As with Medicaid eligibility groups, some Medicaid benefits that states offer are mandatory and others are optional. In designing their Medicaid benefit packages, within federal guidelines, states can require certain enrollees to share in the costs of their coverage, such as through nominal copayments for services and limited premiums. In addition to covering routine services, Medicaid provides certain benefits that are limited or not typically covered under traditional health insurance. For example, it provides long-term services and supports (LTSS) for qualifying seniors and people with disabilities. It also provides translation, interpretation, and non-emergency transportation services that are less often covered by other sources of insurance.
Covered services
Mandatory and optional Medicaid benefits are defined in federal statute and regulations to include a range of items and services as well as specific provider types.
States can choose how to limit benefits, or whether to limit benefits at all. The result is that the same benefit can be designed and implemented in a number of different ways across states. For example, while most states cover dental services (which are optional for adults), and some even cover annual dental exams, others limit this benefit to trauma care or emergency treatment for pain relief and infection. Some states require that services be provided in a specific setting (such as an emergency room); some require that certain services have prior approval; and some place dollar caps on the total amount of services an enrollee can receive each year.
In general, benefits must be equivalent in amount, duration, and scope for all enrollees in the state (known as the comparability rule); benefits must be the same throughout the state (the statewideness rule); and beneficiaries must have freedom of choice among health care providers or managed care plans participating in Medicaid.
For adults, states may limit the extent to which a covered benefit is available by defining both medical necessity criteria and the amount, duration, and scope of services (e.g., a limit on the number of inpatient hospital days). However, under the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) requirements for children under age 21, states must provide any necessary service named in the Medicaid statute—including optional services not otherwise covered by the state—without caps or other limits that are unrelated to medical necessity (Rosenbaum et al. 2008).
As an alternative to traditional Medicaid benefits, states were given authority under the Deficit Reduction Act of 2005 (P.L. 109-171) to enroll state-specified groups (excluding individuals with special medical needs and certain others) in benchmark and benchmark-equivalent benefit packages.1 States that elect to use this benefit design can provide coverage that is equal to the Blue Cross and Blue Shield standard plan under the Federal Employee Health Benefits Program; a plan offered to state employees; the largest commercial health maintenance organization in the state; or other coverage approved by the Secretary of the U.S. Department of Health and Human Services appropriate for the targeted population. A benchmark-equivalent benefit package must be actuarially equivalent to the benchmark to which it is being compared and must include certain benefits.
Under the eligibility expansions to the new adult group under the Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended), those newly eligible will be required to enroll in either benchmark or benchmark-equivalent benefits packages. (As under existing rules, individuals with special medical needs are exempt and states have flexibility to include additional benefits.) In addition, these benefit packages must cover the 10 essential health benefits specified in the ACA.2
In 2018, the Substance Use-Disorder Prevention that promotes Opioid Recovery and Treatment Act (SUPPORT Act, P.L. 115-271) expanded behavioral health benefits in two key ways. First, Section 5022 of the SUPPORT Act made behavioral health coverage a required CHIP benefit, effective October 21, 2019. The statute specifically requires states to provide child health and pregnancy-related assistance that includes coverage of mental health and substance use disorder services. Second, the SUPPORT Act requires states to include medications used to treat opioid use disorder (MOUD) as a Medicaid-covered services for a five-year period beginning October 1, 2020.3
Enrollee cost sharing
States can require that certain groups of Medicaid beneficiaries pay enrollment fees, premiums, deductibles, coinsurance, copayments, or similar cost sharing amounts. There are, however, specific guidelines regarding who may be charged these fees, the services for which they may be charged, and the amount allowed. (See maximum allowable cost sharing and premiums under Medicaid.) Enrollees exempt from cost sharing include: children under age 18 who are eligible under a mandatory Medicaid pathway, enrollees receiving hospice care, those in nursing facilities and intermediate care facilities for individuals with intellectual disabilities (ICFs/ID), and certain enrollees in hospitals and other medical institutions. Preventive services, pregnancy-related services, emergency services, family planning services and supplies, and items and services provided to beneficiaries who are American Indians are also excluded from cost sharing.
Adults with family incomes at or below 100 percent FPL may only be charged nominal amounts for certain services, and premiums may not be imposed. (Information on the federal poverty level for various family sizes can be found here.) For beneficiaries with family incomes above 100 percent FPL, states may impose nominal or higher cost sharing for some services; in addition, those with incomes above 150 percent FPL may be charged premiums. Regardless of income level, states must ensure that the aggregate amount paid by individuals subject to cost sharing above nominal amounts does not exceed 5 percent of a family’s monthly or quarterly income.
1Groups that are exempt from mandatory enrollment in these benefit packages include certain parents, pregnant women, persons dually enrolled in Medicaid and Medicare, those who qualify for Medicaid on the basis of blindness or disability, beneficiaries receiving hospice care, and those who are medically frail or have special medical needs.
2Essential health benefits are defined as: ambulatory services, emergency services, hospitalization, maternity and newborn care, mental health and substance abuse services, prescription drugs, rehabilitative and habilitative services and devices, laboratory services, preventive and wellness services, chronic disease management, and pediatric services, including oral and vision care.
3MOUD is defined as a service combining any FDA-approved drug, including methadone, or any biological produce licensed under the Public Health Service Act to treat opioid use disorders and counseling services or behavioral therapy. States can be exempted from this requirement if before October 1, 2020, they can satisfactorily certify that covering all eligible individuals in the state is not feasible due to a shortage of qualified MOUD providers or treatment facilities willing to provide services under contract either with the state or with a managed care organization working with the state under Section 1903(m) or Section 1905(t)(3) of the Social Security Act.
Learn more from the following MACPAC resources:
Additional background
Fact sheets
Federal Requirements and State Options: Benefits
Federal Requirements and State Options: Premiums and Cost Sharing
Employer-Sponsored Insurance for Low- and Moderate-Income Children
Issue briefs
Recovery Support Services for Medicaid Beneficiaries with a Substance Use Disorder
Twenty Years Later: Implications of Olmstead v. L.C. on Medicaid’s Role in Providing Long-Term Services and Supports
Medicaid Coverage of Non-Emergency Medical Transportation
Update on Pregnancy-Related Medicaid and Minimum Essential Coverage
In-depth analysis and policy recommendations
Utilization Management of Medication-Assisted Treatment in Medicaid
Mandated Report on Therapeutic Foster Care
Managed Long-Term Services and Supports: Status of State Adoption and Areas of Program Evolution
Telehealth in Medicaid
Coverage of Medicaid Dental Benefits for Adults
Behavioral Health in the Medicaid Program―People, Use, and Expenditures
Comparing CHIP Benefits to Medicaid, Exchange Plans, and Employer-Sponsored Insurance
Issues in Pregnancy Coverage under Medicaid and Exchange Plans
Medicaid Coverage of Premiums and Cost Sharing for Low-Income Medicare Beneficiaries