Paying for Medicaid Coverage: An Overview of Monthly Payments in Section 1115 Demonstrations

Five states—Arkansas, Indiana, Iowa, Michigan, and Montana—operate section 1115 Medicaid demonstrations that require or encourage monthly payments from Medicaid beneficiaries with incomes up to 133 percent of the federal poverty level. These demonstrations vary in the amount and timing of the required payments, the income levels at which payments are required, and the consequences for nonpayment. In some states, the monthly payments are considered traditional premiums; in others, they are contributions to beneficiary accounts that resemble health savings accounts. We compare the design of monthly payments in the five demonstrations during the 2014–2016 period. We also (1) estimate the number and proportion of potential enrollees in each state who would be subject to monthly payments using data from the American Community Survey and (2) report the proportion of potential enrollees that could be disenrolled for nonpayment to illustrate how broadly nonpayment consequences might apply to demonstration beneficiaries. Overall, we find that the proportion of the demonstration population required or encouraged to make monthly payments ranges from 25 percent in Michigan to 100 percent in Indiana, although in some states beneficiaries may opt out of making payments with few consequences. In Iowa, Indiana, and Montana, about one quarter of the estimated eligible population can be disenrolled for nonpayment. We close by looking ahead to our continuing observation and evaluation of these demonstrations, including elements of monthly payment design which could be the basis of valid comparisons across states.