 2012–2016
Primary Estimate .....................
1,577
1,657
FYs 2012–2016
Source: CMS Office of the Actuary.
G. Unfunded Mandates Reform Act
Section 202 of the Unfunded
Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated
costs and benefits before issuing any
rule whose mandates require spending
in any 1 year of $100 million in 1995
dollars, updated annually for inflation.
In 2011, that threshold is approximately
$136 million. It is important to
understand, however, that the UMRA
does not address the total cost of a rule.
Rather, it focuses on certain categories
of cost, mainly costs resulting from (A)
imposing enforceable duties on State,
local, or tribal governments, or on the
private sector, or (B) increasing the
stringency of conditions in, or
decreasing the funding of, State, local,
or tribal governments under entitlement
programs.
We believe that States can take
actions that will largely offset the
increased medical assistance spending
for newly enrolled persons. Because the
net effects are uncertain and the overall
costs significant, we have drafted the
PRIA to meet the requirements for
analysis imposed by UMRA, together
with the rest of the preamble. The
extensive consultation with States we
describe later in this analysis was aimed
at the requirements of both UMRA and
Executive Order 13132 on Federalism.
We invite comment on these issues from
States and local governments as well as
any other interested parties.
Emcdonald on DSK2BSOYB1PROD with PROPOSALS2
1. State and Local Governments
Our discussion of the potential
expected impact on States is provided
in the benefits, costs, and transfers
section of the preliminary regulatory
impact analysis. As noted previously,
the Affordable Care Act requires States
that participate in the Medicaid program
to cover adults with incomes below 133
percent of the Federal poverty level, and
provides substantial new Federal
support to nearly offset the costs of
covering that population.
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2. Private Sector and Tribal
Governments
We do not believe this proposed rule
would impose any unfunded mandates
on the private sector. As we explain in
more detail in the Regulatory Flexibility
Act analysis, the provisions of the
Affordable Care Act implemented by the
proposed rule deal with eligibility and
enrollment for the Medicaid and CHIP
programs, and as such are directed
toward State governments rather than
toward the private sector. Since the
proposed rule would impose no
mandates on the private sector, we
conclude that the cost of any possible
unfunded mandates would not meet the
threshold amounts discussed previously
that would otherwise require an
unfunded mandate analysis for the
private sector. We also conclude that an
unfunded mandate analysis also is not
needed for tribal governments since the
proposed rules would not impose
mandates on tribal governments.
H. Regulatory Flexibility Act (RFA)
The RFA requires agencies to analyze
options for regulatory relief of small
entities if a proposed rule would have
a significant economic impact on a
substantial number of small entities.
Few of the entities that meet the
definition of a small entity as that term
is used in the RFA (for example, small
businesses, nonprofit organization, and
small governmental jurisdictions with a
population of less than 50,000) would
be impacted directly by this proposed
rule. Individuals and States are not
included in the definition of a small
entity. There are some States in which
counties or cities share in the costs of
Medicaid. OACT has estimated that
between 2014 and 2021 the Federal
government would pay about 94 percent
of the costs of benefits for new Medicaid
enrollees with the States paying the
remaining 6 percent. An Urban Institute
and Kaiser Family Foundation study
estimated that the Federal government
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will bear between 92 and 95 percent of
the overall costs of the new coverage
provided as a result of the Affordable
Care Act, with the States shouldering
the remaining five to eight percent of
the costs.8 To the extent that States
require counties to share in these costs,
some small jurisdictions could be
affected by the requirements of this
proposed rule. However, nothing in this
rule would constrain States from
making changes to alleviate any adverse
effects on small jurisdictions. The
Department has no way of estimating
the impact of this proposed rule on
small jurisdictions and requests public
comment on this issue.
Because this proposed rule is focused
on eligibility and enrollment in public
programs, it does not contain provisions
that would have a significant direct
impact on hospitals, and other health
care providers that are designated as
small entities under the RFA. However,
the provisions in this proposed rule may
have a substantial, positive indirect
effect on hospitals and other health care
providers due to the substantial increase
in the prevalence of health coverage
among populations who are currently
unable to pay for needed health care,
leading to lower rates of uncompensated
care at hospitals. Again, the Department
cannot determine whether this proposed
rule would have a significant economic
impact on a substantial number of small
entities, and we request public comment
on this issue.
Section 1102(b) of the Act requires us
to prepare a regulatory impact analysis
if a proposed rule may have a significant
economic impact on the operations of a
substantial number of small rural
8 J. Holahan and I. Headen, ‘‘Medicaid coverage
and spending in health reform: National and Stateby-State results for adults at or below 133% FPL,’’
Kaiser Commission on Medicaid and the
Uninsured, May 2010, available online at https://
www.kff.org/healthreform/upload/MedicaidCoverage-and-Spending-in-Health-ReformNational-and-State-By-State-Results-for-Adults-ator-Below-133-FPL.pdf.
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Emcdonald on DSK2BSOYB1PROD with PROPOSALS2
hospitals. This analysis must conform to
the provisions of section 603. For
purposes of section 1102(b) of the Act,
we define a small rural hospital as a
hospital that is located outside of a
metropolitan statistical area and has
fewer than 100 beds. We are not
preparing an analysis for section 1102(b)
of the Act because the Secretary has
determined that this proposed rule
would not have a direct economic
impact on the operations of a substantial
number of small rural hospitals. As
indicated in the preceding discussion,
there may be indirect positive effects
from reductions in uncompensated care.
particular, we have had discussions
with the Eligibility TAG (E–TAG) and
the Children’s Coverage TAG.
The E–TAG is a group of State Medicaid
officials with specific expertise in the
field of eligibility policy under the
Medicaid program. The Children’s
Coverage TAG is a combination of
Medicaid and CHIP officials that
convene to discuss issues that affect
children enrolled in those programs.
Through consultations with these TAGs,
we have been able to get input from
States specific to issues surrounding the
changes in eligibility groups and rules
that will become effective in 2014.
I. Federalism
Executive Order 13132 establishes
certain requirements that an agency
must meet when it promulgates a
proposed rule (and subsequent final
rule) that imposes substantial direct
effects on States, preempts State law, or
otherwise has Federalism implications.
As discussed previously, the Affordable
Care Act and this proposed rule have
significant direct effects on States.
The Affordable Care Act requires
major changes in the Medicaid and
CHIP programs, which would require
changes in the way States operate their
individual programs. While these
changes are intended to benefit
beneficiaries and enrollees by
improving coordination between
programs, they are also designed to
reduce the administrative burden on
States by simplifying and streamlining
systems.
We have consulted with States to
receive input on how the various
Affordable Care Act provisions codified
in this proposed rule would affect
States. We have participated in a
number of conference calls and in
person meetings with State officials in
the months before and since the law was
enacted. These discussions have
enabled the States to share their
thinking and questions about how the
Medicaid changes in the legislation
would be implemented. The conference
calls also furnished opportunities for
CMS to explore these implementation
issues together with States and also
provide information on an informal
basis about implementation plans to the
State Medicaid Directors, and for the
Directors to comment informally on
what they heard in the course of those
conversations.
We continue to engage in ongoing
consultations with Medicaid and CHIP
Technical Advisory Groups (TAGs),
which have been in place for many
years and serve as a staff level policy
and technical exchange of information
between CMS and the States. In
List of Subjects
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42 CFR Part 431
Grant programs—health, Health
facilities, Medicaid, Privacy, Reporting
and recordkeeping requirements.
42 CFR Part 433
Administrative practice and
procedure, Child support Claims, Grant
programs—health, Medicaid, Reporting
and recordkeeping requirements.
42 CFR Part 435
Aid to Families with Dependent
Children, Grant programs—health,
Medicaid, Reporting and recordkeeping
requirements, Supplemental Security
Income (SSI), Wages.
42 CFR Part 457
Administrative practice and
procedure, Grant programs—health,
Health insurance, Reporting and
recordkeeping requirements.
For the reasons set forth in the
preamble, the Centers for Medicare &
Medicaid Services proposes to amend
42 CFR chapter IV as set forth below:
PART 431—STATE ORGANIZATION
AND GENERAL ADMINISTRATION
1. The authority citation for part 431
continues to read as follows:
Authority: Sec. 1102 of the Social Security
Act, (42 U.S.C. 1302).
Subpart A—Single State Agency
2. Section 431.10 is amended by—
A. Revising paragraph (b)(2)(ii) and
the introductory text of paragraph (c)(1).
B. Adding paragraphs (c)(1)(iii) and
(c)(3).
C. Revising paragraphs (d) and (e)(3).
The revisions and additions read as
follows:
§ 431.10
*
Single State agency.
*
*
(b) * * *
(2) * * *
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(ii) Make rules and regulations that it
follows in administering the plan or that
are binding upon State or other agencies
that administer the plan.
*
*
*
*
*
(c) * * *
(1) The plan must specify whether the
entity that determines eligibility for
families, adults, and for individuals
under 21 is—
*
*
*
*
*
(iii) A government-operated Exchange
established under sections 1311(b)(1) or
1321(c)(1) of the Affordable Care Act
(Pub. L. 111–148).
*
*
*
*
*
(3) The single State agency is
responsible for assuring and enforcing
that—
(i) Eligibility determinations are made
consistent with its rules and if there is
a pattern of incorrect determinations
that corrective actions are instituted
and/or the delegation is terminated;
(ii) There is no conflict of interest by
any agency delegated the responsibility
to make eligibility determinations; and
(iii) Eligibility determinations will be
made in the best interest of applicants
and beneficiaries and that the single
State agency will guard against
improper incentives and/or outcomes.
(d) Agreement with Federal or State
and local agencies. The plan must
provide for written agreements between
the Medicaid agency and the Federal or
other State or local agencies that
determine eligibility for Medicaid,
stating—
(1) The relationships and respective
responsibilities of the agencies;
(2) The quality control and oversight
plans by the single State agency to
review determinations made by the
delegee;
(3) The reporting requirements from
the delegee making Medicaid eligibility
determinations to the single State
agency.
(4) The confidentiality and security
requirements in accordance with
sections 1902(a)(7) and 1942 of the Act
for all applicant and beneficiary data;
and
(5) That merit protection principles
are employed by the agency responsible
for the Medicaid eligibility
determination.
(e) * * *
(3) If other Federal, State or local
agencies or offices perform services for
the Medicaid agency, they must not
have the authority to change or
disapprove any administrative decision
of, or otherwise substitute their
judgment for that of, the Medicaid
agency for the application of policies,
rules and regulations issued by the
Medicaid agency.
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3. Section 431.11 is amended by
revising paragraph (d) to read as
follows:
§ 431.11
Organization for administration.
*
*
*
*
*
(d) Eligibility determined by other
agencies. If eligibility is determined by
Federal or State agencies other than the
Medicaid agency or by local agencies
under the supervision of other State
agencies, the plan must include a
description of the staff designated by
those other agencies and the functions
they perform in carrying out their
responsibilities.
Subpart M—Relations With Other
Agencies
§ 431.636
[Removed]
4. Remove § 431.636.
PART 433—STATE FISCAL
ADMINISTRATION
5. The authority citation for part 433
continues to read as follows:
Authority: Section 1102 of the Social
Security Act (42 U.S.C. 1302).
Subpart A—Federal Matching and
General Administration Provisions
6. Section 433.10 is amended by—
A. In paragraph (a), removing the
phrase ‘‘and 1905(b),’’ and adding in its
place the phrase ‘‘1905(b), 1905(y), and
1905(z)’’
B. Adding new paragraphs (c)(6),
(c)(7), and (c)(8).
The additions read as follows:
§ 433.10 Rates of FFP for program
services
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*
*
*
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(c) * * *
(6)(i) Beginning January 1, 2014,
under section 1905(y) of the Act, the
FMAP for a State that is one of the 50
States or the District of Columbia, for
amounts expended by such State for
medical assistance for newly eligible
individuals, as defined in § 433.204 of
this part, will be an increased FMAP
equal to:
(A) 100 percent, for calendar quarters
in calendar years (CYs) 2014 through
2016;
(B) 95 percent, for calendar quarters
in CY 2017;
(C) 94 percent for calendar quarters in
CY 2018;
(D) 93 percent for calendar quarters in
CY 2019;
(E) 90 percent for calendar quarters in
CY 2020; and
(F) 90 percent for calendar quarters in
all other CYs after 2020.
(ii) The FMAP specified in paragraph
(c)(6)(i) of this section will apply to
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amounts expended by a State for
medical assistance for newly eligible
individuals in accordance with the
requirements of the methodology
selected by the State under § 422.206 of
this chapter.
(7)(i) During the period January 1,
2014 through December 31, 2015, under
section 1905(z)(1) of the Act for a State
described in paragraph (c)(7)(ii) of this
section, the FMAP determined under
paragraph (b) of this section will be
increased by 2.2 percentage points.
(ii) A State qualifies for the general
increase in the FMAP under paragraph
(c)(7)(i) of this section, if the State:
(A) Is an expansion State, as described
in paragraph (c)(8)(iii) of this section;
(B) Does not qualify for any payments
on the basis of the increased FMAP
under paragraph (c)(6) of this section, as
determined by the Secretary; and
(C) Has not been approved by the
Secretary to divert a portion of the
Disproportionate Share Hospital
Allotment for the State to the costs of
providing medical assistance or other
health benefits coverage under a
demonstration that is in effect on July 1,
2009.
(iii) The increased FMAP under
paragraph (c)(7)(i) of this section is
available for amounts expended by the
State for medical assistance for
individuals that are not newly eligible
as defined in § 433.204 of this part.
(8)(i) Beginning January 1, 2014,
under section 1905(z) of the Act, the
FMAP for an expansion State defined in
paragraph (c)(8)(iii) of this section, for
amounts expended by such State for
medical assistance for individuals
described in section
1902(a)(10)(A)(i)(VIII) of the Act who
are not newly eligible as defined in
§ 433.204 of this part and who are
nonpregnant childless adults for whom
the State may require enrollment in
benchmark coverage under section 1937
of the Act, will be determined in
accordance with the following formula:
F + (T × (N¥F))
F = The base FMAP for the State
determined under paragraph (b) of
this section, subject to paragraph
(c)(7) of this section.
T = The transition percentage specified
in paragraph (c)(8)(ii) of this
section.
N = The Newly Eligible FMAP
determined under paragraph (c)(6)
of this section.
(ii) For purposes of paragraph (c)(8)(i)
of this section, the transition percentage
is equal to:
(A) 50 percent, for calendar quarters
in CY 2014;
(B) 60 percent, for calendar quarters
in CY 2015;
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(C) 70 percent, for calendar quarters
in CY 2016;
(D) 80 percent, for calendar quarters
in CY 2017;
(E) 90 percent, for calendar quarters in
CY 2018; and
(F) 100 percent, for calendar quarters
in CY 2019 and all subsequent calendar
years.
(iii) A State is an expansion State if,
on the March 23, 2010, the State offered
health benefits coverage Statewide to
parents and nonpregnant, childless
adults whose income is at least 100
percent of the poverty line, that
includes inpatient hospital services, is
not dependent on access to employer
coverage, employer contribution, or
employment and is not limited to
premium assistance, hospital-only
benefits, a high deductible health plan,
or alternative benefits under a
demonstration program authorized
under section 1938 of the Act. A State
that offers health benefits coverage to
only parents or only nonpregnant
childless adults described in the
preceding sentence will not be
considered to be an expansion State.
(iv) For amounts expended by an
expansion State as defined in paragraph
(c)(8)(iii) of this section for medical
assistance for individuals described in
section 1902(a)(10)(A)(i)(VIII) of the Act
who are newly eligible as defined in
§ 433.201, and who are non-pregnant
childless adults for whom the State may
require enrollment in benchmark
coverage under section 1937 of the Act,
the FMAP is as specified in paragraph
(c)(6) of this section.
7. Subpart E is added to part 433 to
read as follows:
Subpart E—Methodologies for Determining
Federal Share of Medicaid Expenditures for
Mandatory Group
Sec.
433.202 Scope.
433.204 Definitions.
433.206 Choice of methodology.
433.208 Threshold methodology.
433.210 Statistically-valid sampling
methodology.
433.212 CMS established FMAP proportion.
Subpart E—Methodologies for
Determining Federal Share of Medicaid
Expenditures for Mandatory Group
§ 433.202
Scope.
This subpart sets forth the
requirements and procedures under
which States may claim for the higher
Federal share of expenditures for newly
eligible individuals specified in
§ 433.204 of this subpart.
§ 433.204
Definitions.
As used in this subpart:
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Newly Eligible Individual means an
individual eligible for Medicaid in
accordance with the requirements of the
new adult group and who would not
have been eligible for Medicaid under
the State’s eligibility standards and
methodologies for the Medicaid State
plan, waiver or demonstration programs
in effect in the State as of December 1,
2009.
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§ 433.206
Choice of methodology.
(a) Beginning January 1, 2014, the
State must determine the expenditures
which may be claimed at the FMAP rate
described in § 433.10 of this part using
one of the following methods:
(1) Applying eligibility thresholds and
proxies in accordance with § 433.208 of
this part; or
(2) Conducting a statistically valid
sample in accordance with § 433.210 of
this part; or
(3) Electing to utilize the CMS
established FMAP proportion rate
established in accordance with
§ 433.212 of this part.
(b) The State must provide to CMS for
approval a methodology that provides
the description of the method it will use
to determine the appropriate FMAP
claim for medical assistance
expenditures for newly eligible
individuals including all of the
following requirements:
(1) Except as provided in paragraph
(b)(2) of this section, at least 2 years
prior to the year in which the State will
implement that method.
(2) For CY 2014, the State must notify
CMS of such method no later than
December 31, 2012.
(3) Changing claiming methodologies:
(i) The State must use the chosen
methodology for at least 3 consecutive
years before changing to another
methodology;
(ii) The State must notify CMS of any
change in methodology in accordance
with paragraphs (b)(1) and (b)(2) of this
section.
(c) To implement each methodology—
(1) The State must first determine
those individuals eligible under section
1902(a)(10)(A)(i)(VIII) of the Act.
(2) The State may apply a CMS
approved methodology only to
expenditures for such individuals.
