FACT SHEET
FOR
IMMEDIATE RELEASE
February
19, 2015
Contact: CMS Media Relations
Basic
Health Program Funding Methodology Final Notice
Fact
Sheet
The Centers for Medicare &
Medicaid Services (CMS) today issued a final notice establishing the
methodology for determining federal funding for the Basic Health Program in
program year 2016. The Basic Health Program provides states with the option to
establish a health benefits coverage program for lower-income individuals as an
alternative to Health Insurance Marketplace coverage under the Affordable Care
Act. This voluntary program enables states to create a health benefits program
for residents with incomes that are too high to qualify for Medicaid through
Medicaid expansion in the Affordable Care Act, but are in the lower income
bracket to be eligible to purchase coverage through the Marketplace. This final
notice is substantially the same as the final notice for program year 2015.
Overview
Section 1331 of the Affordable Care
Act provides states with a coverage option, the Basic Health Program, for
individuals who are citizens or lawfully present non-citizens, who do not
qualify for Medicaid, the Children’s Health Insurance Program (CHIP) or other
minimum essential coverage and generally have income between 133 percent and
200 percent of the federal poverty level.
Benefits include at least the 10
essential health benefits specified in the Affordable Care Act; states can add
benefits at their option. The monthly premium and cost sharing charged to
eligible individuals will not exceed what an eligible individual would have
paid if he or she were to receive coverage from a qualified health plan through
the Marketplace, including cost-sharing reductions and advance premium tax
credits; a state can lower premiums and other out of pocket costs at its
option. A state that operates a Basic Health Program will receive federal
funding equal to 95 percent of the amount of the premium tax credit and the
cost sharing reductions that would have otherwise been provided to (or on
behalf of) eligible individuals if these individuals enrolled in qualified
health plans through the Marketplace.
On March 12, 2014, CMS released the
final rule for the Basic
Health Program. CMS established standards for state and federal administration
of the program, including provisions regarding eligibility and enrollment,
benefits, cost-sharing requirements and oversight activities. Where possible,
CMS aligned Basic Health Program rules with existing rules governing coverage
through the Marketplace, Medicaid, or CHIP to simplify administration for
states and promote coordination between the Basic Health Program and other
health insurance programs.
The final notice issued today
provides the methodology and data sources necessary to determine federal
payment amounts made in program year 2016 to states that elect to use the Basic
Health Program to offer health benefits to low-income individuals otherwise
eligible to purchase coverage through the Marketplace. The final notice uses
the same methodology as the final 2015 payment notice.
Key Provisions
CMS will use the same payment
methodology for program year 2016 as established for 2015, along with updated
values for several factors.
- The methodology calculates monthly payment rates for each state for various rate cells, which are defined by age, geographic area (county), income, household size, and the number of persons in a household enrolled in the program. The methodology also makes adjustments for American Indians and Alaska Natives enrolled in the program.
- The methodology calculates payment rates based on the premium tax credit amount and the cost-sharing reductions. The premium tax credit is calculated by estimating the average premium tax credit that persons would have received for each rate cell, which is the difference between the second lowest cost silver plan premium available and the amount of income that a household would be required to pay if the members of the household were enrolled in the second lowest cost silver plan in the Marketplace. Cost-sharing reductions are calculated by estimating the average advance cost-sharing reductions payment that would have been provided to persons for each rate cell.
- The methodology gives states the option to use either the 2016 Marketplace premiums or the 2015 premiums projected forward by an estimated trend rate to calculate the Basic Health Program payment rates. States would also have the option to propose a methodology to calculate the difference in health status between the Basic Health Program population and persons enrolled in the individual Marketplace.
- The methodology calculates payments quarterly. Payments will be based on the last quarter of enrollment (or estimated enrollment for states that implement a new Basic Health Program) and reconciled once enrollment data is submitted for each quarter.
This final notice is on display at http://www.ofr.gov/inspection.aspx and will be
posted on https://www.federalregister.gov/articles/2015/02/24/2015-03662/federal-funding-methodology-for-program-year-2016-basic-health-program
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