Cost Sharing for Children and Families
Legislative/Regulatory Authority
Within federal standards, states have discretion to impose limited cost sharing on children and families in Medicaid and SCHIP.
Medicaid. Since Medicaid was originally designed largely for people with very limited incomes or serious health care conditions, it historically has sharply limited cost sharing. As a result of new federal standards adopted in 2005 (through the Deficit Reduction Act), states now have somewhat more flexibility to impose cost sharing and premiums on Medicaid beneficiaries, especially those who are not deeply impoverished.1
The detailed rules now governing state flexibility to impose cost sharing on children and families in Medicaid are outlined in Table 1 (PDF). In general, they are designed to allow for only minimal cost sharing at the lowest income levels, but somewhat more if states expand coverage further up the income scale. For example, states cannot impose any cost sharing on children below 150 percent of the federal poverty level except in a narrow range of circumstances (e.g., using an emergency room for a non-emergency and for certain medications). Even at more moderate-income levels, federal rules also exempt some special services, such as preventive care for children, from any cost sharing.
SCHIP. Created in 1997, the SCHIP program allows states to expand Medicaid, create a separate SCHIP program, or use a combination of both. Cost sharing rules in SCHIP-funded Medicaid expansions are the same as those in Medicaid, whereas, as shown in Table 1 (PDF), states have more flexibility to impose cost sharing in separate SCHIP programs.
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Where States Stand
Footnotes
1. See E. Herz, “
Medicaid Cost-Sharing Under the Deficit Reduction Act of 2005 (DRA),” Congressional Research Service (January 25, 2007); and J. Guyer, C. Mann, & J. Alker, “
The Deficit Reduction Act: A Review of Key Medicaid Provisions Affecting Children and Families,” Center for Children and Families (March 2006).
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