Medicaid costs: premiums, copayments, and the cap

One of Medicaid's defining features is how little it costs the person covered. For most enrollees there is no monthly premium at all, and copayments, where they exist, are nominal: a few dollars for a prescription or a visit, not the deductibles and coinsurance familiar from private insurance. But "usually free" is not "always free," and the exceptions are worth understanding.

Premiums: usually none, sometimes small

Most Medicaid enrollees pay no premium. Some states charge premiums to some groups, most commonly to higher-income children in CHIP, to expansion adults under waiver authority, or to people in buy-in programs for workers with disabilities. Where premiums exist, they are modest compared with private insurance, and federal rules limit them. Children in Medicaid itself cannot be charged a premium in most circumstances, and pregnant women cannot be charged for pregnancy-related services. If a premium applies to you, the notice that sets it must also explain what happens if it is not paid, and in CHIP, failure to pay a premium cannot be used to cut short a child's 12 months of continuous eligibility.

Copayments: nominal, and often waived in practice

States may impose copayments on some services for some groups, within federal limits. In practice many states charge nothing for most services, and those that do charge keep amounts small: a dollar or a few dollars for a generic prescription or an office visit is typical, with somewhat higher amounts permitted for non-emergency use of a hospital emergency department. Certain services and certain people are exempt from cost sharing entirely: emergency services, family planning services and supplies, preventive services for children, pregnancy-related services for pregnant women, hospice care, and services for children, among others, cannot carry cost sharing. Native Americans and Alaska Natives who have received services through tribal health programs are also exempt.

The 5 percent household cap

The most important protection is the aggregate cap. Total premiums and cost sharing for everyone in a Medicaid household combined may not exceed 5 percent of the household's income, measured monthly or quarterly as the state chooses. Once a household reaches that cap, it owes no further cost sharing for the rest of the period. States that impose cost sharing must track each household's spending through a system that does not depend on the family keeping its own records, and must notify the family and its providers when the cap is reached. If your state charges copayments and you believe you have hit the cap, say so and ask for the tracking to be checked.

This table is arithmetic on the federal 5 percent rule, not a statement of what any state charges. Most households never approach the cap, because most states charge little or nothing.

What if you cannot pay a copayment?

For most enrollees, a provider may not deny a covered service because you cannot pay the copayment at the time of the visit, although the state may allow denial for some higher-income enrollees for some services. The debt does not turn into a bill you must pay before your next visit in the way a private bill would, and it cannot be used to end your Medicaid eligibility. If a provider refuses care over an unpaid copayment, or tries to bill you beyond the Medicaid rate, that is a complaint to raise with your plan and your state Medicaid agency, not a debt to accept quietly.

Sources: 42 C.F.R. part 447, subpart A (premiums and cost sharing); 42 C.F.R. section 447.56 (limitations and aggregate cap); Medicaid.gov, Out-of-Pocket Cost Exemptions; Medicaid.gov, Cost Sharing.