(d) Nothing in this section impacts the
timing or approval of an individual’s
eligibility for Medicaid.
§ 433.208
Threshold methodology.
(a) Beginning January 1, 2014, States
may elect to apply a CMS-approved
State specific threshold methodology
that meets all of the following
requirements:
(1) Incorporates State eligibility
standards, including disregards and
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other adjustments that were in place as
of December 1, 2009.
(2) Incorporates any enrollment caps
under section 1115 demonstration
programs that were in place in the State
on December 1, 2009.
(3) Is applied to each individual
applicant determined eligible for
Medicaid under the adult group.
(4) Is used to determine whether each
individual is newly eligible so that the
State may claim the FMAP described in
§ 433.10(c) of this subpart for all
expenditures for such individuals.
(b) To implement the threshold
methodology, the State must submit a
methodology and receive CMS approval
of such methodology prior to its
application to new FMAP
determinations.
(1) Such methodology will specify
how the State will determine the
population within the adult group and
describe in a format provided by CMS
how it is approximating the December 1,
2009 standards and methodologies, as
well as how the State will apply the
established criteria.
(2) Subject to approval by CMS, a
State may use criteria including but not
limited to:
(i) Self-declaration.
(ii) Claims history.
(iii) Receipt of Social Security
Disability Income.
(iv) Disability determination by SSA.
(v) Information from the Asset
Verification System established under
the DRA.
(vi) Information from tax returns.
(vii) Application of a proportion
derived from historical data of the
actual proportion of individuals within
specific eligibility groups that were
ineligible for Medicaid due to assets or
eligible for Medicaid due to disability
status using the eligibility standards in
place as of December 1, 2009.
(viii) Other disability and asset data
sources.
(c) The threshold methodology must:
(1) Not be biased in such a manner as
to overestimate or over report
individuals as newly eligible who were
actually individuals who would have
been eligible using the State’s December
1, 2009 eligibility standards.
(2) Provide an accurate estimation of
which individuals would have been
eligible in accordance with the
December 1, 2009 eligibility standards
to be used for the designated year, by
incorporating simplified assessments of
asset and disability requirements in
place at that time. Once individuals are
determined to be either a newly eligible
individual or an individual who would
have been eligible under the December
2009 standards, the State would apply
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that eligibility determination throughout
the entire year.
(3) Be verified by, and adjusted
prospectively to include results of, any
evaluations conducted by CMS in
conjunction with the State(s) of the
accuracy of the threshold.
§ 433.210 Statistically valid sampling
methodology.
(a)(1) A State choosing to implement
a statistically-valid sampling
methodology to determine the
proportion of expenditures to which the
FMAP specified in § 433.10(c) of this
subpart will apply, must submit to CMS
a methodology that details the sampling
plan prior to making such claims which
demonstrates compliance with the
requirements established in this section
as well as all additional requirements
that CMS issues in subregulatory
guidance.
(2) The methodology with the
sampling plan must be submitted to
CMS on or before January 1 of the
calendar year in which the State will
claim expenditures using the sampling
methodology.
(3) The State may not implement the
sampling methodology until CMS has
reviewed and approved the State’s
sampling plan.
(b) A State must verify that its
sampling plan follows all relevant
requirements established in the most
current OMB Circular A–87.
(c) The State must implement the plan
as specified in the CMS-approved
sampling plan for the year in which it
claims expenditures based on the
sampling plan.
(d) A State must draw a statistically
valid sample from the population of
Medicaid applicants who are eligible for
Medicaid under the adult group.
(e) The State must evaluate each
individual randomly selected to be
included in the sample to determine
whether:
(1) The individual is newly eligible;
or
(2) The individual would have been
eligible under the standards in place to
determine eligibility under the
Medicaid State plan and/or
demonstration program as of December
1, 2009, including any enrollment caps
under section 1115 demonstration
programs that were in place in the State
on December 1, 2009.
(f) The State will attribute all actual
medical assistance expenditures in that
calendar year for each newly eligible
individual in the sample and for each
individual in the sample who would
have been eligible under the December
1, 2009 standards. The State will
extrapolate and apply the proportion of
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Medicaid expenditures attributed to the
newly eligible in the sample to the
expenditures of the population.
(g) The State will consider the amount
determined in accordance with
paragraph (f) of this section to be the
expenditures of the newly eligible
individuals and receive the FMAP rate
described in § 433.10(c) of this subpart
for such expenditures when the State
claims on the CMS–64.
(h) The State may claim and receive
the FMAP described in § 433.10(c) of
this subpart for an estimated proportion
on an interim basis as follows:
(1) States may claim expenditures in
current years based on an interim FMAP
proportion determined by the most
recent year for which data is available.
(2) States must make a retroactive
adjustment to claims on the CMS–64 for
the current year once that expenditure
information is finalized under the
provisions of paragraph (f) of this
section.
(3)(i) Results of a statistically-valid
sampling methodology for any given
year must be finalized and applied, and
adjustments to claims on the CMS–64
must be made, within 2 years from the
date of the actual expenditure.
(ii) If the State does not have
supporting documentation at the end of
the second year following the year at
issue, the State must make a decreasing
adjustment on the CMS–64 to refund the
higher FMAP rates, and such claims
will be regarded as untimely under 45
CFR 95.7 if resubmitted.
(iii) A State must implement the
statistically valid sampling methodology
in accordance with this section on an
annual basis for the initial 3 consecutive
years.
(A) States that have completed the
requirements for 3 consecutive years,
are required thereafter to verify using a
sampling methodology in accordance
with this section every 3 years.
(B) Any State that meets the
requirements of paragraph (h)(3)(iii)(A)
of this section may retroactively apply
results of the sample to the rates of the
calendar year expenditures for the years
prior to the sample up to the last year
in which the State completed and
applied the results of a sampling
methodology.
§ 433.212 CMS established FMAP
proportion.
(a) Beginning January 1, 2014, States
may elect to apply a CMS determined
proportion to medical assistance
expenditures for individuals eligible for
Medicaid in the adult group.
(b) CMS will publish State-specific
estimated FMAP proportions of
eligibility under the December 2009
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eligibility criteria using data sources
including, but not limited to MEPS and
MSIS data.
(c) CMS will meet all of the following
requirements:
(1) Solicit and incorporate comments
on the development of rates.
(2) Annually establish a model to
predict in an unbiased way the
appropriate proportion of expenditures
for which each State would claim the
FMAP rate described in § 433.10(c) of
this subpart for newly eligible
individuals taking into account any
enrollment caps under demonstration
programs that were in place in the State
on December 1, 2009.
(3) Publish the State-specific rates by
October 1 of the preceding year. For CY
2014, the model must be published no
later than January 1, 2013.
(4) Incorporate results from a
validation methodology in accordance
with § 433.212(e) of this subpart such as
a statistically valid sampling of State
data of actual individuals eligible for
and enrolled in Medicaid in accordance
with section 1902(a)(10)(A)(i)(VIII) of
the Act.
(5) Provide technical assistance to
States on applying the rates established.
(d) States will apply the CMS
published State-specific proportion of
expenditures attributed to the newly
eligible to expenditures for all
individuals eligible for and enrolled in
Medicaid in accordance with section
1902(a)(10)(A)(i)(VIII) of the Act. The
State will consider the amount
determined in accordance with this
section to be the expenditures of the
newly eligible individuals and receive
the FMAP rate described in § 433.10(c)
of this part for such expenditures when
the State claims expenditures on the
CMS–64.
(e) Validation measures such as
statistical sampling must be
incorporated into the estimate:
(1) On an annual basis beginning in
CY 2016, to include expenditures
related to CY 2014, and continue
through CY 2021;
(2) After CY 2021, validation will be
completed, and results incorporated
into the model, on a 3-year basis;
(3) After CY 2030, validation will be
completed, and results incorporated
into the model, on a 5-year basis.
PART 435—ELIGIBILITY IN THE
STATES, DISTRICT OF COLUMBIA,
THE NORTHERN MARIANA ISLANDS,
AND AMERICAN SAMOA
8. The authority citation for part 435
continues to read as follows:
Authority: Sec. 1102 of the Social Security
Act (42 U.S.C. 1302).
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9a. Remove the term ‘‘family income’’
wherever it appears in part 435 and add
in its place the term ‘‘household
income.’’
Subpart A—General Provisions and
Definitions
9b. Section 435.4 is amended by—
A. Adding the definitions of
‘‘Advance payments of the premium tax
credit,’’ ‘‘Affordable Insurance Exchange
(Exchange),’’ ‘‘Agency,’’ ‘‘Caretaker
relative,’’ ‘‘Dependent child,’’ ‘‘Effective
income level,’’ ‘‘Electronic account,’’
‘‘Household income,’’ ‘‘Insurance
affordability program,’’ ‘‘MAGI-based
income,’’ ‘‘Minimum essential
coverage,’’ ‘‘Modified adjusted gross
income (MAGI),’’ ‘‘Pregnant woman,’’
‘‘Secure electronic interface,’’ and ‘‘Tax
dependent’’ in alphabetical order.
B. Revising the definition of ‘‘Families
and children.’’
The revisions read as follows:
§ 435.4
Definitions and use of terms.
*
*
*
*
*
Advance payments of the premium
tax credit means payments of the tax
credit specified in section 36B of the
Internal Revenue Code of 1986, which
provide premium assistance on an
advance basis to support enrollment of
an eligible individual in a qualified
health plan through the Exchange.
*
*
*
*
*
Affordable Insurance Exchange
(Exchange) means a governmental
agency or non-profit entity that meets
the applicable requirements and makes
qualified health plans available to
qualified individuals and qualified
employers. Unless otherwise identified,
this term refers to State Exchanges,
regional Exchanges, subsidiary
Exchanges, and a Federally-facilitated
Exchange.
Agency means a State Medicaid
agency.
*
*
*
*
*
Caretaker relative means a relative of
a dependent child by blood, adoption,
or marriage with whom the child is
living, who assumes primary
responsibility for the child’s care (as
may, but is not required to, be indicated
by claiming the child as a tax dependent
for Federal income tax purposes),
including the child’s natural, adoptive,
or step parent; another relative of the
child based on blood (including those of
half-blood), adoption, or marriage; and
the spouse of such parent or relative,
even after the marriage is terminated by
death or divorce.
*
*
*
*
*
Dependent child means a child who is
under the age of 18, or is age 18 and a
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full-time student, and who is deprived
of parental support by reason of the
death, absence from the home, or
unemployment of at least one parent,
unless the State has elected in its State
plan to eliminate such deprivation
requirement. A parent is considered to
be unemployed if he or she is working
less than 100 hours per month, or such
higher number of hours as the State may
elect in its State plan.
Effective income level means the
income standard applicable under the
State plan for an eligibility group, after
taking into consideration any disregard
of a block of income.
Electronic account means an
electronic file that includes all
information collected and generated by
the State regarding each individual’s
Medicaid eligibility and enrollment,
including all documentation required
under § 435.913.
Families and children means
individuals whose eligibility for
Medicaid is determined based on being
a pregnant woman, a child younger than
age 21, or a parent or other caretaker
relative of a dependent child. It does not
include individuals whose eligibility is
based on other factors, such as
blindness, disability, being aged (65 or
more years old), or a need for long-term
care services.
Household income has the meaning
provided in § 435.603(d).
Insurance affordability program
means:
(1) A State Medicaid program under
title XIX of the Act;
(2) A State children’s health insurance
program (CHIP) under title XXI of the
Act;
(3) A State basic health program
established under section 1331 of the
Affordable Care Act;
(4) Coverage in a qualified health plan
through the Exchange with advance
payments of the premium tax credit
established under section 36B of the
Internal Revenue Code of 1986; or
(5) Coverage in a qualified health plan
through the Exchange with cost-sharing
reductions established under section
1402 of the Affordable Care Act.
MAGI-based income has the meaning
provided in § 435.603(e).
*
*
*
*
*
Minimum essential coverage means
coverage defined in section 5000A(f) of
subtitle D of the Internal Revenue Code
of 1986, as added by section 1401 of the
Affordable Care Act, and implementing
regulations of such section issued by the
Secretary of the Treasury.
Modified adjusted gross income
(MAGI) has the meaning provided in
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section 36B(d)(2) of the Internal
Revenue Code of 1986.
*
*
*
*
*
Pregnant woman means a woman
during pregnancy and the post partum
period, which extends until the last day
of the month in which a 60-day period,
beginning on the date the pregnancy
terminates, ends.
Secure electronic interface means an
interface which allows for the exchange
of data between Medicaid and other
insurance affordability programs and
adheres to the requirements in part 433,
subpart C of this chapter.
*
*
*
*
*
Tax dependent means an individual
for whom another individual properly
claims a deduction for a personal
exemption under section 151 of the
Internal Revenue Code of 1986 for a
taxable year.
Subpart B—Mandatory Coverage
10. The heading for subpart B is
revised as set forth above.
11. Section 435.110 is revised to read
as follows:
§ 435.110 Parents and other caretaker
relatives.
(a) Basis. This section implements
sections 1931(b) and (d) of the Act.
(b) Scope. The agency must provide
Medicaid to parents and other caretaker
relatives, as defined in § 435.4, and if
applicable the spouse of the parent or
other caretaker relative, whose
household income is at or below the
income standard established by the
agency in the State plan, in accordance
with paragraph (c) of this section.
(c) Income standard. The agency must
establish in its State plan the income
standard as follows:
(1) The minimum income standard is
a State’s AFDC income standard in
effect as of May 1, 1988 for a household
of the applicable family size.
(2) The maximum income standard is
the higher of—
(i) The effective income level in effect
for section 1931 low-income families
under the Medicaid State plan or waiver
of the State plan as of March 23, 2010
or December 31, 2013, if higher,
converted to a MAGI-equivalent
standard in accordance with guidance
issued by the Secretary under section
1902(e)(14)(A) and (E) of the Act; or
(ii) A State’s AFDC income standard
in effect as of July 16, 1996 for a
household of the applicable family size,
increased by no more than the
percentage increase in the Consumer
Price Index for all urban consumers
between July 16, 1996 and the effective
date of such increase.
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12. Revise the undesignated center
heading that is immediately before
§ 435.116 to read as follows:
Mandatory Coverage of Pregnant
Women, Children Under 19, and
Newborn Children
13. Section 435.116 is revised to read
as follows:
§ 435.116
Pregnant women.
(a) Basis. This section implements
sections 1902(a)(10)(A)(i)(III) and (IV);
1902(a)(10)(A)(ii)(I), (IV), and (IX); and
1931(b) and (d) of the Act.
(b) Scope. The agency must provide
Medicaid to pregnant women whose
household income is at or below the
income standard established by the
agency in its State plan, in accordance
with paragraph (c) of this section.
(c) Income standard. The agency must
establish in its State plan the income
standard as follows:
(1) The minimum income standard is
the higher of:
(i) 133 percent FPL for a household of
the applicable family size; or
(ii) Such higher income standard up
to 185 percent FPL, if any, as the State
had established as of December 19, 1989
for determining eligibility for pregnant
women, or, as of July 1, 1989, had
authorizing legislation to do so.
(2) The maximum income standard is
the higher of—
(i) The highest effective income level
in effect under the Medicaid State plan
for coverage under the sections
specified at paragraph (a) of this section,
or waiver of the State plan covering
pregnant women, as of March 23, 2010
or December 31, 2013, if higher,
converted to a MAGI-equivalent
standard in accordance with guidance
issued by the Secretary under section
1902(e)(14)(A) and (E) of the Act; or
(ii) 185 percent FPL.
(d) Covered services.
(1) Pregnant women are covered
under this section for the full Medicaid
coverage described in paragraph (d)(2)
of this section, except that the agency
may provide only pregnancy-related
services described in paragraph (d)(3) of
this section for pregnant women whose
income exceeds the applicable income
limit established by the agency in its
State plan, in accordance with
paragraph (d)(4) of this section.
(2) Full Medicaid coverage—
(i) Consists of all services which the
State is required to cover under
§ 440.210(a)(1) of this chapter and all
services which it has opted to cover
under § 440.225 of this chapter; and
(ii) May include, at State option,
enhanced pregnancy-related services in
accordance with § 440.250(p) of this
chapter.
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(3) Pregnancy-related services—
(i) Consist at least of services, as
defined by the agency, related to
pregnancy (including prenatal, delivery,
postpartum, and family planning
services) and other conditions which
may complicate pregnancy; and
(ii) May include, at State option,
enhanced pregnancy-related services in
accordance with § 440.250(p) of this
chapter).
(4) Applicable income limit for full
Medicaid coverage of pregnant women.
For purposes of paragraph (d)(1) of this
section—
(i) The minimum applicable income
limit is the State’s AFDC income
standard in effect as of May 1, 1988 for
a household of the applicable family
size.
(ii) The maximum applicable income
limit is the highest effective income
level for coverage under section
1902(a)(10)(A)(i)(III) of the Act or under
section 1931(b) and (d) of the Act in
effect under the Medicaid State plan or
waiver of the State plan as of March 23,
2010 or December 31, 2013, if higher,
converted to a MAGI-equivalent
standard.
14. Section 435.118 is added to read
as follows:
Emcdonald on DSK2BSOYB1PROD with PROPOSALS2
§ 435.118
19.
Infants and children under age
(a) Basis. This section implements
sections 1902(a)(10)(A)(i)(III), (IV), (VI),
and (VII); 1902(a)(10)(A)(ii)(IV) and (IX);
and 1931(b) and (d) of the Act.
(b) Scope. The agency must provide
Medicaid to children under age 19
whose household income is at or below
the income standard established by the
agency in its State plan, in accordance
with paragraph (c) of this section.
(c) Income standard.
(1) The minimum income standard is
the higher of—
(i) 133 percent FPL for a household of
the applicable family size; or
(ii) For infants under age 1, such
higher income standard up to 185
percent FPL, if any, as the State had
established as of December 19, 1989 for
determining eligibility for infants, or, as
of July 1, 1989 had authorizing
legislation to do so.
