New Rules Set Limits on Locking Kids Out of Coverage for Nonpayment of Premiums

Thirty-three (33) states charge premiums or enrollment fees for children enrolled in Medicaid or CHIP, starting as low as 101% of the federal poverty level in CHIP. In the past, federal guidelines for dealing with premium grace periods and nonpayment of premiums were minimal, particularly in CHIP. It was not until CHIP was reauthorized in 2009 that states were required to provide a minimum 30-day grace period for families to pay CHIP premiums. But until now, there have been no rules protecting children from having their insurance cancelled and being locked out of coverage for nonpayment.

Twelve (12) states currently impose lockout periods but only five (5) of those lock kids out for more than three (3) months. Thanks to new rules, states will no longer be able to have lockout periods of more than 90 days. Moreover, states cannot require that outstanding premiums be repaid as a condition for re-enrollment (although they can continue alternative collection efforts). The rules also clarify that states must review a family’s circumstances to determine if, due to an income decrease, they qualify for a lower premium or no premium. If a family pays its outstanding premiums during the lockout period, coverage must be reinstated.

States may require the family to go through the full application process again at the end of the lockout period, as some currently do. However, states that provide 12-month continuous eligibility for children often reinstate coverage without requiring a new application. It’s also important to point out that federal rules allow states to waive premiums due to financial hardship but it’s not clear if any have implemented such policies (although we did in New Hampshire when I administered the CHIP program).

There are many other issues associated with charging premiums, including whether premiums are affordable for low-income families. While families with income below 150 percent of the federal poverty level (FPL) cannot be charged premiums for their children enrolled in Medicaid, the rules are different in CHIP. CHIP programs are allowed to charge premiums of up to $19 per month for families with income between 100 and 150 percent FPL. One of the benefits of moving children aged 6-18 with income between 100 – 133 percent FPL from CHIP to Medicaid (as required under the ACA’s aligning stairstep eligibility provision) is that the minimum level for charging premiums effectively is increased to 133 percent FPL.

I’ll be writing more about premium administration, including whether it is even cost-effective for states to collect premiums, as soon as I come up for air from digesting all the new regulations.

Tricia Brooks is a Research Professor at the Georgetown University McCourt School of Public Policy’s Center for Children and Families.

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