What Is Medicaid Cost Sharing?

Figuring out medical expenses feels like deciphering a foreign language, especially with individual out-of-pocket costs, different insurance plans, countless doctor visits and healthcare providers, and cascading healthcare fees. Sometimes, families opt to share medical costs. Is cost-sharing the right family plan for you?

Understanding Medicaid cost sharing

Medicaid cost sharing refers to the portion of healthcare costs that Medicaid beneficiaries are required to pay out-of-pocket (the "cost share"). This can include copays, coinsurance, and deductibles for certain medical services or prescriptions. The amount of cost sharing can differ in each state and might depend on the person's income and the specific Medicaid program they are in. Some groups, like children and pregnant women, usually don't participate in cost sharing.

Types of cost sharing

Cost-sharing comes in different forms, each with a different allowable cost.

• Copayments: A copayment is a small, fixed amount you pay each time you receive a specific medical service, like visiting a healthcare provider or getting a prescription.
• Deductibles: A deductible is the total amount you have to pay out-of-pocket for your healthcare before Medicaid starts helping with the costs.
• Coinsurance: Coinsurance is the percentage of a medical bill that you have to pay after Medicaid covers its portion of the cost share. For example, if Medicaid pays 80% of the bill, you would be responsible for paying the remaining 20%.
• Premiums: A premium is a regular payment to keep your Medicaid coverage active. Some people with higher incomes on Medicaid might be required to pay these premiums, but there are protections in place to limit costs for certain vulnerable groups like children and those in institutions.

Understanding your payment responsibilities

Different states and programs have specific cost share requirements regarding your loved one's expected payment for services. Read over each plan's guidelines carefully. Then, work with a social worker or financial advisor to decide which option is best for your loved one's health and finances:

Mandatory cost sharing

• What it is: This is when you are required to pay a certain amount out-of-pocket for healthcare services as part of your Medicaid coverage; it's not optional.
• Impact on enrollee: The enrollee must contribute a specific percentage/type of cost or "match" the program's contribution.

Voluntary cost sharing

• What it is: This is when you can choose to pay extra out-of-pocket costs for healthcare services to access a higher level of service or care that Medicaid doesn't fully cover but is not required.
• Impact on enrollee: The enrollee may gain a competitive advantage in the application process.

Voluntary committed cost sharing

• What it is: This usually refers to situations where an organization or individual agrees to cover certain costs voluntarily, often in a formal agreement, as part of their contribution to a project or program, though it's not required by Medicaid.
• Impact on enrollee: Enrollee must contribute the offered amount and have it documented and reported

Prescription drug cost-sharing

The cost share for prescription drugs can vary for those on Medicaid. States can set different copayments for prescriptions based on whether the drug is a lower-cost generic or a more expensive brand-name drug.

If your income exceeds 150% of the Federal Poverty Level (FPL), you might have to share up to 20% of the cost of non-preferred drugs. If your income is at or below 150% FPL, the state will keep your copayments low to make sure you can afford your medications.

States will provide a list of "preferred" (cheaper) and "non-preferred" (more expensive) drugs, helping you choose more affordable options. You might also pay less if you order your medication through mail order rather than picking it up at a pharmacy.

Non-emergency use of the emergency room

States can ask Medicaid patients for higher copayments if they visit the emergency room for non-emergencies. But these extra costs only apply if it's not an emergency. Before asking for this extra payment, the hospital must make sure the patient doesn't need emergency care, that there's another option for care nearby, and that the patient knows about the extra payment and gets a referral to the other place.

Out-of-pocket limits: when to stop paying

For Medicaid beneficiaries, out-of-pocket limits set a cap on how much you will have to pay for covered medical services in a given year. Once you reach this limit, Medicaid will cover all additional costs for the rest of the year, including doctor office visits and other medical expenses.

The limit is based on a percentage of the family's income, ensuring it remains affordable for low-income individuals and families. Typically, Medicaid sets different limits depending on the specific Medicaid program or Medicaid waiver a beneficiary is enrolled in, and it varies by state since states have some flexibility in how they implement Medicaid.

How cost-sharing affects care

A high share of the cost can discourage patients from seeking the medical care they need. Suppose your loved one is worried about a copay, indirect costs, or deductible. They might put off that healthcare provider's visit or prescription refill.

Holding off medical treatment causes significant problems down the road. Early detection and treatment lead to good health.

Table summarizing study on how cost-sharing affects medical care use among low-income populations:

If you're concerned about paying high out-of-pocket costs like copayments or deductibles, consider looking into Medicaid plans or programs that can lower these expenses. You can choose providers with lower copayments or find state-specific Medicaid options that limit how much you have to pay. Talk to your healthcare provider or social worker about your financial concerns—they can help you find resources or assistance programs that fit your situation.

Children's Health Insurance Program (CHIP) and cost-sharing

Millions of American children receive CHIP benefits. CHIP assists families with pediatric medical expenses. States that offer CHIP can choose to impose cost sharing, but there are rules.

For example, states can't charge for preventive care or well-child visits. There are limits on how much they can charge and protections to prevent families from losing coverage due to unpaid fees. CHIP benefits follow these guidelines:

• Fairness first: States can't charge cost-sharing to Native American and Alaskan Native children. States can't favor wealthier families by making it harder for lower-income families.
• Keeping well-child visits free: Here's some good news – states can't charge a dime for important well-baby and well-child visits! Well, appointments keep your little ones healthy, and CHIP recognizes that.
• One bit at a time: States can't impose multiple cost-sharing charges for a single service. Instead, they must use one type of cost-sharing, like a copay or deductible, not both at once. This keeps things more straightforward for everyone.

Disenrollment: what if I miss a payment?

What happens if a family misses a payment? Here's where things get a little more complex:

• Grace period: States give families a 30-day coverage period to catch up on any missed CHIP premiums before they can remove them from the program.
• Right to explain: Families have the right to explain why they missed a payment during the coverage period. Maybe income dropped, or something unexpected happened. The state has to listen and see if the child qualifies for Medicaid or a lower cost-sharing plan in CHIP.
• Fresh start after 90 days: Even if a family gets dropped for missing payments, there's a time limit. States can only lock them out of CHIP for up to 90 days. Once those 90 days are up, the family can re-enroll without paying off the old debt.

CHIP has safeguards in place so a patient's out-of-pocket payments don't become a barrier to medical care. It's all about fairness, keeping preventative care accessible, and giving individual families a second chance.

Working with CHIP at the state level

How does a share of the cost work at the state level? Let's take Georgia, for example. Georgia's CHIP program is a lifesaver for many families, but caregivers need to understand the rules.

While kids under six are lucky enough to get free health insurance plan coverage, families with higher incomes might be asked to pay a monthly fee. Plus, there could be copayments for specific healthcare provider's visits or prescriptions.

Family caregivers have the knowledge to advocate for their loved ones. Empowerment through knowledge not only benefits loved ones directly but also contributes to building a more supportive and informed healthcare environment for all.