(2) The maximum income standard
for each of the age groups of infants
under age 1, children age 1 through age
5, and children age 6 through age 18 is
the higher of—
(i) 133 percent FPL;
(ii) The highest effective income level
for each age group in effect under the
Medicaid State plan for coverage under
the applicable sections of the Act listed
at § 435.118(a), or waiver of the State
plan covering such age group, as of
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March 23, 2010 or December 31, 2013,
if higher, converted to a MAGIequivalent standard in accordance with
guidance issued by the Secretary under
section 1902(e)(14)(A) and (E) of the
Act; or
(iii) For infants under age 1, 185
percent FPL.
15. Revise the undesignated center
heading that is before § 435.119 to read
as follows:
Mandatory Coverage for Individuals
Age 19 through 64
16. Section 435.119 is revised to read
as follows:
§ 435.119 Coverage for individuals age 19
or older and under age 65 at or below 133
percent FPL.
(a) Basis. This section implements
section 1902(a)(10)(A)(i)(VIII) of the Act.
(b) Eligibility. The agency must
provide Medicaid to individuals who:
(1) Are age 19 or older and under age
65;
(2) Are not pregnant;
(3) Are not entitled to or enrolled for
Medicare benefits under part A or B of
title XVIII of the Act;
(4) Are not otherwise eligible for and
enrolled for mandatory coverage under
a State’s Medicaid State plan in
accordance with subpart B of this part;
and
(5) Have household income that is at
or below 133 percent FPL for a
household of the applicable family size.
(c) Coverage for dependent children.
(1) A State may not provide Medicaid
to a parent or other caretaker relative
living with a dependent child if the
child is under the age specified in
paragraph (c)(2) of this section, unless
such child is receiving benefits under
Medicaid, the Children’s Health
Insurance Program under subchapter D
of this chapter, or otherwise is enrolled
in other minimum essential coverage as
defined in § 435.4 of this part.
(2) For the purpose of paragraph (c)(1)
of this section, the age specified is
under age 19, unless the State had
elected as of March 23, 2010 to provide
Medicaid to individuals under age 20 or
21 under § 435.222 of this part, in which
case the age specified is such higher age.
Subpart C—Options for Coverage
17. The heading for subpart C is
revised to read as set forth above.
18. Section 435.218 is added to read
as follows:
§ 435.218
FPL.
Individuals above 133 percent
(a) Basis. This section implements
section 1902(a)(10)(A)(ii)(XX) of the Act.
(b) Eligibility.
(1) Criteria. The agency may provide
Medicaid to individuals who:
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(i) Are under age 65;
(ii) Are not eligible for and enrolled
for mandatory coverage under a State’s
Medicaid State plan in accordance with
subpart B of this part;
(iii) Are not otherwise eligible for and
enrolled for optional coverage under a
State’s Medicaid State plan in
accordance with subpart C of this part,
based on information available to the
State from the application filed by or on
behalf of the individual; and
(iv) Have household income that
exceeds 133 percent FPL, but is at or
below the income standard elected by
the agency and approved in its
Medicaid State plan, for a household of
the applicable family size.
(2) Limitations.
(i) A State may not, except as
permitted under an approved phase-in
plan adopted in accordance with
paragraph (b)(3) of this section, provide
Medicaid to higher income individuals
described in paragraph (b)(1) of this
section without providing Medicaid to
lower income individuals described in
such paragraph.
(ii) The limitation on coverage of
parents and other caretaker relatives
specified in § 435.119(c) also applies to
coverage under this section.
(3) Phase-in plan. A State may phase
in coverage to all individuals described
in paragraph (b)(1) of this section under
a phase-in plan submitted in a State
plan amendment to and approved by the
Secretary.
Subpart E—General Eligibility
Requirements
19. Section 435.403 is amended by—
A. Redesignating paragraphs (h) and
(i) as paragraphs (i) and (h),
respectively.
B. Revising newly redesignated
paragraphs (h)(1) and (h)(4)
C. Revising newly redesignated
paragraphs (i)(1) and (i)(2).
D. Removing newly redesignated
paragraph (i)(3).
E. Further redesignating newly
redesignated paragraph (i)(4) as
paragraph (i)(3).
F. Amending paragraph (l)(2) by
removing ‘‘paragraph (h)’’ and adding
‘‘paragraph (i)’’ in its place.
The revisions and addition read as
follows:
§ 435.403
State residence.
*
*
*
*
*
(h) Individuals age 21 and over.
(1) For an individual not residing in
an institution as defined in paragraph
(b) of this section, the State of residence
is the State where the individual—
(i) Intends to reside, including
without a fixed address or, if incapable
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of stating intent, where the individual is
living; or
(ii) Has entered the State with a job
commitment or seeking employment
(whether or not currently employed).
*
*
*
*
*
(4) For any other institutionalized
individual, the State of residence is the
State where the individual intends to
reside or, if incapable of stating intent,
where the individual is living.
(i) Individuals under age 21.
(1) For an individual under age 21
who is capable of indicating intent and
who is emancipated from his or her
parent or who is married, the State of
residence is determined in accordance
with paragraph (h)(1) of this section.
(2) For an individual under age 21 not
described in paragraph (i)(1) of this
section, not living in an institution as
defined in paragraph (b) of this section
and not eligible for Medicaid based on
receipt of assistance under title IV–E of
the Act, as addressed in paragraph (g) of
this section, the State of residence is the
State:
(i) Where the individual resides,
including with a custodial parent or
caretaker or without a fixed address; or
(ii) Where the individual’s parent or
caretaker has entered the State with a
job commitment or seeking employment
(whether or not currently employed).
*
*
*
*
*
Subpart G—General Financial
Eligibility Requirements and Options
20. Section 435.603 is added to read
as follows:
Emcdonald on DSK2BSOYB1PROD with PROPOSALS2
§ 435.603 Application of modified adjusted
gross income (MAGI).
(a) Basis, scope, and implementation.
(1) This section implements section
1902(e)(14) of the Act.
(2) Effective January 1, 2014, the
agency must apply the financial
methodologies set forth in this section
in determining the financial eligibility
of all individuals for Medicaid, except
for individuals identified in paragraph
(i) of this section and as provided in
paragraph (a)(3) of this section.
(3) In the case of determining ongoing
eligibility for beneficiaries determined
eligible for Medicaid on or before
December 31, 2013 and receiving
Medicaid as of January 1, 2014,
application of the financial
methodologies set forth in this section
must not be applied until March 31,
2014 or the next regularly-scheduled
redetermination of eligibility for such
individual under § 435.916, whichever
is later, if the individual otherwise
would lose eligibility as a result of the
application of these methodologies.
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(b) Definitions. For purposes of this
section—
Code means the Internal Revenue
Code of 1986.
Family size means the number of
persons counted as members of an
individual’s household. In the case of
determining the family size of a
pregnant woman, the pregnant woman
is counted as 2 persons. In the case of
determining the family size of other
individuals who have a pregnant
woman in their household, the pregnant
woman is counted, at State option, as
either 1 or 2 person(s).
Tax dependent has the meaning
provided in § 435.4 of this part.
(c) Basic rule. Except as specified in
paragraph (i) of this section, the agency
must determine financial eligibility for
Medicaid based on ‘‘household income’’
as defined in paragraph (d) of this
section.
(d) Household income.
(1) Except as provided in paragraphs
(d)(2) and (d)(3) of this section,
household income is the sum of the
MAGI-based income, as defined in
paragraph (e) of this section, of every
individual included in the individual’s
household, minus an amount equivalent
to 5 percentage points of the Federal
poverty level for the applicable family
size.
(2) The MAGI-based income of an
individual who is included in the
household of his or her natural, adopted
or step parent and is not required to file
a tax return under section 6012 of the
Code for the taxable year in which
eligibility for Medicaid is being
determined, is not included in
household income whether or not the
individual files a tax return.
(3) In the case of individuals
described in paragraph (f)(2)(i) of this
section, household income also includes
actually available cash support provided
by the person claiming such individual
as a tax dependent.
(e) MAGI-based income. For the
purposes of this section, MAGI-based
income means income calculated using
the same financial methodologies used
to determine modified adjusted gross
income as defined in section
36B(d)(2)(B) of the Code, except that,
notwithstanding the treatment of the
following under the Code—
(1) An amount received as a lump
sum is counted as income only in the
month received.
(2) Scholarships or fellowship grants
used for education purposes and not for
living expenses are excluded from
income.
(3) American Indian/Alaska Native
exceptions. The following are excluded
from income:
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(i) Distributions from Alaska Native
Corporations and Settlement Trusts;
(ii) Distributions from any property
held in trust, or that is subject to Federal
restrictions, or otherwise under the
supervision of the Secretary of the
Interior.
(iii) Distributions resulting from real
property ownership interests related to
natural resources and improvements—
(A) Located on or near a reservation
or within the most recent boundaries of
a prior Federal reservation; or
(B) Resulting from the exercise of
Federally-protected rights relating to
such real property ownership interests;
(iv) Payments resulting from
ownership interests in or usage rights to
items that have unique religious,
spiritual, traditional, or cultural
significance or rights that support
subsistence or a traditional lifestyle
according to applicable Tribal Law or
custom;
(v) Student financial assistance
provided under the Bureau of Indian
Affairs education programs.
(f) Household.
(1) Basic rule for taxpayers not
claimed as a tax dependent. In the case
of an individual filing a tax return for
the taxable year in which an initial
determination or redetermination of
eligibility is being made, and who is not
claimed as a tax dependent by another
taxpayer, the household consists of the
taxpayer and all tax dependents.
(2) Basic rule for individuals claimed
as a tax dependent. In the case of an
individual who is claimed as a tax
dependent by another taxpayer, the
household is the household of the
taxpayer claiming such individual as a
tax dependent, except that the
household must be determined in
accordance with paragraph (f)(3) of this
section in the case of—
(i) Individuals other than a spouse or
a biological, adopted or step child who
are claimed as a tax dependent by
another taxpayer;
(ii) Individuals under age 21 living
with both parents, if the parents are not
married; and
(iii) Individuals under age 21 claimed
as a tax dependent by a non-custodial
parent.
(3) Rules for individuals who neither
file a tax return nor are claimed as a tax
dependent. In the case of individuals
who do not file a Federal tax return and
are not claimed as a tax dependent, the
household consists of the individual
and, if living with the individual—
(i) The individual’s spouse;
(ii) The individual’s natural, adopted
and step children under age 19 or, if
such child is a full-time student, under
age 21; and
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(iii) In the case of individuals under
age 19, or, in the case of full-time
students, under age 21 the individual’s
natural, adopted and step parents and
adoptive and step siblings under age 19
or, if such sibling is a full-time student,
under age 21.
(4) Married couples. In the case of a
married couple living together, each
spouse will be included in the
household of the other spouse,
regardless of whether they file a joint
tax return under section 6013 of the
Code or whether one spouse is claimed
as a tax dependent by the other spouse.
(g) No resource test or income
disregards. In the case of individuals
whose financial eligibility for Medicaid
is determined in accordance with this
section, the agency must not—
(1) Apply any assets or resources test;
or
(2) Apply any income or expense
disregards under sections 1902(r)(2) or
1931(b)(2)(C), or otherwise under title
XIX, of the Act.
(h) Budget period.
(1) Applicants and new enrollees.
Financial eligibility for Medicaid for
applicants and other individuals not
receiving Medicaid benefits at the point
at which eligibility for Medicaid is
being determined must be based on
current monthly household income and
family size.
(2) Current beneficiaries. For
individuals who have been determined
financially-eligible for Medicaid using
the MAGI-based methods set forth in
this section, a State may elect in its
State plan to base financial eligibility
either on current monthly household
income and family size or projected
annual household income for the
current calendar year.
(3) In determining current monthly or
projected annual household income
under paragraph (h)(1) or (h)(2) of this
section, the agency may adopt a
reasonable method to include a prorated
portion of reasonably predictable future
income, to account for a reasonably
predictable decrease in future income,
or both, as evidenced by a signed
contract for employment, a clear history
of predictable fluctuations in income, or
other clear indicia of such future
changes in income. Such future increase
or decrease in income must be verified
in the same manner as other income, in
accordance with the income and
eligibility verification requirements at
§ 435.940 et seq., including by selfattestation if reasonably compatible
with other electronic data obtained by
the agency in accordance with such
sections.
(i) Eligibility Groups for which
modified MAGI-based methods do not
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apply. The financial methodologies
described in this section are not applied
in determining the eligibility for
individuals whose eligibility for
Medicaid is being determined on the
following bases or under the following
eligibility groups. For individuals
described in paragraphs (i)(3) through
(i)(6) of this section, the agency must
use the financial methods described in
§ 435.601 and § 435.602 of this subpart.
(1) Individuals whose eligibility for
Medicaid does not require a
determination of income by the State
Medicaid agency, including, but not
limited to, individuals deemed to be
receiving Supplemental Security
Income (SSI) benefits and eligible for
Medicaid under § 435.120, individuals
receiving SSI benefits and eligible for
Medicaid under § 435.135, § 435.137 or
§ 435.138 of this subpart and
individuals for whom the State relies on
a finding of income made by an Express
Lane agency, in accordance with section
1902(e)(13) of the Act.
(2) Individuals who are age 65 or
older.
(3) Individuals whose eligibility is
being determined on the basis of being
blind or disabled, or on the basis of
being treated as being blind or disabled,
including, but not limited to,
individuals eligible under § 435.121,
§ 435.232 or § 435.234 of this part or
under section 1902(e)(3) of the Act.
(4) Individuals whose eligibility is
being determined on the basis of the
need for long-term care services,
including nursing facility services or a
level of care in any institution
equivalent to such services; home and
community-based services under
section 1915 or under a demonstration
under section 1115 of the Act; or
services described in sections 1905(a)(7)
or (24) or in sections 1905(a)(22) and
1929 of the Act.
(5) Individuals who are being
evaluated for eligibility for Medicare
cost sharing assistance under section
1902(a)(10)(E) of the Act, but only for
purposes of determining eligibility for
such assistance.
(6) Individuals who are being
evaluated for coverage as medically
needy under subparts D and I of this
part.
Subpart J—Eligibility in the States and
District of Columbia Applications
21. Section 435.905 is revised to read
as follows:
§ 435.905 Availability of program
information.
(a) The agency must furnish the
following information in electronic and
paper formats, and orally as appropriate,
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to all applicants and other individuals
who request it:
(1) The eligibility requirements;
(2) Available Medicaid services; and
(3) The rights and responsibilities of
applicants and beneficiaries.
(b) Such information must be
provided in simple and understandable
terms and in a manner that is accessible
to persons who are Limited English
Proficient (LEP) and individuals living
with disabilities.
22. Section 435.907 is revised to read
as follows:
§ 435.907
Application.
(a) The agency must require an
application from the applicant, an
authorized representative, or someone
acting responsibly for the applicant.
(b) The application must be—
(1) The single, streamlined
application for all insurance
affordability programs developed by the
Secretary in accordance with section
1413(b)(1)(A) of the Affordable Care Act;
or
(2) An alternative single, streamlined
application for all insurance
affordability programs developed by a
State and approved by the Secretary in
accordance with section 1413(b)(1)(B) of
the Affordable Care Act. The alternative
application must be no more
burdensome than the single streamlined
application described in paragraph
(b)(1) of this section and ensure
coordination across insurance
affordability programs.
(c) For individuals applying for
coverage, or who may be eligible, on a
basis other than the applicable modified
adjusted gross income standard in
accordance with § 435.911, the agency
may use either the single, streamlined
application and supplemental forms to
collect additional information needed to
determine eligibility on such other basis
or an alternative application form
approved by the Secretary.
(d) The agency must establish
procedures to enable an individual, or
other authorized person acting on behalf
of the individual, to submit an
application—
(1) Via the Internet Web site described
in § 435.1200(d) of this part;
(2) By telephone;
(3) Via mail;
(4) In person; or
(5) Via facsimile.
(e) Information related to nonapplicants.
(1) The agency may not require an
individual who is not applying for
benefits for himself or herself (a ‘‘nonapplicant’’) to provide an SSN or
information regarding such individual’s
citizenship, nationality, or immigration
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status on any application or
supplemental form.
(2) The agency may request that a
household member who is a nonapplicant provide an SSN, only if—
(i) Provision of the SSN to the agency
is voluntary and the agency permits the
completion of the application without
such information;
(ii) The SSN from a non-applicant is
used to determine an applicant’s
eligibility for Medicaid or for a purpose
directly connected to the administration
of the State plan; and
(iii) The agency clearly notifies the
non-applicant that the provision of an
SSN is voluntary and informs the
individual how the SSN will be used, at
the time it is requested.
(f) The initial application must be
signed under penalty of perjury.
Electronic, including telephonically
recorded, signatures and handwritten
signatures transmitted by fascimile or
other electronic transmission must be
accepted.
23. Section 435.908 is revised to read
as follows:
§ 435.908 Assistance with application and
redetermination.
(a) The agency must allow
individual(s) of the applicant or
beneficiary’s choice to assist in the
application process or during a
redetermination of eligibility.
(b) The agency must provide
assistance to any individual seeking
help with the application or
redetermination process in person, over
the telephone, and online, and in a
manner that is accessible to individuals
with disabilities and those who are
limited English proficient.
24. Redesignate § 435.911 through
§ 435.914 as § 435.912 through § 435.915
respectively.
25. Add new § 435.911 to read as
follows:
Emcdonald on DSK2BSOYB1PROD with PROPOSALS2
§ 435.911
Determination of eligibility.
(a) Statutory basis. This section
implements sections 1902(a)(4), (a)(8),
(a)(10)(A), (a)(19), and (e)(14) and
section 1943 of the Act.
(b)(1) Applicable modified adjusted
gross income standard means 133
percent of the Federal poverty level or,
if higher—
(i) In the case of parents and other
caretaker relatives described in
§ 435.110(b), the income standard
established in accordance with
§ 435.110(c);
(ii) In the case of pregnant women, the
income standard established in
accordance with § 435.116(c);
(iii) In the case of individuals under
age 19, the income standard established
in accordance with § 435.118(c);
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(iv) The income standard established
under § 435.218(b)(1)(iv) of this part, if
the State has elected to provide coverage
under such section and, if applicable,
coverage under the State’s phase-in plan
has been implemented for the
individual whose eligibility is being
determined.
