Kentucky’s Medicaid Waiver Gives State Unprecedented Power to Raise Premiums, Impose Fines

While giving Kentucky the unprecedented ability to require Medicaid beneficiaries to work or engage in work-related activities through the state’s Medicaid waiver, the Centers for Medicare & Medicaid Services (CMS) gave the state additional first-of-its-kind authority to raise beneficiaries’ premiums and fine them for things like using the emergency room for non-emergent problems or missing appointments. These fines will come from Rewards Accounts that are designed to enable beneficiaries to pay for their dental and vision care, likely leading them to go without those key services.

Now, Kentucky will be able to — at any time — raise beneficiaries’ premiums to levels well above those allowed in the past without seeking CMS approval. CMS has let other states charge premiums, but never more than 2 percent of household income — the upper limit that individuals with incomes below Medicaid eligibility levels would have to pay for marketplace coverage. Kentucky is currently charging $1 to $15 monthly premiums, or 2 percent of household income, but CMS is letting the state raise premiums to up to 4 percent. That means that an adult making $12,140 a year (100 percent of the federal poverty line) would have to pay about $40 each month while an adult making $16,643 (138 percent of the federal poverty line) would pay about $55 each month.

CMS has never before allowed premiums this high, nor let states raise premiums in this way, which is inconsistent with public input requirements for Medicaid waivers that require the state to give the public time to weigh in on changes that would affect beneficiaries before the state submits a waiver for CMS approval.

Kentucky also plans to fine beneficiaries for not paying premiums, using the emergency room for non-urgent problems, and missing appointments by deducting money out of their Rewards Accounts, through which beneficiaries can pay for vision and dental services, over-the-counter medications, and limited fitness-related services such as gym memberships.

Moreover, these fines would come on top of harmful copayments and benefit reductions that Kentucky plans to implement. For example, if beneficiaries can’t pay their premiums, they’re both locked out of coverage for six months and fined. These provisions will likely hit many beneficiaries, who haven’t previously had to pay premiums and still aren’t likely to be able to afford them, as other states that charge Medicaid beneficiaries with premiums have shown.

The waiver lets Kentucky put additional barriers to care in place, too. If beneficiaries go to the emergency room for what turns out to be a non-emergency, they have to pay both an $8 copayment and a fine. And if they need help getting to the doctor so they don’t miss their appointment and face yet another fine, they can’t use non-emergency medical transportation because Kentucky will no longer provide it under the waiver.

Together, the high premiums, fines, and a lack of available transportation make it even less likely that beneficiaries will be able to get benefits they previously had — dental and vision care — because they won’t have enough money in their Rewards Account to pay for them.