(2) [Reserved]
(c) For each individual who has
submitted an application described
§ 435.907 and who meets the nonfinancial requirements for eligibility (or
for whom the agency is providing a
reasonable opportunity to provide
documentation of citizenship or
immigration status, in accordance with
sections 1903(x), 1902(ee) or 1137(d) of
the Act), the State Medicaid Agency
must comply with the following—
(1) Eligibility determination for
mandatory coverage on basis of
modified adjusted gross income. For
each such individual who is under age
19, pregnant, or age 19 or older and
under age 65 and not entitled to or
enrolled for Medicare benefits under
part A or B or title XVIII of the Act, and
whose household income is at or below
the applicable modified adjusted gross
income standard, the agency must
promptly and without undue delay
furnish Medicaid benefits to such
individual in accordance with parts 440
and 441 of this chapter.
(2) Eligibility on basis other than
applicable modified adjusted gross
income standard. For each such
individual not determined eligible for
Medicaid in accordance with paragraph
(c)(1) of this section, the agency must
collect additional information as
needed, consistent with § 435.907(c),
to—
(i) Determine whether such individual
is eligible for Medicaid on any other
basis.
(ii) Promptly and without undue
delay furnish Medicaid to each such
individual determined eligible, in
accordance with parts 440 and 441 of
this chapter; and
(iii) Comply with the requirements set
forth in § 435.1200(g).
26. Section 435.916 is revised to read
as follows:
§ 435.916 Periodic redeterminations of
Medicaid eligibility.
(a) Redetermination of individuals
whose Medicaid eligibility is based on
modified adjusted gross income.
(1) Except as provided in paragraph
(d) of this section, the eligibility of
Medicaid beneficiaries whose financial
eligibility is based on the applicable
modified adjusted gross income
standard in accordance with
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§ 435.911(c)(1)must be redetermined
once every 12 months.
(2) The agency must make a
redetermination of eligibility without
requiring information from the
individual if able to do so based on
reliable information contained in the
individual’s account or other more
current information available to the
agency, including but not limited to
information accessed through any data
bases accessed by the agency under
§ 435.948, § 435.949 and § 435.956 of
this part.
(i) Individuals redetermined eligible
on the basis of information available to
the agency.
(A) If the agency determines, on the
basis of information available to the
agency that the individual remains
eligible for Medicaid, consistent with
the requirements of this subpart and
subpart E of part 431 the agency must
notify the individual—
(1) Of the eligibility determination,
and basis therefore; and
(2) That the individual must inform
the agency, through any of the modes
permitted for submission of applications
under § 435.907(d) of this subpart, if any
of the information contained in such
notice is inaccurate.
(B) Such individuals must not be
required to sign and return the notice.
(ii) Individuals not redetermined
eligible on basis of information
available to agency. If the agency cannot
determine, on the basis of information
available to it, that the individual
remains eligible for Medicaid, or if it
otherwise needs additional information
to complete the redetermination, the
agency must comply with the
requirements in paragraph (a)(3) of this
section.
(3) Use of a pre-populated renewal
form. For individuals not redetermined
eligible under paragraph (a)(2) of this
section, the agency must—
(i) Provide the individual with—
(A) A renewal form containing
information available to the agency that
is needed to renew eligibility, as
specified by the Secretary;
(B) At least 30 days from the date of
the renewal form to respond and
provide necessary information;
(C) Notice of the agency’s decision
concerning eligibility in accordance
with this subpart and subpart E of part
431 of this chapter; and
(D) The ability to respond to the
renewal form through any of the modes
permitted for submission of applications
under § 435.907(d), and if required, sign
the renewal electronically.
(ii) Verify any information provided
by the beneficiary in accordance with
§ 435.945 through § 435.956.
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(iii) Reconsider in a timely manner
the eligibility of an individual who is
terminated for failure to respond to the
renewal form, if the individual
subsequently responds to the agency
within a reasonable period after the date
of termination without the need for the
individual to file a new application.
(4) Transmission of data on
individuals no longer eligible for
Medicaid. If an individual is determined
ineligible for Medicaid, the agency must
assess the individual for eligibility for
other insurance affordability programs
and transmit the electronic account and
any relevant information used to make
the eligibility determination to the
appropriate program in accordance with
the requirements set forth in
§ 435.1200(g) of this part.
(b) Redetermination of individuals
whose Medicaid eligibility is determined
on a basis other than modified adjusted
gross income. The agency must
redetermine the eligibility of Medicaid
beneficiaries excepted from modified
adjusted gross income under
§ 435.603(i) of this part, for
circumstances that may change, at least
every 12 months. The agency may—
(1) Consider blindness as continuing
until the reviewing physician under
§ 435.531 of this part determines that a
beneficiary’s vision has improved
beyond the definition of blindness
contained in the plan; and
(2) Consider disability as continuing
until the review team, under § 435.541
of this part, determines that a
beneficiary’s disability no longer meets
the definition of disability contained in
the plan.
(c) Procedures for reporting changes.
The agency must have procedures
designed to ensure that beneficiaries
make timely and accurate reports of any
change in circumstances that may affect
their eligibility and that such changes
may be reported in accordance with the
modes required for submission of
applications under § 435.907(d) of this
subpart.
(d) Agency action on information
about changes. Consistent with the
requirements of § 435.952 of this
subpart—
(1) The agency must promptly
redetermine eligibility when it receives
information about changes in a
beneficiary’s circumstances that may
affect his or her eligibility.
(2) If the agency has information
about anticipated changes in a
beneficiary’s circumstances that may
affect his or her eligibility, it must
redetermine eligibility at the
appropriate time based on such changes.
27. Section 435.940 is revised to read
as follows:
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§ 435.940
Basis and scope.
The income and eligibility
verification requirements set forth at
§ 435.940 through § 435.960 of this
subpart are based on sections 1137,
1902(a)(4), 1902(a)(19), 1903(r)(3) and
1943(b)(3) of the Act and section 1413
of the Affordable Care Act.
28. Section 435.945 is revised to read
as follows:
§ 435.945
General requirements.
(a) Nothing in these regulations in this
subpart should be construed as limiting
the State’s program integrity measures
or affecting the State’s obligation to
ensure that only eligible individuals
receive benefits, consistent with part
455 of this subchapter.
(b) Except with respect to citizenship
and immigration status information, and
subject to the verification requirements
set forth in this subpart, the agency may
accept attestation without requiring
further paper documentation (either
self-attestation by the applicant or
beneficiary or by a parent, caretaker or
other person acting responsibly on
behalf of an applicant or beneficiary) of
all information needed to determine the
eligibility of an applicant or beneficiary
for Medicaid.
(c) The agency must request and use
information relevant to verifying an
individual’s eligibility for Medicaid in
accordance with § 435.948 through
§ 435.956 of this subpart.
(d) The agency must furnish, in a
timely manner, income and eligibility
information needed for verifying
eligibility for the following programs:
(1) To other agencies in the State and
other States and to the Federal programs
both listed in § 435.948(a) of this
subpart and identified in section
1137(b) of the Act;
(2) Other insurance affordability
programs;
(3) The child support enforcement
program under part D of title IV of the
Act; and
(4) SSA for OASDI under title II and
for SSI benefits under title XVI of the
Act.
(e) The agency must, as required
under section 1137(a)(7) of the Act, and
upon request, reimburse another agency
listed in § 435.948(a) of this subpart or
paragraph (d) of this section for
reasonable costs incurred in furnishing
information, including new
developmental costs associated with
furnishing the information to another
agency.
(f) Prior to requesting information for
an applicant or beneficiary from another
agency or program under this subpart,
the agency must inform the individual
that the agency will obtain and use
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51193
information available to it under this
subpart to verify income and eligibility
or for other purposes directly connected
to the administration of the State plan.
(g) The agency must report
information as prescribed by the
Secretary for purposes of determining
compliance with § 431.305, subpart P of
part 431, § 435.910, § 435.913, and
§ 435.940 through § 435.965 of this
chapter and of evaluating the
effectiveness of the income and
eligibility verification system.
(h) Information exchanged
electronically between the State
Medicaid agency and any other agency
or program must be sent and received
via secure electronic interfaces as
defined in § 435.4 of this part.
(i) The agency must execute written
agreements with other agencies before
releasing data to, or requesting data
from, those agencies. Such agreements
must provide for appropriate safeguards
limiting the use and disclosure of
information as required by Federal or
State law or regulations.
29. Section 435.948 is revised to read
as follows:
§ 435.948
Verifying financial information.
(a) The agency must request
information relating to financial
eligibility from other agencies in the
State and other States and Federal
programs in accordance with this
section. To the extent the agency
determines such information is useful to
verifying the financial eligibility of an
individual, the agency must request:
(1) Information related to wages, net
earnings from self-employment,
unearned income and resources from
the State Wage Information Collection
Agency (SWICA), the Internal Revenue
Service, the Social Security
Administration, the agencies
administering the State unemployment
compensation laws, the Stateadministered supplementary payment
programs under section 1616(a) of the
Act, and any State program
administered under a plan approved
under Titles I, X, XIV, or XVI of the Act;
and
(2) Information related to eligibility or
enrollment from the Public Assistance
Reporting Information System (PARIS),
the Supplemental Nutrition Assistance
Program, and other insurance
affordability programs.(Note: all
eligibility determination systems must
conduct data matching through PARIS).
(b) To the extent that the information
identified in paragraph (a) is available
through the electronic service
established in accordance with
§ 435.949 of this subpart, the agency
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must obtain the information through
such service.
(c)(1) If the information identified in
paragraph (a) of this section is not
available through the electronic service
established in accordance with
§ 435.949 of this subpart, the agency
may obtain the information directly
from the appropriate agency or program
consistent with the requirements in
§ 435.945 of this subpart.
(2) The agency must request the
information by SSN, or if a SSN is not
available, using other personally
identifying information in the
individual’s account, if possible.
(d) Flexibility in information
collection and verification. Subject to
approval by the Secretary, the agency
may request and use income
information from a source or sources
alternative to those listed in paragraph
(a) of this section provided that such
alternative source will reduce the
administrative costs and burdens on
individuals and States while
maximizing accuracy, minimizing
delay, meeting applicable requirements
relating to the confidentiality,
disclosure, maintenance, or use of
information, and promoting
coordination with other insurance
affordability programs.
30. Section 435.949 is added to read
as follows:
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§ 435.949 Verification of information
through an electronic service.
(a) The Secretary will establish an
electronic service through which States
may verify certain information with, or
obtain such information from, Federal
agencies, including the Social Security
Administration, the Department of
Treasury, the Department of Homeland
Security and any other Federal offices
that maintain records containing
information related to eligibility for
Medicaid or other minimum essential
coverage.
(b) To the extent that information is
available through the electronic service
established by the Secretary, States must
obtain the information through such
service, subject to the requirements in
subpart C of part 433 of this chapter.
(c) The Secretary may provide for, or
approve a request from a State to utilize,
an alternative mechanism through
which States may collect and verify
such information, if the Secretary
determines that such alternative
mechanism meets the criteria set forth
in § 435.948(d) of this subpart.
31. Section 435.952 is revised to read
as follows:
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§ 435.952 Use of information and requests
of additional information from individuals.
(a) The agency must promptly
evaluate information received or
obtained by it in accordance with
regulations under § 435.940 through
§ 435.960 of this subpart to determine
whether such information may affect the
eligibility of an individual or the
benefits to which he or she is entitled.
(b) If information provided by or on
behalf of an individual (on the
application or renewal form or
otherwise) is reasonably compatible
with information obtained by the agency
in accordance with § 435.948, § 435.949
or § 435.956 of this subpart, the agency
must determine or redetermine
eligibility based on such information.
(c) An individual must not be
required to provide additional
information or documentation unless
information needed by the agency in
accordance with § 435.948, § 435.949 or
§ 435.956 of this subpart cannot be
obtained electronically or the
information obtained electronically is
not reasonably compatible with
information provided by or on behalf of
the individual.
(1) In such cases, the agency may seek
additional information, including a
statement which reasonably explains
the discrepancy or other additional
information (including paper
documentation), from the individual.
(2) The agency must provide the
individual a reasonable period to
furnish such additional information.
(d) The agency may not deny or
terminate eligibility or reduce benefits
for any individual on the basis of
information received in accordance with
regulations under § 435.940 through
§ 435.960 of this subpart unless the
agency has sought additional
information from the individual in
accordance with paragraph (c) of this
section, and provided proper notice and
hearing rights to the individual in
accordance with this subpart and
subpart E of part 431.
§ 435.953
[Removed]
32. Section 435.953 is removed.
§ 435.955
[Removed]
33. Section 435.955 is removed.
34. Section 435.956 is added to read
as follows:
§ 435.956 Verification of other nonfinancial information.
(a) [Reserved]
(b) [Reserved]
(c) State residency.
(1) The agency may verify State
residency in accordance with
§ 435.945(b) of this subpart or through
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other reasonable verification procedures
consistent with the requirements in
§ 435.952 of this subpart.
(2) A document that provides
evidence of immigration status may not
be used alone to determine State
residency.
(d) Social Security numbers. The
agency must verify Social Ssecurity
numbers (SSNs) in accordance with
§ 435.910(f) and (g) of this subpart.
(e) Pregnancy and household size.
The agency must accept self-attestation
of pregnancy and the individuals that
comprise an individual’s household, as
defined in 435.603(f), unless the state
has information that is not reasonably
compatible with such attestation,
subject to the requirements of § 435.952
of this subpart.
(f) Age and date of birth. The agency
may verify date of birth in accordance
with § 435.945(b) of this subpart or
through other reasonable verification
procedures consistent with the
requirements in § 435.952 of this
subpart.
35. Subpart M is added to read as
follows:
Subpart M—Coordination of Eligibility
and Enrollment Between Medicaid,
CHIP, Exchanges and Other Insurance
Affordability Programs
§ 435.1200 Medicaid agency
responsibilities.
(a) Statutory basis. This section
implements sections 1943 and
2102(b)(3)(B) and (c)(2) of the Act.
(b) Definitions. As used in this
subpart:
Applicable modified adjusted gross
income (MAGI) standard is defined as
provided in § 435.911(b)(1) of this part.
Application means the single
streamlined application described in
§ 435.907(b) submitted by or on behalf
of an individual.
Exchange is defined as provided in
§ 435.4 of this part.
Insurance Affordability Program is
defined as provided in § 435.4 of this
part.
Secure electronic interface is defined
as provided in § 435.4 of this part.
(c) General requirements. The State
Medicaid Agency must —
(1) Participate in and comply with the
coordinated eligibility and enrollment
system described in section 1943 of the
Act to ensure that the agency fulfills the
responsibilities set forth in paragraphs
(e) through (g) of this section in
partnership with other insurance
affordability programs.
(2) Consistent with § 431.10(d) of this
chapter, enter into one or more
agreements with the Exchange and the
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agencies administering other insurance
affordability programs, as defined in
§ 435.4 of this part, as are necessary to
fulfill each of the requirements of this
section.
(3) In accordance with the Medicaid
State plan, certify the criteria, including
but not limited to applicable MAGI
standards as defined in § 435.911(b) of
this subpart and satisfactory
immigration status, necessary for the
Exchange to determine Medicaid
eligibility.
(d) Internet Web site. The State
Medicaid agency must make available to
current and prospective Medicaid
applicants and beneficiaries a Web site
that:
(1) Supports applicant and beneficiary
activities, including accessing
information on the insurance
affordability programs available in the
State, applying for and renewing
coverage, and other activities as
appropriate; and
(2) Is accessible to people with
disabilities in accordance with the
Americans with Disabilities Act and
section 504 of the Rehabilitation Act
and provides meaningful access for
persons who are limited English
proficient.
(e) Provision of Medicaid for
individuals found eligible for Medicaid
by the Exchange. For each individual
found eligible for Medicaid by the
Exchange based on the applicable MAGI
standard, the agency must establish
procedures—
(1) To receive, via secure electronic
interface, the electronic account
containing the finding of Medicaid
eligibility, all information provided on
the application, and any information
obtained or verified by the Exchange in
making such finding; and
(2) To furnish Medicaid to the
individual promptly and without undue
delay in accordance with parts 440 and
441 of this chapter, to the same extent
and in the same manner as if such
individual had been determined eligible
for Medicaid by the agency.
(f) Transfer of applications from other
insurance affordability programs to the
State Medicaid agency. The agency
must adopt procedures to ensure that it
promptly and without undue delay
determines the Medicaid eligibility of
individuals determined to be potentially
eligible for Medicaid by other insurance
affordability programs. The procedures
must ensure that—
(1) The agency accepts, via secure
electronic interface, the electronic
account for the individual screened as
potentially Medicaid eligible, including
all information provided on the
application and any information
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obtained or verified by the insurance
affordability program;
(2) The agency may not request
information or documentation from the
individual that is already contained in
the electronic account;
(3) The agency determines the
Medicaid eligibility of the individual,
promptly and without undue delay, in
accordance with § 435.911(c) of this part
in the same manner as if the application
had been submitted directly to, and
processed by, the agency, except that
the agency must not verify eligibility
criteria already verified by the insurance
affordability program.
(4) The agency notifies the insurance
affordability program of the final
determination of the individual’s
eligibility or ineligibility for Medicaid.
(g) Evaluation of eligibility for the
Exchanges and other insurance
affordability programs.
(1) Individuals determined not eligible
for Medicaid. For individuals who
submit an application which includes
sufficient information to determine
Medicaid eligibility, and whom the
agency determines are not eligible for
Medicaid, the agency must establish
procedures to assess such individuals
for potential eligibility for other
insurance affordability programs and
promptly and without undue delay
transfer such individuals’ electronic
accounts to any other program(s) for
which they may be eligible. The
electronic account must include all
information provided on the application
and any information obtained or
verified by the agency, including the
determination of Medicaid ineligibility.
(2) Individuals undergoing a Medicaid
eligibility determination on a basis other
than MAGI. In the case of an individual
with household income, as defined in
§ 435.603(d) of this part, greater than the
applicable MAGI standard and for
whom the agency is determining
eligibility on the basis of being blind or
disabled, the agency must establish
procedures to—
(i) Assess the individual for potential
eligibility for coverage under other
insurance affordability programs and,
promptly and without undue delay,
provide the individual’s electronic
account to any such program for which
the individual may be eligible. The
electronic account must be transmitted
via secure electronic interface and must
include all information provided on the
application and any information
obtained or verified by the agency, along
with the determination that the
individual is not Medicaid eligible on
the basis of the applicable MAGI
standard, but that a final determination
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51195
of Medicaid eligibility is still pending;
and
(ii) Notify the appropriate insurance
affordability program(s) of the agency’s
final determination of eligibility or
ineligibility.
PART 457—ALLOTMENTS AND
GRANTS TO STATES
36a. The authority citation for part
457 continues to read as follows:
Authority: Section 1102 of the Social
Security Act (42 U.S.C. 1302).
36b. In part 457, remove the term
‘‘family income’’ wherever it appears
and add in its place the term
‘‘household income.’’
37. In part 457 remove ‘‘SCHIP’’
wherever it appears and add in its place
‘‘CHIP.’’
Subpart A—Introduction; State Plans
for Child Health Insurance Programs
and Outreach Strategies
38. Section § 457.10 is amended by—
A. Removing the definition of
‘‘Medicaid applicable income level.’’
B. Adding the following definitions in
alphabetical order: ‘‘Affordable
Insurance Exchange (Exchange),’’
‘‘Electronic account,’’ ‘‘Household
income,’’ ‘‘Insurance affordability
program,’’ ‘‘Secure electronic interface,’’
and ‘‘Single, streamlined application.’’
The additions read as follows:
§ 457.10
Definitions and use of terms.
*
*
*
*
*
Affordable Insurance Exchange
(Exchange) is defined as provided in
§ 435.4 of this chapter.
*
*
*
*
*
Electronic account means an
electronic file that includes all
information collected and generated by
the State regarding each individual’s
CHIP eligibility and enrollment,
including all documentation required
under § 457.380 of this part.
*
*
*
*
*
Household income is defined as
provided in § 435.603(d) of this chapter.
Insurance affordability program is
defined as provided in § 435.4 of this
chapter.
*
*
*
*
*
Secure electronic interface is defined
as provided in § 435.4 of this chapter.
*
*
*
*
*
Single, streamlined application means
the single, streamlined application form
that is used by the State in accordance
with § 435.907(b) of this chapter and 45
CFR 155.405 for individuals to apply for
coverage for all insurance affordability
programs.
*
*
*
*
*
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39. Section § 457.80 is amended by
revising paragraph (c)(3) to read as
follows:
§ 457.80 Current State child health
insurance coverage and coordination.
*
*
*
*
*
(c) * * *
(3) Ensure coordination with other
insurance affordability programs in the
determination of eligibility and
enrollment in coverage to ensure that
there are no unnecessary gaps in
coverage, including through use of the
procedures described in § 457.305,
§ 457.350 and § 457.353.
Subpart C—State Plan Requirements:
Eligibility, Screening, Applications,
and Enrollment
40. Section 457.300 is amended by—
A. Republishing paragraph (a)
introductory text.
B. Adding paragraphs (a)(4) and (a)(5).
C. Revising paragraph (c).
The addition and revision reads as
follows:
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§ 457.300
Basis, scope, and applicability.
(a) Statutory basis. This subpart
interprets and implements—
*
*
*
*
*
(4) Section 2107(e)(1)(O) of the Act,
which relates to coordination of CHIP
with the Exchanges and the State
Medicaid agency.
(5) Section 2107(e)(1)(F) of the Act,
which relates to income determined
based on modified adjusted gross
income.
*
*
*
*
*
(c) Applicability. The requirements of
this subpart apply to child health
assistance provided under a separate
child health program. Regulations
relating to eligibility, screening,
applications and enrollment that are
applicable to a Medicaid expansion
program are found at § 435.4, § 435.229,
§ 435.905 through § 435.908, § 435.1102,
§ 435.940 through § 435.958, § 435.1200,
§ 436.3, § 436.229, and § 436.1102 of
this chapter.
41. Section 457.301 is amended by—
A. Adding the definitions of ‘‘Family
size’’ and ‘‘Medicaid applicable income
level’’ in alphabetical order.
B. Removing the definition of ‘‘Joint
application.’’
The additions read as follows:
§ 457.301
Definitions and use of terms.
*
*
*
*
*
Family size is defined as provided in
§ 435.603(b) of this chapter.)
Medicaid applicable income level
means, for a child, the effective income
level (expressed as a percentage of the
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Federal poverty level and converted to
a modified adjusted gross income
equivalent level in accordance with
guidance issued by the Secretary under
section 1902(e)(14)(A) and (E) of the
Act) specified under the policies of the
State plan under title XIX of the Act
(including for these purposes, a section
1115 waiver authorized by the Secretary
or under the authority of section
1902(r)(2) of the Act) as of March 31,
1997 for the child to be eligible for
Medicaid under either section 1902(l)(2)
or 1905(n)(2) of the Act.
*
*
*
*
*
42. Section 457.305 is revised to read
as follows:
§ 457.305
State plan provisions.
The State plan must include a
description of—
(a) The standards, consistent with
§ 457.310 and § 457.320 of this subpart,
and financial methodologies consistent
with § 457.315 of this subpart used to
determine the eligibility of children for
coverage under the State plan.
(b) The State’s policies governing
enrollment and disenrollment;
processes for screening applicants for
and, if eligible, facilitating their
enrollment in other insurance
affordability programs; and processes
for implementing waiting lists and
enrollment caps (if any).
43. Section 457.310 is amended by—
A. Republishing paragraph (b)
introductory text.
B. Revising paragraphs (b)(1)(i),
(b)(1)(ii), (b)(1)(iii) introductory text,
and (b)(1)(iii)(B).
C. Adding paragraph (b)(1)(iv).
The revisions and addition read as
follows:
§ 457.310
Targeted low-income child.
*
*
*
*
*
(b) Standards. A targeted low-income
child must meet the following
standards:
(1) * * *
(i) Has a household income, as
determined in accordance with
§ 457.315, at or below 200 percent of the
Federal poverty level for a family of the
size involved;
(ii) Resides in a State with no
Medicaid applicable income level;
(iii) Resides in a State that has a
Medicaid applicable income level and
has a household income that either—
*
*
*
*
*
(B) Does not exceed the income level
specified for such child to be eligible for
medical assistance under policies of the
State plan under title XIX on June 1,
1997; or
(iv) Is not eligible for Medicaid as a
result of the elimination of income
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disregards as specified under
§ 435.603(g) of this chapter.
*
*
*
*
*
44. Section 457.315 is added to read
as follows:
§ 457.315 Application of modified adjusted
gross income and household definition.
Effective January 1, 2014, the CHIP
agency shall apply the financial
methodologies set forth in paragraphs
(b) through (h) of § 435.603 of this
chapter in determining the financial
eligibility of all individuals for CHIP.
The exception to application of such
methods for individuals for whom the
State relies on a finding of income made
by an Express Lane agency at
§ 435.603(i)(1) also applies.
45. Section 457.320 is amended by—
A. Removing paragraphs (a)(4) and
(a)(6).
B. Redesignating paragraphs (a)(5),
(a)(7), (a)(8), (a)(9), and (a)(10) as
paragraphs (a)(4), (a)(5), (a)(6), (a)(7),
and (a)(8), respectively.
C. Revising paragraph (d).
D. Removing and reserving paragraph
(e)(2).
The revisions and additions read as
follows:
§ 457.320
Other eligibility standards.
*
*
*
*
*
(d) Residency.
(1) Residency for a noninstitutionalized child who is not a
ward of the State must be determined in
accordance with § 435.403(i) of this
chapter.
(2) A State may not—
(i) Impose a durational residency
requirement;
(ii) Preclude the following individuals
from declaring residence in a State—
(A) An institutionalized child who is
not a ward of a State, if the State is the
State of residence of the child’s
custodial parent or caretaker at the time
of placement; or
(B) A child who is a ward of a State,
regardless of where the child lives
(3) In cases of disputed residency, the
State must follow the process described
in § 435.403(m) of this chapter.
(e) * * *
(2) [Reserved]
46. Section 457.330 is added to read
as follows:
§ 457.330
Application.
The State shall use the single,
streamlined application used by the
State in accordance with § 435.907(b) of
this chapter, and otherwise comply with
the provisions of such § 435.907 of this
chapter, except that the terms of
§ 435.907(c) of this chapter (relating to
applicants seeking coverage on a basis
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other than modified adjusted gross
income) do not apply.
47. Section 457.335 is added to read
as follows:
§ 457.335 Availability of program
information and Internet Web site.
The terms of § 435.905 and
§ 435.1200(d) of this chapter apply
equally to the State in administering a
separate CHIP.
48. Section 457.340 is amended by
revising the section heading and
paragraphs (a), (b) and (f) to read as
follows:
§ 457.340
CHIP.
§ 457.348 Determinations of Children’s
Health Insurance Program eligibility from
other applicable health coverage programs.
Application for and enrollment in
(a) Application assistance. A State
must afford families an opportunity to
apply for CHIP without delay and must
provide assistance to families in
understanding and completing
applications and in obtaining any
required documentation. Such
assistance must be made available to
applicants and enrollees in person, over
the telephone, and online, and must be
provided in a manner that is accessible
to individuals living with disabilities
and those who are limited English
proficient.
(b) Use of Social Security number. A
State must require each individual
applying for CHIP to provide a Social
Security number (SSN) in accordance
with § 435.910 and cannot require nonapplicants to provide an SSN consistent
with the requirements at § 435.907(e) of
this chapter.
*
*
*
*
*
(f) Effective date of eligibility. A State
must specify a method for determining
the effective date of eligibility for CHIP,
which can be determined based on the
date of application or through any other
reasonable method that ensures
coordinated transition of children
between programs as family
circumstances change and avoids gaps
or overlaps in coverage.
49. Section 457.343 is added to read
as follows:
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§ 457.343 Periodic redetermination of CHIP
eligibility.
The redetermination procedures
described in § 435.916 of this chapter
apply equally to the State in
administering a separate CHIP, except
that the State shall verify information
needed to renew CHIP eligibility in
accordance with § 457.380 of this
subpart, shall provide notice regarding
the State’s determination of renewed
eligibility or termination in accordance
with § 457.340(e) of this subpart and
shall comply with the requirements set
forth in § 457.350 of this subpart for
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screening individuals for other
insurance affordability programs and
transmitting such individuals’
electronic account and other relevant
information to the appropriate program.
50. Section 457.348 is added to read
as follows:
(a) Exchange determinations of CHIP
eligibility.
(1) For each individual found eligible
for CHIP by the Exchange based on the
applicable MAGI standard, the State
must establish procedures—
(i) To receive, via secure electronic
interface, the electronic account
containing the finding of CHIP
eligibility and all information provided
on the application and/or verified by the
Exchange which made such finding; and
(ii) To furnish CHIP to the individual
promptly and without undue delay in
accordance with § 457.340 of this
subpart, to the same extent and in the
same manner as if such individual had
been determined by the State to be
eligible for CHIP in accordance with
such section.
(2) [Reserved].
(b) Screening for potential CHIP
eligibility by other insurance
affordability programs. The State must
adopt procedures to ensure that it
promptly and without undue delay
determines the CHIP eligibility of
individuals determined to be potentially
eligible for CHIP, by other insurance
affordability programs. The procedures
must ensure that—
(1) The State accepts, via secure
electronic interface, the electronic
account for the individual screened as
potentially CHIP eligible, including all
information provided on the application
and any information obtained or
verified by the insurance affordability
program;
(2) The State may not request
information or documentation from the
individual that is already contained in
the electronic account;
(3) The State determines the CHIP
eligibility of the individual, promptly
and without undue delay, in accordance
with § 457.340 in the same manner as if
the application had been submitted
directly to, and processed by, the State,
except that the State must not verify
eligibility criteria already verified by the
insurance affordability program.
(4) The State notifies the insurance
affordability program of the final
determination of the individual’s
eligibility or ineligibility for CHIP.
(c) Option to accept CHIP eligibility
determinations from the Medicaid
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51197
agency. A State may accept
determinations of CHIP eligibility made
by another insurance affordability
program in the same manner that it
accepts Exchange determinations of
CHIP eligibility under paragraph (a) of
this section.
(d) Certification of eligibility criteria.
The State must certify for the Exchange
the criteria necessary to determine CHIP
eligibility, including but not limited to
the income standard adopted for its
separate CHIP program and the criteria
related to satisfactory immigration
status, as set forth in the State plan in
accordance with § 457.305 of this part.
51. Section 457.350 is amended by—
A. Revising the section heading.
B. Revising paragraphs (a), (b), (c),
and (f).
C. Removing and reserving paragraph
(d).
D. Adding paragraphs (i), (j), and (k).
The additions and revisions read as
follows:
§ 457.350 Eligibility screening and
enrollment in other insurance affordability
programs.
(a) State plan requirement. The State
plan shall include a description of the
coordinated eligibility and enrollment
procedures used, at intake and any
follow-up eligibility determination,
including any periodic redetermination,
to ensure that:
(1) Only targeted low-income children
are furnished CHIP coverage under the
plan; and
(2) Enrollment is facilitated for
applicants found to be potentially
eligible for other insurance affordability
programs in accordance with this
section.
(b) Screening objectives. A State must
identify any applicant, beneficiary, or
other individual applying for coverage
on the single, streamlined application
who is potentially eligible for:
(1) Medicaid on the basis of having
household income at or below the
applicable modified adjusted gross
income standard, as defined in
§ 435.911(b) of this chapter;
(2) Medicaid on a basis other than
having household income at or below
the applicable modified adjusted gross
income standard; or
(3) Eligibility for other insurance
affordability programs, including
eligibility for advanced payments for
premium tax credits based on having
household income above the income
standard in the State for CHIP or the
applicable modified adjusted gross
income standard in the State for
Medicaid, as appropriate, or for
enrollment in a qualified health plan
through an Exchange without advanced
payments for a premium tax credit.
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(c) Income eligibility test. To identify
the individuals described in paragraphs
(b)(1) and (b)(3) of this section, a State
must apply the methodologies used to
determine household income described
in § 457.315 of this part.
(d) [Reserved].
*
*
*
*
*
(f) Applicants found potentially
eligible for Medicaid based on modified
adjusted gross income. If the screening
process reveals that the applicant is
potentially eligible for Medicaid based
on modified adjusted gross income, the
State must—
(1) Promptly transmit the electronic
account, and any other relevant
information obtained through the
application, to the Medicaid agency via
secure electronic interface; and
(2) Except as provided in § 457.355 of
this subpart, find the applicant
ineligible, provisionally ineligible, or
suspend the applicant’s application for
CHIP unless and until the Medicaid
application for the applicant is denied;
and
(3) Determine or redetermine
eligibility for CHIP, consistent with the
timeliness standards established under
§ 457.340(d) of this subpart, if—
(i) The State is notified, in accordance
with § 435.1200(f)(4) of this chapter that
the applicant has been found ineligible
for Medicaid; or
(ii) The State is notified prior to the
final Medicaid eligibility determination
that the applicant’s circumstances have
changed and another screening shows
that the applicant is not likely to be
eligible for Medicaid.
*
*
*
*
*
(i) Applicants found potentially
eligible for other insurance affordability
programs. If the screening process
reveals that an applicant is not eligible
for CHIP, is not screened as potentially
eligible for Medicaid on the basis of
modified adjusted gross income, and is
potentially eligible for enrollment in a
qualified health plan through the
Exchange or other insurance
affordability programs, the State must
promptly transmit the electronic
account, and other relevant information
obtained through the application to the
applicable program using secure
electronic interfaces.
(j) Applicants potentially eligible for
Medicaid on a basis other than modified
adjusted gross income. If, based on
information obtained through the single,
streamlined application, the applicant is
not screened as potentially eligible for
Medicaid on the basis of modified
adjusted gross income but may be
eligible for Medicaid on another basis,
the State must—
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17:38 Aug 16, 2011
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(1) Promptly transmit the electronic
account, and any other relevant
information obtained through the
application to the Medicaid agency
using secure electronic interfaces; and
(2) Complete the determination of
eligibility for CHIP in accordance with
§ 457.340 of this subpart; and
(3) Disenroll the beneficiary from
CHIP if the State is notified in
accordance with § 435.1200(f)(4) of this
chapter that the applicant has been
determined eligible for Medicaid.
(k) A State may enter into an
arrangement with the Exchange to make
eligibility determinations for advanced
premium tax credits in accordance with
Section 1943(b)(2) of the Act.
52. Section 457.353 is revised to read
as follows:
§ 457.353 Monitoring and evaluation of
screening process.
States must establish a mechanism
and monitor to evaluate the screen and
enroll process described at § 457.350 of
this subpart to ensure that children who
are:
(a) Screened as potentially eligible for
other insurance affordability programs
are enrolled in such programs, if
eligible; or
(b) Determined ineligible for other
insurance affordability programs are
enrolled in CHIP, if eligible.
53. Section 457.380 is revised to read
as follows:
§ 457.380
Eligibility verification.
(a) General requirements. Except with
respect to verification of citizenship and
immigration status, and subject to the
verification requirements set forth in
paragraph (d) of this section, the State
may accept attestation of all information
needed to determine the eligibility of an
applicant or beneficiary for CHIP.
(b) [Reserved]
(c) State Residents. If the State does
not accept self-attestation of residency,
the State must verify residency in
accordance with § 435.956(c) of this
chapter.
(d) Income. The State must verify the
income of an individual by using the
data sources and following the
standards and procedures for
verification of financial eligibility
described in § 435.945(b), § 435.948 and
§ 435.952 of this chapter.
(e) Verification of other factors of
eligibility. For eligibility requirements
not described in paragraphs (b), (c) or
(d) of this section, a State may adopt
reasonable verification procedures,
except that the State must accept selfattestation of pregnancy and the
individuals that comprise an
individual’s household unless the state
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Fmt 4701
Sfmt 4702
has information that is not reasonably
compatible with such attestation. The
State may verify date of birth in
accordance with § 435.945(b) or through
other reasonable verification procedures
consistent with the requirements in
§ 435.952.
(f) Requesting information.
(1) The State must use electronic
sources of data, if available, before
requesting additional information,
including paper documentation, from an
individual.
(2) An individual shall not be
required to provide additional
information or documentation unless
information needed by the State cannot
be obtained electronically or
information obtained electronically is
not reasonably compatible with
information provided by or on behalf of
the individual. In such cases, the State
may seek additional information,
including a statement which reasonably
explains the discrepancy and/or paper
documentation, from the individual.
The State must provide the individual a
reasonable period to furnish such
information.
(g) Electronic service. To the extent
that information sought under this
section is available through the
electronic service established by the
Secretary at § 435.949 of this chapter,
the State shall access the information
through that service.
(h) Interaction with program integrity
requirements. Nothing in this section
should be construed as limiting the
State’s program integrity measures or
affecting the State’s obligation to ensure
that only eligible individuals receive
benefits.
(i) Flexibility in information collection
and verification. Subject to approval by
the Secretary, the State may modify the
methods to be used for collection of
information and verification of
information as set forth in this section,
provided that such alternative source
will reduce the administrative costs and
burdens on individuals and States while
maximizing accuracy, minimizing
delay, meeting applicable requirements
relating to the confidentiality,
disclosure, maintenance, or use of
information, and promoting
coordination with other insurance
affordability programs.
(Catalog of Federal Domestic Assistance
Program No. 93.778, Medical Assistance
Program)
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Dated: June 29, 2011.
Donald M. Berwick,
Administrator, Centers for Medicare &
Medicaid Services.
Approved: August 10, 2011.
Kathleen Sebelius,
Secretary, Department of Health and Human
Services.
[FR Doc. 2011–20756 Filed 8–12–11; 8:45 am]
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]]>Agencies
[Federal Register Volume 76, Number 159 (Wednesday, August 17, 2011)]
[Proposed Rules]
[Pages 51148-51199]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-20756]
[[Page 51147]]
Vol. 76
Wednesday,
No. 159
August 17, 2011
Part II
Department of Health and Human Services
-----------------------------------------------------------------------
Centers for Medicare & Medicaid Services
-----------------------------------------------------------------------
42 CFR Parts 431, 433, 435, et al.
Medicaid Program; Eligibility Changes Under the Affordable Care Act of
2010; Proposed Rule
Federal Register / Vol. 76, No. 159 / Wednesday, August 17, 2011 /
Proposed Rules
[[Page 51148]]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
42 CFR Parts 431, 433, 435, and 457
[CMS-2349-P]
RIN 0938-AQ62
Medicaid Program; Eligibility Changes Under the Affordable Care
Act of 2010
AGENCY: Centers for Medicare & Medicaid Services (CMS), HHS.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This proposed rule would implement provisions of the Patient
Protection and Affordable Care Act of 2010 and the Health Care and
Education Reconciliation Act of 2010 (collectively referred to as the
Affordable Care Act). The Affordable Care Act expands access to health
insurance through improvements in Medicaid, the establishment of
Affordable Insurance Exchanges (``Exchanges''), and coordination
between Medicaid, the Children's Health Insurance Program (CHIP), and
Exchanges. This proposed rule would implement sections of the
Affordable Care Act related to Medicaid and CHIP eligibility,
enrollment simplification, and coordination.
In addition, this proposed rule also sets out the increased Federal
Medical Assistance Percentage (FMAP) rates and the related conditions
and requirements that will be available for State medical assistance
expenditures relating to ``newly eligible'' individuals and certain
medical assistance expenditures in ``expansion States'' beginning
January 1, 2014, including a proposal of three alternative
methodologies to use for purposes of applying the appropriate FMAP for
expenditures in accordance with section 2001 of the Affordable Care
Act.
DATES: To be assured consideration, comments must be received at one of
the addresses provided below, no later than 5 p.m. on October 31, 2011.
ADDRESSES: In commenting, please refer to file code CMS-2349-P. Because
of staff and resource limitations, we cannot accept comments by
facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to https://www.regulations.gov. Follow the ``Submit a
comment'' instructions.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-2349-P, P.O. Box 8016,
Baltimore, MD 21244-8016.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-2349-P, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. Alternatively, you may deliver (by hand or
courier) your written comments ONLY to the following addresses prior to
the close of the comment period:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC
20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
call telephone number (410) 786-7195 in advance to schedule your
arrival with one of our staff members.
Comments erroneously mailed to the addresses indicated as
appropriate for hand or courier delivery may be delayed and received
after the comment period.
For information on viewing public comments, see the beginning of
the SUPPLEMENTARY INFORMATION section.
FOR FURTHER INFORMATION CONTACT:
Sarah Delone, (410) 786-0615.
Stephanie Kaminsky, (410) 786-4653.
SUPPLEMENTARY INFORMATION: A detailed Preliminary Regulatory Impact
Analysis associated with this proposed rule is available at https://www.cms.gov/MedicaidEligibility/downloads/CMS-2349-P-PreliminaryRegulatoryImpactAnalysis.pdf. A summary of the
aforementioned analysis is included as part of this proposed rule.
Inspection of Public Comments: All comments received before the
close of the comment period are available for viewing by the public,
including any personally identifiable or confidential business
information that is included in a comment. We post all comments
received before the close of the comment period on the following Web
site as soon as possible after they have been received: https://www.regulations.gov. Follow the search instructions on that Web site to
view public comments.
Comments received timely will also be available for public
inspection as they are received, generally beginning approximately 3
weeks after publication of a document, at the headquarters of the
Centers for Medicare & Medicaid Services, 7500 Security Boulevard,
Baltimore, Maryland 21244, Monday through Friday of each week from 8:30
a.m. to 4 p.m. To schedule an appointment to view public comments,
phone 1-800-743-3951.
Table of Contents
I. Background
A. Introduction
B. Legislative Overview
C. Overview of the Proposed Rule
II. Provisions of the Proposed Rule
A. Changes to Medicaid Eligibility
1. Coverage for Individuals Age 19 or Older and Under Age 65 at
or Below 133 Percent FPL (Sec. 435.119)
2. Individuals Above 133 Percent FPL (Sec. 435.218)
3. Amendments to Part 435, Subparts A Through D
a. Eligibility for Parents and Other Caretaker Relatives,
Pregnant Women, and Children
(1) Parents and Other Caretaker Relatives (Sec. 435.110)
(2) Pregnant Women (Sec. 435.116)
(3) Infants and Children Under Age 19 (Sec. 435.118)
b. Other Conforming Changes to Existing Regulations
B. Financial Methodologies for Determining Medicaid Eligibility
Based on MAGI Under the Affordable Care Act
1. Point-in-Time Measurement of Income (Budget Periods) (Sec.
435.603(h))
2. Changes to Medicaid Financial Methods
3. Provisions of Proposed Rule Implementing MAGI Methods
a. Proposed Methods for Counting Income Based on MAGI (Sec.
435.603(e))
b. Proposed Rules for Determining Household Composition Under
MAGI Based Methods (Sec. 435.603(f))
(1) Household Composition for Tax Filers (Sec. 435.603(f)(1))
and Their Tax Dependents (Sec. 435.603(f)(2))
(2) Household Composition for Non-Filers (Sec. 435.603(f)(3))
(3) Retention of Existing Financial Methods (Sec. 435.603(i))
C. Residency for Medicaid Eligibility Defined
[[Page 51149]]
1. Residency Definition for Adults (Age 21 and Over) Sec.
435.403(h))
2. Residency Definition for Children (Under Age 21) (Sec.
435.403(i))
D. Application and Enrollment Procedures for Medicaid
1. Availability of Program Information (Sec. 435.905)
2. Applications (Sec. 435.907)
3. Assistance With Application and Redetermination (Sec.
435.908)
E. MAGI Screen (Sec. 435.911)
F. Coverage Month
G. Verification of Income and Other Eligibility Criteria (Sec.
435.940 Through Sec. 435.956)
1. Basis, Scope, and General Requirements (Sec. 435.940 and
Sec. 435.945)
2. Verification of Financial Eligibility (Sec. 435.948)
3. Verification of Information From Federal Agencies (Sec.
435.949)
4. Use of Information and Request for Additional Information
(Sec. 435.952)
5. Verification of Other Non-Financial Information (Sec.
435.956)
H. Periodic Redetermination of Medicaid Eligibility (Sec.
435.916)
I. Coordination of Eligibility and Enrollment Among Insurance
Affordability Programs--Medicaid Agency Responsibilities (Sec.
435.1200)
1. Basic Responsibilities (Sec. 435.1200(c))
2. Internet Web Site (Sec. 435.1200(d))
3. Provision of Medical Assistance for Individuals Found
Eligible for Medicaid by an Exchange (Sec. 435.1200(e))
4. Transfer of Applications From Other Insurance Affordability
Programs to the State Medicaid Agency (Sec. 435.1200(f))
5. Evaluation of Eligibility for Other Insurance Affordability
Programs (Sec. 435.1200(g))
J. Single State Agency (Sec. 431.10 and Sec. 431.11)
K. Provisions of Proposed Regulation Implementing Application of
MAGI to CHIP
1. Definitions and Use of Terms (Sec. 457.10 and Sec. 457.301)
2. State Plan Provisions (Sec. 457.305)
3. Application of MAGI and Household Definition (Sec. 457.315)
4. Other Eligibility Standards (Sec. 457.320)
5. Clarifications Related to MAGI
L. Residency for CHIP Eligibility (Sec. 457.320)
M. CHIP Coordinated Eligibility and Enrollment Process
1. Applications and Outreach Standards (Sec. 457.330, Sec.
457.334, Sec. 457.335 and Sec. 457.340)
2. Determination of CHIP Eligibility and Coordination With
Exchange and Medicaid (Sec. 457.348 and Sec. 457.350)
3. Periodic Redetermination of CHIP Eligibility (Sec. 457.343)
and Coverage Months
4. Verification of Eligibility (Sec. 457.380)
5. Ministerial Changes (Sec. 457.80, Sec. 457.300, Sec.
457.301, Sec. 457.305, and Sec. 457.353)
N. Federal Medical Assistance Percentage (FMAP) for Newly
Eligible Individuals and for Expansion States
1. Availability of FMAP (Sec. 433.10(c))
a. Newly Eligible FMAP (Sec. 433.10(c)(6))
b. Expansion State FMAP (Sec. 433.10(c)(7) and Sec.
433.10(c)(8))
(1) 2.2 Percentage Points Increase in FMAP (Sec. 433.10(c)(7))
(2) Expansion State FMAP (Sec. 433.10(c)(8))
2. Methodology (Sec. 433.206(a) and Sec. 433.206(b))
3. Alternative 1: 2009 Eligibility Standard Threshold
4. Alternative 2: Statistically Valid Sampling Methodology
(Sec. 433.210)
5. Alternative 3: Use of a FMAP Methodology Based on Reliable
Data Sources (Sec. 433.212)
6. Additional Methodology Approaches
III. Collection of Information Requirements
IV. Response to Comments
V. Summary of Preliminary Regulatory Impact Analysis
Regulations Text
Acronyms
Because of the many organizations and terms to which we refer by
acronym in this proposed rule, we are listing these acronyms and their
corresponding terms in alphabetical order below:
Act Social Security Act
AFDC Aid to Families with Dependent Children
BBA Balanced Budget Act of 1997
CHIP Children's Health Insurance Program
CMS Centers for Medicare & Medicaid Services
DHS Department of Homeland Security
EITC Earned Income Tax Credit
EPSDT Early and periodic screening, diagnosis, and treatment
FFP Federal financial participation
FMAP Federal medical assistance percentage
FPL Federal poverty level
HCERA Health Care and Education Reconciliation Act of 2010 (Pub. L.
111-152, enacted March 30, 2010)
HHS [U.S.] Department of] Health and Human Services
IRA Individual Retirement Account
IRC Internal Revenue Code of 1986
IRS Internal Revenue Service
LEP Limited English Proficient
MAGI Modified adjusted gross income
MSA Medical Savings Account
PRWORA Personal Responsibility and Work Opportunity Reconciliation
Act of 1996
QI Qualifying Individuals
QMB Qualified Medicare Beneficiaries
SHO State Health Official
SLMB Specified Low-Income Medicare Beneficiaries
SMD State Medicaid Director
SNAP Supplemental Nutrition Assistance Program
SPA State Plan Amendment
SSA Social Security Administration
SSI Supplemental Security Income
SSN Social Security number
TANF Temporary Assistance for Needy Families
I. Background
A. Introduction
The Patient Protection and Affordable Care Act (Pub. L. 111-148,
enacted on March 23, 2010), was amended by the Health Care and
Education Reconciliation Act of 2010 (Pub. L. 111-152, enacted on March
30, 2010), and together these laws are referred to as the Affordable
Care Act. In addition, section 205 of the Medicare & Medicaid Extenders
Act of 2010 (Pub. L. 111-309, enacted December 15, 2010) made technical
corrections to the Social Security Act (the Act) to implement the
Affordable Care Act. This proposed rule addresses changes to Medicaid
and CHIP eligibility in the Affordable Care Act.
Prior to the implementation of the Affordable Care Act in 2014,
individuals who fall into certain ``categories'' or ``categorical
groups'' are eligible for Medicaid, including low-income children,
pregnant women, parents and other caretaker relatives, seniors, and
people with disabilities. Federal minimum income eligibility standards
vary by category. All States currently cover pregnant women and
children under age 6 at or below 133 percent of the Federal poverty
level (FPL) (in some States the minimum eligibility level is 185
percent FPL for pregnant women and children under one), and children
age 6 through age 18 with family incomes at or below 100 percent of the
FPL, though many States have implemented higher standards for pregnant
women and children. The Federally specified minimum eligibility levels
for parents, people with disabilities and the elderly are significantly
lower, although States have the option to expand coverage to people
within these categories at higher income levels. Prior to the
Affordable Care Act, States could not cover non-disabled, non-elderly
adults who do not have dependent children, regardless of their income
level, except through a Medicaid demonstration under Section 1115 of
the Act. As a result of the varying Federal minimum standards and State
options, eligibility for Medicaid is complicated and significant gaps
continue to exist even among the lowest income Americans.
The Affordable Care Act extends and simplifies Medicaid
eligibility. Starting in calendar year (CY) 2014, it replaces the
complex categorical groupings and limitations to provide Medicaid
eligibility to all individuals under age 65 with income at or below 133
percent FPL, provided that the individual meets certain non-financial
eligibility criteria, such as citizenship or satisfactory immigration
status. Children and, in some States, pregnant women will be eligible
at income levels equal to or higher than the 133 percent level,
depending on existing State-established
[[Page 51150]]
income eligibility standards. In addition, States will have a new
option to expand eligibility beyond the new simplified Federal
minimums.
In addition, starting January 1, 2014, eligibility for Medicaid for
most individuals, as well as for CHIP, will be determined using
methodologies that are based on modified adjusted gross income (MAGI),
as defined in the Internal Revenue Code of 1986 (IRC). Per the
Affordable Care Act, eligibility for advance payments of premium tax
credits for the purchase of private coverage through the Exchange will
use MAGI as it is defined in the IRC to determine eligibility as well.
Medicaid, CHIP and the Exchanges will use common income methodologies
and will align the rules and methodologies used to evaluate eligibility
for most individuals under all three programs.
The alignment of the methods for determining eligibility is one
part of an overall system established by the Affordable Care Act that
allows for real-time eligibility determinations of most applicants and
allows for prompt enrollment of individuals in the ``insurance
affordability program'' for which they qualify. In this proposed rule,
insurance affordability programs include Medicaid, CHIP, advance
payments of premium tax credits and cost-sharing reductions through the
Exchange, and any State-established Basic Health Program, if
applicable.
Individuals will not have to apply to multiple programs nor will
they be sent from one program to another if they initially apply to a
program for which they are not ultimately eligible. To achieve
coordination, this proposed rule for Medicaid and CHIP eligibility is
aligned with the applicable provisions in the proposed rule
establishing the Exchanges published in the July 15, 2011 Federal
Register (76 FR 41866) (``Patient Protection and Affordable Care Act;
Establishment of Exchanges and Qualified Health Plans''), as well as in
the accompanying proposed rule published elsewhere in this Federal
Register implementing the Affordable Care Act provisions related to the
eligibility for advance payments of premium tax credits and cost-
sharing reductions and enrollment in a qualified health plan through
the Exchanges (referred to hereinafter as the ``Exchange proposed
rule'') as well as the proposed rule developed by the Department of the
Treasury regarding the health insurance premium assistance tax credit
(``the Treasury proposed rule''), also published elsewhere in this
Federal Register.
Section 2001 of the Affordable Care Act ensures that States will
receive an increased FMAP for all newly eligible individuals, defined
as those who would not have been eligible in the State in December
2009. The FMAP for these newly eligible individuals will be 100 percent
for Calendar Year (CY) 2014--2016, gradually declining to 90 percent in
2020 where it remains indefinitely. In addition, some States that had
expanded coverage to adults (parents and adults without children) prior
to December 2009, referred to as ``expansion States,'' shall also
receive an increased FMAP that begins in 2014 between the regular FMAP
and the FMAP for newly eligible individuals and equalizing with the
newly eligible FMAP in 2019 and beyond. The proposed rule sets forth
the definitions of newly eligible individuals and expansion States as
well as the applicable FMAPs beginning in 2014.
While the new FMAPs provide significant new federal financial
support for States, they could cause States significant burden to
administer if States had to evaluate all applicants under the new
simplified rules for purposes of determining eligibility and under
their otherwise obsolete December 2009 eligibility rules for purposes
of determining the appropriate FMAP. A dual system would be inefficient
and likely lead to inaccuracies. To promote States' ability to operate
efficient and effective processes, this rule proposes three alternative
approaches for determining the applicable FMAP. Based on the comments
received through this proposed rule and the results of an upcoming CMS/
HHS feasibility study, we expect to modify, narrow or combine the
approaches available to States in the final rule. By establishing an
alternative methodology or methodologies for use in the FMAP
determination by a State, the proposed rule aims to ensure that it will
not be necessary for a State to make an eligibility determination for
every individual using two separate eligibility systems and thereby
advancing efficient and effective operations for States, individuals,
and the Federal government.
Starting in 2014, individuals and small businesses will be able to
purchase private health insurance through State-based competitive
marketplaces called Affordable Insurance Exchanges. Exchanges will
offer Americans competition, choice, and clout. Insurance companies
will compete for business on a level playing field, driving down costs.
Consumers will have a choice of health plans to fit their needs. And
Exchanges will give individuals and small businesses the same
purchasing clout as big businesses. The Departments of Health and Human
Services, Labor, and the Treasury (the Departments) are issuing
regulations implementing Exchanges in several phases. The first in this
series was a Request for Comment relating to Exchanges, published in
the August 3, 2010 Federal Register (75 FR 45584). Second, Initial
Guidance to States on Exchanges was published issued on November 18,
2010. Third, a proposed rule for the application, review, and reporting
process for waivers for State innovation was published in the March 14,
2011 Federal Register (76 FR 13553). Fourth, two proposed regulations
were published in the Federal Register on July 15, 2011 (76 FR 41866
and 76 FR 41930) to implement components of the Exchange and health
insurance premium stabilization policies in the Affordable Care Act.
Fifth, a proposed regulation for the establishment of the Consumer
Operated and Oriented Plan (CO-OP) Program under section 1322 of the
Affordable Care Act was published in the Federal Register on July 20,
2011 (76 FR 43237). Sixth, three proposed rules, including this one,
are being published in the Federal Register on August 17, 2011 to
provide guidance on the eligibility determination process related to
enrollment in a qualified health plan, advance payments of the premium
tax credit, cost-sharing reductions, Medicaid, and the Children's
Health Insurance Program (CHIP).
B. Legislative Overview
This proposed rule implements the Medicaid and CHIP eligibility and
enrollment provisions of the Affordable Care Act including:
Section 1413, which directs the Secretary of HHS (the
``Secretary'') to establish a streamlined system for individuals to
apply for and be enrolled in an insurance affordability program if
eligible.
Section 1414, which directs the Secretary of Treasury,
upon written request, to provide the Secretary with certain tax return
information used in determining an individual's eligibility for all
insurance affordability programs.
Section 2001, which sets out the Medicaid eligibility
changes and new optional coverage effective in CY 2014.
Section 2002, which references the determination of
financial eligibility for Medicaid for certain populations.
Section 2101, which implements new eligibility standards
for CHIP.
Section 2201, which simplifies and coordinates eligibility
and enrollment system between all insurance affordability programs.
[[Page 51151]]
Section 2001(a)(3), which added a new section 1905(y) of
the Act, which provides for a significant increase in the FMAP for
medical assistance expenditures for individuals determined eligible
under the adult group in the State and who are considered to be ``newly
eligible'', as defined in section 1905(y)(2)(A) of the Act.
Section 10201(c)(4), which added a new section 1905(z) to
the Act. As discussed in section N of this rule, Section 1905(z) of the
Act contains two provisions, which make available additional FMAP rates
for the expansion States.
In this rule, ``CHIP'' refers to a separate child health program
operated by a State under title XXI and the regulations governing such
programs at 42 CFR part 457.
C. Overview of the Proposed Rule
The proposed amendments to 42 CFR parts 431, 435, and 457 in this
rule propose the Federal policies and guidelines necessary to
facilitate the creation of the eligibility and enrollment system
established by the Affordable Care Act. Amendments to 42 CFR part 435
subparts B and C are proposed to implement the statutory changes to
Medicaid eligibility. We propose amendments to subpart A to add new or
revised definitions.
Amendments to 42 CFR part 435 subpart G propose that, for most
individuals, financial eligibility for Medicaid will be based on MAGI,
to define the new MAGI-based financial methodologies, and to identify
those individuals whose eligibility will not be based on MAGI.
Proposed amendments to subpart J and the addition of a new subpart
M provide Federal rules to promote the establishment by States of a
seamless and coordinated system to determine eligibility of individuals
seeking assistance and to enroll them in the appropriate insurance
affordability program. We propose a new subpart M to delineate the
responsibilities of the State Medicaid agency in the coordinated system
of eligibility and enrollment established under the Affordable Care
Act, and propose comparable amendments for CHIP at 42 CFR part 457.
We propose to amend 42 CFR part 433 to add new provisions at Sec.
433.10(c) to indicate the increases to the FMAPs as available to States
under the Affordable Care Act. A number of provisions in the Affordable
Care Act are not included in this proposed rule, but either have been
or will be addressed in separate rulemaking or other guidance. In the
April 19, 2011 Federal Register, we published the Federal Funding for
Medicaid Eligibility Determination and Enrollment Activities final rule
(76 FR 21950) that provides details on enhanced Federal funding for
Medicaid eligibility systems.
We also intend to issue additional proposed rules on related
matters such as appeals, notices, presumptive eligibility, eligibility
for former foster care children, deletion of existing regulations that
have been rendered obsolete, and eligibility policy in the territories.
In addition, we intend to release a Request for Information (RFI)
related to State conversion of current income standards to MAGI-
equivalent standards per section 2002 of the Affordable Care Act as
well as a RFI related to the State flexibility to establish basic
health programs for low-income individuals not eligible for Medicaid
under section 1331 of the Affordable Care Act.
II. Provisions of the Proposed Rule
The following descriptions are structured to explain the provisions
being proposed and do not necessarily follow the order of the
regulation's text.
A. Changes to Medicaid Eligibility
1. Coverage for Individuals Age 19 or Older and Under Age 65 at or
Below 133 Percent FPL (Sec. 435.119)
Section 2001(a) of the Affordable Care Act adds a new section
1902(a)(10)(A)(i)(VIII) of the Act (referred to as ``the adult
group''), under which States will provide Medicaid coverage starting in
CY 2014 to individuals under age 65 who are not otherwise mandatorily
eligible for Medicaid under sections 1902(a)(10)(A)(i)(I) through (VII)
or (IX) of the Act and have household income, based on the new MAGI
methods described in section II.B of this proposed rule, at or below
133 percent FPL. Although the Act specifies that this new group is for
individuals under age 65, individuals under age 19 are not included
because such individuals with household income at or below 133 percent
FPL are covered in the eligibility groups under sections
1902(a)(10)(A)(i)(IV), (VI), and (VII) of the Act.
We propose to replace the current Sec. 435.119 (which addresses
obsolete provisions for eligibility of qualified family members under
section 1902(a)(10)(A)(i)(V) of the Act for which the statutory
authority ended on September 30, 1998), to establish this new
eligibility group.
Proposed Sec. 435.119(a) and (b) set forth the policy, explained
above. Reflected in proposed paragraph (b), financial eligibility for
the adult group will be based on MAGI, as defined in section
1902(e)(14) of the Act and implemented at proposed Sec. 435.603; there
is no resource test.
Section 1902(a)(10)(A)(i)(VIII) of the Act specifies that
individuals may be eligible for the adult group if they ``are not
described in a previous subclause of'' section 1902(a)(10)(A)(i) of the
Act. Under these proposed rules, an individual is not eligible under
the new adult group if the individual is otherwise eligible under
section 1902(a)(10)(A)(i) of the Act and 42 CFR 435 subpart B, but may
be eligible for the adult group if the individual is described in but
not eligible for Medicaid under another mandatory group. This will mean
that an individual who is a recipient of Supplemental Security Income
(SSI) benefits, and so potentially eligible under section
1902(a)(10)(A)(i)(II) of the Act, may be eligible for coverage under
the adult group in a State that has elected in accordance with section
1902(f) of the Act and Sec. 435.121 to use more restrictive
eligibility criteria for Medicaid than SSI.
The new adult group will include parents as well as adults not
living with children. It will also include individuals currently
eligible under an optional coverage group (such as, for individuals
with disabilities) who have household income, based on the new MAGI
methods, at or below 133 percent of the FPL and otherwise meet the
criteria for coverage under the new group. At proposed Sec.
435.119(c), we codify section 1902(k)(3) of the Act, which permits
coverage of parents and other caretaker relatives under the new adult
group only if their children under age 19 (or higher if the State has
elected to cover children under age 20 or 21 under Sec. 435.222) are
enrolled in Medicaid or ``other health insurance coverage.'' In
paragraph (c)(1), we propose to define ``other health insurance
coverage'' to mean minimum essential coverage, as defined in Sec.
435.4 of this proposed rule.
2. Individuals Above 133 Percent FPL (Sec. 435.218)
Section 2001(e) of the Affordable Care Act adds a new section
1902(a)(10)(A)(ii)(XX) of the Act, giving States the option starting in
CY 2014 to provide Medicaid coverage to individuals under age 65
(including pregnant women and children) with income above 133 percent
FPL. This new eligibility group provides a simplified mechanism for
States to cover individuals whose income exceeds the State's income
standard for
[[Page 51152]]
mandatory coverage (for example, 133 percent FPL for the adult group).
This option is an alternative to the use of income disregards under
section 1902(r)(2) or 1931(b)(2)(C) of the Act, which have been used in
the past to expand eligibility, but which will no longer be available
starting in 2014.
We propose to add a new Sec. 435.218 establishing this optional
eligibility group, which covers individuals who are under 65 years old;
are not eligible for and enrolled in an eligibility group under section
1902(a)(10)(A)(i) of the Act and 42 CFR 435 subpart B or under section
1902(a)(10)(A)(ii) of the Act and 42 CFR part 435 subpart C; and have
household income based on MAGI that exceeds 133 percent of the FPL but
does not exceed the optional income standard established by the State.
The basis and basic eligibility criteria for this group are set forth
in proposed Sec. 435.218(a) and (b)(1).
Section 1902(a)(10)(A)(ii)(XX) of the Act specifies that
individuals may be eligible under this category if they ``are not
described in or enrolled under a previous subclause of'' section
1902(a)(10)(A)(ii) of the Act. We interpret the language ``described in
or enrolled under'' to mean eligible for another optional or mandatory
group under section 1902(a)(10)(A) of the Act, and we propose at Sec.
435.218(b)(1)(ii) and (iii) that this limitation applies only if the
individual is eligible for or enrolled under another eligibility group
that is covered by the State.
To ease administrative burden on States and to make it easier for
States to enroll eligible individuals under the simplest eligibility
category, we also propose in Sec. 435.218(b)(1)(ii) and (iii) that an
individual who meets the eligibility criteria at Sec. 435.218(b)(1)(i)
and (iv) would be determined eligible under this group, unless the
individual can be determined eligible under another eligibility group
based on information available to the State from the application. A
State is not required to make determinations regarding eligibility
factors such as disability, level of care, or resources first in order
to decide whether an individual would be eligible for another
eligibility group, unless such determination can be made based only on
the information provided on the application. However, as an exception
to this, if an individual appears to be eligible as ``medically needy''
based on information provided, he or she could still be enrolled in
this optional group. States would still have to determine eligibility
under all possible categories if the individual is not eligible under
this new optional group.
Section 1902(a)(10)(A)(ii)(XX) of the Act provides that, to be
eligible under this optional group, an individual's income must ``not
exceed the highest income eligibility level established under the State
plan or under a waiver of the plan[.]'' We are interpreting the statute
to give States flexibility in establishing the income standard for this
group, provided such standard exceeds 133 percent FPL and is approved
in the State plan.
Section 1902(hh)(1) of the Act provides that States ``may elect to
phase-in'' coverage for this optional group ``based on the categorical
group (including non-pregnant childless adults) or income, so long as
the State does not extend such eligibility to individuals * * * with
higher income before making individuals * * * with lower income
eligible for medical assistance.'' We propose that if a State wants to
phase in coverage for this group, it submit a plan for Secretarial
approval.
Children are included in this new optional group for individuals
above 133 percent FPL if they are not already eligible for Medicaid.
Therefore, if a State covers children above 133 percent FPL under a
separate CHIP and adopts coverage under this new optional group, the
State ultimately must shift coverage of children with income at or
below the income standard from CHIP to Medicaid under this group. The
State would still be able to claim enhanced FMAP under title XXI for
such children.
Section 1902(hh)(2) of the Act limits eligibility of parents and
other caretaker relatives under the new optional group to individuals
whose children have coverage in the same manner as eligibility is
limited for parents and caretaker relatives under the new adult group
per section 1902(k)(3) of the Act. At Sec. 435.218(b)(2)(ii), we
propose to implement this provision in the same manner as proposed for
the new adult group at Sec. 435.119(c).
3. Amendments to Part 435, Subparts A Through D
Determining Medicaid eligibility prior to the Affordable Care Act
changes in CY 2014 is complicated due to a patchwork of multiple
mandatory and optional eligibility groups for different ``categorical
populations.'' Many States cover 50, 60, or more distinct eligibility
groups. Financial eligibility is determined using methodologies based
on other programs, such as the SSI and the former AFDC programs, adding
further complexity to the eligibility determination process. In this
rule, consistent with the Affordable Care Act policies, we propose to
streamline and simplify current regulations governing Medicaid
eligibility for children, pregnant women, parents, and other caretaker
relatives whose financial eligibility, beginning in CY 2014, will be
based on MAGI.
In response to the President's request, outlined in Executive Order
13563, that agencies streamline and simplify Federal regulations, we
propose to use the authority of section 1902(a)(19) of the Act, which
provides ``that eligibility * * * be determined * * * in a manner
consistent with simplicity of administration and the best interests of
recipients,'' to simplify and consolidate certain existing mandatory
and optional eligibility groups into three categories starting in CY
2014, to complement the new adult group: (1) Parents and caretaker
relatives (new Sec. 435.110); (2) pregnant women (new Sec. 435.116);
and (3) children (new Sec. 435.118).
As illustrated in Table 1, we are proposing to collapse existing
Medicaid eligibility categories, with the goal of making the program
significantly easier for States to administer and for the public to
understand. In subsequent rulemaking, we will provide additional
guidance on existing regulatory provisions that are effectively
subsumed under the provisions contained in these proposed rules or have
been rendered obsolete for other reasons. In proposing a simplified
approach to eligibility for populations whose eligibility will be based
on MAGI, it is our intent that eligibility for coverage will not change
for any of the populations as a result of this proposal. We solicit
comments on the implications of these proposed rules for individuals as
well as States. Table 1 shows how the mandatory and optional groups in
current regulations (the column on the left) are moved into the new
broader groups (parents, pregnant women, and children) under this
proposed rule.
[[Page 51153]]
Table 1
----------------------------------------------------------------------------------------------------------------
Medicaid Proposed Rule
Social Security Act and Pre-ACA -----------------------------------------------------------------------------
Regulations Parents/caretaker relatives (Sec. Pregnant women Children < 19
435.110) (Sec. 435.116) (Sec. 435.118)
----------------------------------------------------------------------------------------------------------------
Mandatory Medicaid Eligibility Groups
----------------------------------------------------------------------------------------------------------------
Low-income families-- X X X
1902(a)(10)(A)(i)(I) and 1931
AFDC recipients--Sec. 435.110.
Qualified Pregnant Women & ................................... X X
Children < 19--
1902(a)(10)(A)(i)(III)--Sec.
435.116.
Poverty-level related pregnant ................................... X X
women & infants--
1902(a)(10)(A)(i)(IV)--No rule.
----------------------------------------------------------------------------------------------------------------
Poverty-level related children 1- ................................... ................... X
5--1902(a)(10)(A)(i)(VI)--No rule.
Poverty-level related children 6- ................................... ................... X
18--1902(a)(10)(A)(i)(VII)--No
rule.
----------------------------------------------------------------------------------------------------------------
Optional Medicaid Eligibility Groups
----------------------------------------------------------------------------------------------------------------
Families & children financially Keeps 435.210 for parents/caretaker X X
eligible for AFDC-- relatives.
1902(a)(10)(A)(ii)(I)--Sec.
435.210.
Families & children who would be ................................... X X
eligible for AFDC if not
institutionalized--1902(a)(10)(A)
(ii)(IV)--Sec. 435.211.
Poverty-level related pregnant ................................... X X
women & infants--
1902(a)(10)(A)(ii)(IX)--No rule.
----------------------------------------------------------------------------------------------------------------
a. Eligibility for Parents and Other Caretaker Relatives, Pregnant
Women, and Children
(1) Parents and Other Caretaker Relatives (Sec. 435.110)
We propose to delete in its entirety Sec. 435.110 for individuals
receiving AFDC and to replace it with a new Sec. 435.110 for existing
eligibility that is continuing under sections 1902(a)(10)(A)(i)(I) and
1931(b) and (d) of the Act for parents and other caretaker relatives of
dependent children (including pregnant women who are parents or
caretaker relatives). These statutory provisions remain and are not
superseded by the provisions of the Affordable Care Act establishing a
new adult group for individuals not otherwise eligible under section
1902(a)(10)(A)(i) of the Act. While the parent/caretaker relative
category continues to apply, our proposed rules simplify this category
considerably and provides States flexibility to set their income
eligibility standard under this category within allowable Federal
parameters.
Under the proposed rule, each State will establish an income
standard in its State plan for coverage of parents and other caretaker
relatives under Sec. 435.110. The Federal minimum and maximum income
standards for this group are set forth in sections 1931(b)(2)(A) and
1931(b)(2)(B) of the Act. The minimum income standard for the new
parent/caretaker relative group is a State's AFDC income standards for
a household of the applicable family size in effect as of May 1, 1988.
The maximum income standard would be established as set forth below.
The maximum income standard for the parent and other caretaker relative
eligibility group would be the higher of:
The State's effective income level (including any
disregard of a block of income) for section 1931 families under the
State plan or waiver of such plan as of March 23, 2010 or December 31,
2013, if higher, converted to a MAGI-equivalent income standard in
accordance with guidance to be issued by the Secretary under section
1902(e)(14)(A) and (E) of the Act (The conversion of current income
standards to a MAGI-equivalent standard is discussed in section
II.B.3.a of this proposed rule.); and
The State's AFDC income standard in effect as of July 16,
1996, increased by no more than the percentage increase in the Consumer
Price Index for all urban consumers since such date.
If a State's income standard for the parent/caretaker relative
group is below 133 percent FPL, parents and other caretaker relatives
with income above that income standard and at or below 133 percent FPL
would qualify for Medicaid under the new adult group. The conversion of
current income standards to a MAGI-equivalent standard is discussed in
section II.B.3.a of this proposed rule.
States currently have the option to cover parents and other
caretaker relatives at income levels above the standard for families
under section 1931 of that Act. They can do so under the authority at
section 1902(a)(10)(A)(ii)(I) of the Act and Sec. 435.210 of the
existing regulations. This option will continue under the Affordable
Care Act for coverage of parents and other caretaker relatives who are
not eligible for mandatory Medicaid coverage under Sec. 435.110 or the
new adult group at proposed Sec. 435.119. We note that parents and
other caretaker relatives who are Medicare-eligible or elderly may be
covered under Sec. 435.110 and Sec. 435.210, even though they are
excluded from coverage under the adult group at Sec. 435.119.
We are also proposing to simplify the income methods for
determining eligibility under the new parent and other caretaker
relative group. Pre-Affordable Care Act, section 1931 of the Act
requires a two-step process in determining income eligibility: (1) The
family must have gross income at or below 185 percent of the State's
consolidated standard of need under its AFDC program, in effect as of
July 16, 1996; and (2) the family's net countable income after
subtracting various income exclusions and disregards and expenses must
be at or below the State's AFDC payment standard or a higher income
standard established by the State under section 1931 of the Act.
Because each State's net countable income standard converted to a MAGI-
equivalent income standard will be lower than its current gross income
standard, we propose to eliminate the 185 percent gross income test as
unnecessary and, to simplify eligibility, base income eligibility in
proposed Sec. 435.110 only on the second prong of the income test,
that is, the net countable income standard converted to a MAGI-
equivalent income standard.
Consistent with section 1931 of the Act, we propose Medicaid
definitions of ``caretaker relative'' and ``dependent child'' at Sec.
435.4. A caretaker relative is defined as a parent or other relative
(related by blood, adoption, or marriage) living with a dependent child
for whom such individual is assuming primary responsibility. Per
section 1931 of the
[[Page 51154]]
Act, to be ``dependent,'' the child must be ``deprived'' of at least
one parent's support by reason of death, absence, or unemployment.
Under the statute, a parent is considered to be unemployed if he or she
is working less than 100 hours per month. However, we propose to codify
in this rule the flexibility given States in a final rule amending 45
CFR 233.101 (63 FR 42270) and in a State Medicaid Director letter dated
September 22, 1997 to eliminate the ``deprivation'' requirement
altogether (which most States have done) or to establish a higher
number of working hours as the threshold for determining unemployment.
In proposing this rule, we are retaining the minimum income
standards specified in Federal statute for each eligibility group,
while giving States flexibility to set new standards at a level that
takes into account a State's current rules regarding how income is
counted. In all cases, the income standard would be applied to an
individual's MAGI-based household income. We considered whether or not
States should convert the Federal minimum income standards prescribed
in statute--for example, the minimum standard for pregnant women and
children specified in section 1902(l) and for parents and other
caretaker relatives in section 1931(b) of the Act--to a MAGI-equivalent
minimum income standard based on the income exclusions and disregards
currently used by the State. While doing so could result in maintaining
eligibility for individuals who might otherwise lose Medicaid due to
the elimination of income exclusions and disregards under MAGI, if a
State were to reduce its income standard to the minimum permitted, it
also would result in different minimum income eligibility standards
being applied across States and reduce the amount of eligibility
simplification that could be achieved. We, therefore, do not propose to
require conversion of the Federal minimum income standards currently
prescribed in statute to MAGI-equivalent standards.
Furthermore, we do not believe that the impact on eligibility of
the proposed policy will be significant. Eligibility standards for
children must be maintained through September 2019, in accordance with
the maintenance of effort provisions (MOE) in section 1902(gg) of the
Act, and when the MOE provision expires, eligibility for only a small
number of children would be affected if a State were to drop coverage
to the minimum level permitted. Parents and other caretaker relatives
who could lose eligibility under section 1931 of the Act if a State
were to reduce coverage to the minimum permitted under the statute
would retain eligibility under the new adult group. Pregnant women
would be affected if a State were to decrease its income standard to
the statutory minimum level, as the MOE for pregnant women ends with
the establishment of an Exchange in 2014 and there is no other coverage
group to which affected pregnant women would necessarily be
transferred; instead, pregnant women affected by a State's decision to
reduce its Medicaid income standard for pregnant women to the minimum
permitted under the Act would likely become eligible for advanced
payments of the premium tax credit for enrollment through the Exchange.
(2) Pregnant Women (Sec. 435.116)
As is true for parents and caretaker relatives, the law retains
eligibility based on pregnancy. To simplify the eligibility rules, we
propose to replace the current Sec. 435.116 for qualified pregnant
women and qualified children under section 1902(a)(10)(A)(i)(III) of
the Act with a new Sec. 435.116 for pregnant women. In addition, under
the authority of section 1902(a)(19) of the Act, we are consolidating
many different eligibility categories for pregnant women and are
proposing to include in the revised Sec. 435.116 all mandatory and
optional eligibility groups, except the medically needy, for which
pregnancy status and income are the only factors of eligibility. The
following sections of the Act are included under the proposed Sec.
435.116: 1931 (low-income families); 1902(a)(10)(A)(i)(III) (qualified
pregnant women); 1902(a)(10)(A)(i)(IV), 1902(a)(10)(A)(ii)(IX), and
1902(l) (poverty-level related pregnant women); 1902(a)(10)(A)(ii)(I)
(pregnant women who meet AFDC financial eligibility criteria); and
1902(a)(10)(A)(ii)(IV) (institutionalized pregnant women).
Under the proposed rule, paragraphs (a) through (c) set forth the
basis and basic provisions for coverage of pregnant women under Sec.
435.116. We propose at Sec. 435.116(c) that each State will establish
an income standard in its State plan for coverage of pregnant women.
The minimum income standard is 133 percent FPL, unless a higher income
standard, at or below 185 percent FPL, was in effect for pregnant women
on December 19, 1989 (section 1902(l)(2)(A) of the Act). The maximum
income standard is the higher of:
The highest effective income level (including any
disregard of a block of income), converted to a MAGI-equivalent income
standard, in effect under the State plan or waiver of the State plan as
of March 23, 2010 or December 31, 2013, if higher, for coverage of
pregnant women under the sections of the Act identified above; and
185 percent FPL.
We are also codifying current law to add a definition of ``pregnant
woman'' in Sec. 435.4, incorporating the post partum period.
While we propose to consolidate various eligibility categories for
pregnant women, States continue to have flexibility under the statute
to provide different benefits to certain pregnant women or to provide
all pregnant women with full Medicaid coverage, as many States do
today. Thus, under clause (V) in the matter following section
1902(a)(10)(G) of the Act, pregnant women eligible for Medicaid under
sections 1902(a)(10)(A)(i)(IV), 1902(a)(10)(A)(ii)(IX), and 1902(l) of
the Act are only covered for services related to pregnancy or to a
condition which may complicate the pregnancy. In accordance with
section 1902(a)(10)(B) of the Act, all other pregnant women eligible
for coverage under the sections of the Act listed in Sec. 435.116(a)
are eligible for all services that the State covers under the State
plan, regardless of whether the service is related to pregnancy or to a
condition that may complicate pregnancy.
However, States currently have the flexibility to provide full
Medicaid coverage as pregnancy-related services for all pregnant women.
Thus, we propose at Sec. 435.116(d) that pregnant women are covered
for full Medicaid coverage, unless a State elects to provide only the
pregnancy-related services described at Sec. 435.116(d)(3) for
pregnant women whose income exceeds an income limit established by the
State for full coverage. States have flexibility under existing
regulations at Sec. 440.210(a)(2) to establish a policy that all
services covered under the State plan are related to pregnancy or to a
condition that may complicate pregnancy. Therefore, States will not
have to establish an income limit for full coverage for pregnant women
under Sec. 435.116(d)(4), but may elect to provide full coverage for
all pregnant women. Reflected at proposed paragraph (d)(3), States also
may elect to cover certain enhanced pregnancy-related services, as
specified in Sec. 440.250(p), for pregnant women only.
(3) Infants and Children Under age 19 (Sec. 435.118)
Section 2001(a)(4) of the Affordable Care Act amends section
1902(l)(2)(C) of the Act to provide Medicaid to children ages 6 through
18 with household income at or below at least 133 percent
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FPL. This amendment eliminates certain of the age-based differences in
Federal Medicaid eligibility rules for children, which currently
provide for a minimum income standard of 100 percent FPL for coverage
of children ages 6 through 18 (although many States have implemented
optional coverage at higher levels), and means that all children and
adults under age 65 with household income at or below 133 percent FPL
will be eligible for Medicaid. Section 205(b) of the Medicare and
Medicaid Extenders Act of 2010 clarifies that this amendment is
effective January 1, 2014. If some or all of these children are covered
under a separate CHIP before this provision takes effect, these
children will move to coverage under Medicaid. Such a change, however,
will not affect States' ability to claim enhanced FMAP under title XXI
for these children.
Currently, there are many different mandatory and optional
eligibility categories for children. To simplify the eligibility rules,
we propose to include under Sec. 435.118 all mandatory and optional
eligibility groups for which age under 19 and income are the only
factors of eligibility. The following sections of the Act are included
under proposed Sec. 435.118: 1931 (low-income families);
1902(a)(10)(A)(i)(III) (qualified children who meet AFDC financial
eligibility criteria); 1902(a)(10)(A)(i)(IV) and 1902(a)(10)(A)(ii)(IX)
(infants); 1902(a)(10)(A)(i)(VI) (children ages 1 through 5);
1902(a)(10)(A)(i)(VII) (children ages 6 through 18); and
1902(a)(10)(A)(ii)(IV) (institutionalized children).
Proposed Sec. 435.118(a) through (c) set forth the basis and
eligibility criteria for children, as explained above. We propose in
Sec. 435.118(c) that each State will establish income standard(s) in
its State plan for coverage of children by age group. There is no
resource test. The minimum income standard for all age groups is 133
percent FPL, unless, for infants per section 1902(l)(2)(A) of the Act,
a higher income standard, at or below 185 percent FPL, was in effect on
December 19, 1989. The maximum income standard for each age group is
the higher of:
The highest effective income level for the age group
(including any disregard of a block of income)--converted to a MAGI-
equivalent standard--in effect under the State plan or waiver as of
March 23, 2010 or December 31, 2013; or
For infants, 185 percent FPL.
A State may not otherwise increase its income standard above the
levels specified because, effective January 1, 2014, States may no
longer apply new income disregards in determining eligibility for
individuals whose eligibility is based on MAGI. Coverage at higher
income levels can be implemented through adoption of the new optional
group at proposed Sec. 435.218.
The maintenance of effort (MOE) provisions of the Affordable Care
Act at section 2001(b) maintain the minimum income standards for
children at the levels in effect on March 23, 2010; these standards are
maintained for children until September 30, 2019. These proposed
regulations do not address the MOE provisions specified in sections
1902(a)(74) and 1902(gg) of the Act, as added by section 2001(b) of the
Affordable Care Act. As a condition of receiving Federal financial
participation, States must comply with these provisions, which are
being addressed through subregulatory guidance.
Other Conforming Changes to Existing Regulations
Revisions are proposed at Sec. 435.4 to the definition of
``families and children'' to delete references to AFDC rules.
Definitions are proposed for ``agency,'' ``caretaker relative,''
``dependent child,'' and ``pregnant woman.'' Definitions related to
implementation of the Affordable Care Act are proposed for ``advance
payments of the premium tax credit,'' ``Affordable Insurance Exchange
(Exchange),'' ``effective income level,'' ``electronic account,''
``household income,'' ``insurance affordability program,'' ``MAGI-based
income,'' ``minimum essential coverage,'' ``modified adjusted gross
income (MAGI),'' ``secure electronic interface,'' and ``tax
dependent''.
B. Financial Methodologies for Determining Medicaid Eligibility Based
on MAGI Under the Affordable Care Act
Section 2002 of the Affordable Care Act, as amended by section 1004
of the HCERA, creates a new section 1902(e)(14) of the Act, which
provides that effective January 1, 2014, financial eligibility for most
individuals shall be based on MAGI and ``household income,'' as defined
in section 36B(d)(2) of the IRC (hereinafter referred to as ``section
36B definitions''). In this preamble, ``MAGI-based methodologies''
refers both to the rules governing the determination of the MAGI of an
individual or a married couple filing a joint tax return, as well as to
the determination of total household income. Similarly, reference to
the determination of income eligibility ``based on MAGI'' refers to
determinations based on household income using MAGI-based
methodologies.
The adoption of MAGI-based methodologies to determine income
represents a significant simplification for the Medicaid program,
eligibility for which has historically been linked to programs
providing cash assistance to low-income populations. We are considering
permitting States to convert to MAGI-based methodologies prior to 2014
through section 1115 demonstrations.
Proposed Sec. 435.603 sets forth proposed methodologies to
implement MAGI in determining Medicaid eligibility for affected
individuals effective January 1, 2014. Our proposed methodologies
codify the section 36B definitions of MAGI and household income, except
in a very limited number of cases discussed below. At proposed Sec.
435.603(i), we identify those populations excepted under the Affordable
Care Act from application of MAGI-based methodologies; for these
populations pre-Affordable Care Act Medicaid financial methodologies--
generally set forth in existing regulations at Sec. 435.601 and Sec.
435.602--will continue to apply.
1. Point-in-Time Measurement of Income (Budget Periods) (Sec.
435.603(h))
Under pre-Affordable Care Act Medicaid rules, per section
402(a)(13)(A) of former title IV-A of the Act, income eligibility for
Medicaid is based on current income actually available to the
individual in any given month. MAGI, as defined in section 36B of the
IRC, is determined on the basis of annual income. The Affordable Care
Act addresses this issue by adding section 1902(e)(14)(H)(i) of the Act
to provide that the use of MAGI in determining eligibility for Medicaid
shall not be ``construed as affecting or limiting the application of
the requirement under this title to determine an individual's income as
of the point in time at which an application for medical assistance is
processed.'' Moreover, section 1902(a)(17) of the Act provides that
States use eligibility standards and methodologies that are
``reasonable,'' ``consistent with the objectives of [the Act],'' and
take into account only such income as is ``determined in accordance
with standards prescribed by the Secretary, available to the applicant
or recipient[.]''
In this proposed rule, we refer to the ``point in time'' rules
referenced in the statute as the ``budget period'' (that is, monthly
versus annual income) based upon which income eligibility is
determined. At proposed Sec. 435.603(h)(3), we are retaining the
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current flexibility afforded States to take into account future changes
in income that can be reasonably anticipated (as may be the case with
certain seasonal workers or someone with a signed employment contract
or layoff notice). Such anticipated changes would be determined in
accordance with the verification regulations at Sec. 435.940 et seq.
Uncertain changes in future income (for example, someone who is looking
for, but has not secured, a job) may not be considered under the option
reflected at proposed Sec. 435.603(h)(3). Actual changes in income--
including deviations from reasonably anticipated fluctuations in
income--must still be reported to, and acted upon by, the agency in
accordance with Sec. 435.916(c) and (d).
To promote flexibility, administrative simplification and
continuity of coverage for beneficiaries already enrolled in Medicaid,
we propose at Sec. 435.603(h)(2) to give States the additional
flexibility, for individuals eligible for Medicaid based on MAGI, to
maintain eligibility as long as annual income based on MAGI methods for
the calendar year remains at or below the Medicaid income standard.
This gives States the option to align with the annual eligibility
period applied in the Exchanges and to minimize the extent to which
individuals experiencing relatively small fluctuations in income bounce
back and forth between programs.
We believe that these flexibilities will help address some of the
challenges that will arise due to the reliance on monthly income for
purposes of eligibility for Medicaid versus annual income for purposes
of eligibility for advance payments of premium tax credits. In
particular, if a State does not opt to take into account a reasonably
predictable drop in future income, someone with current monthly income
above the Medicaid income standard, but projected annual income below
100 percent FPL could be determined both ineligible for Medicaid (until
their monthly income actually dropped) and for advance payments of the
premium tax credit for enrollment through the Exchange (because, with
very limited exceptions, individuals with income below 100 percent FPL
are not eligible for advance payments of the premium tax credit). We
solicit comments on how best to prevent a gap in coverage, including
whether to ensure that State Medicaid agencies take into account a
predictable future drop in income.
2. Changes to Medicaid Financial Methods
Under pre-Affordable Care Act Medicaid rules for families and
children, essentially all money received, from whatever source, is
counted as income in the month in which it is received, unless
explicitly excluded or disregarded under the Act, disregarded at State
option, or excluded under other Federal statutes. A ``household'' (for
purposes of determining family size and whose income is counted)
generally consists of parents and the children with whom they are
living. Other non-legally responsible relatives and unrelated
individuals living together are not included, nor are spouses or
parents living apart from the rest of the family, which means that the
income of such individuals is not deemed available to the Medicaid
applicant. Under pre-Affordable Care Act Medicaid rules, inclusion of
stepparents in a stepchild's household depends on State law relating to
obligations to support stepchildren. A stepparent's income is
considered available to his or her spouse since spouses are legally
responsible for each other.
Section 36B of the IRC, and Sec. 1.36B-1 of the IRS proposed
premium tax credit rule, define ``MAGI, '' ``household income,'' and
``family size.'' See also section 152 of the IRC and Internal Revenue
Service (IRS) Publication 501 regarding rules for claiming ``qualifying
children'' and ``qualifying relatives'' as tax dependents. To be
eligible to receive advance payments of a premium tax credit for the
purchase of coverage through an Exchange, married couples generally
must file jointly.
As discussed in section II.I of this proposed rule, sections 1413
and 2201 of the Affordable Care Act direct the creation of a seamless,
simplified system of coordinated eligibility and enrollment between
insurance affordability programs, and in most instances, section 36B
definitions of ``MAGI'' and ``household income'' are applied to
Medicaid to promote seamless coordination. In some situations, the
application of these new rules will have the impact of constraining
Medicaid eligibility, but consistent with the statute, we have applied
the 36B rules because of the impact on coordina
