42 U.S.C. § 1396e–1 — Premium assistance

(a) In general. A State^* may choose to offer a premium assistance subsidy to every person^* entitled to medical assistance^* under this subchapter who can get qualified employer^*-sponsored coverage. For a person under 19, the State may offer it to the person’s parent^*. The subsidy must meet this section’s requirements and must be cost-effective as that term is used for section 1397ee(c)(3)(A) of this title. This section does not define “medical assistance” or “cost-effective.”

(b) Qualified employer-sponsored coverage.

(1) In general. In this paragraph, “qualified employer-sponsored coverage” means a group health plan^* or health insurance coverage^* offered through an employer that meets all three conditions:

(A) The coverage qualifies as “creditable coverage” as a group health plan^* under section 2701(c)(1) of the Public Health Service Act. This section does not define “creditable coverage.”

(B) The employer pays at least 40 percent of any premium for the coverage.

(C) The employer offers the coverage to all individuals in a way that would be a nondiscriminatory eligibility classification under section 105(h)(3)(A)(ii) of the Internal Revenue Code of 1986, without applying clause (i) of subparagraph (B) of that provision.

(2) Exception. “Qualified employer-sponsored coverage” does not include coverage consisting of either:

(A) benefits under a health flexible spending arrangement, as defined in section 106(c)(2) of the Internal Revenue Code of 1986; or

(B) a high deductible health plan, as defined in section 223(c)(2) of that Code. This exclusion applies whether or not the plan was bought together with a health savings account, as defined in section 223(d) of that Code.

(3) Treatment^* as third-party liability. The State must treat coverage provided under qualified employer-sponsored coverage as a third-party liability under section 1396a(a)(25) of this title.

(c) Premium assistance subsidy. In this section, “premium assistance subsidy” means the amount that the individual or the individual’s family must contribute toward enrollment in qualified employer-sponsored coverage. For section 1396b(a) of this title, these subsidies count as payments for medical assistance.

(d) Voluntary participation.

(1) Employers. An employer’s participation in a State’s premium assistance subsidy program is voluntary. An employer may tell the State that it chooses not to receive a subsidy directly on behalf of an employee.

(2) Beneficiaries. The State may not provide a subsidy unless the individual, or the individual’s parent, voluntarily chooses to receive it. The State may not require that choice as a condition for receiving medical assistance. The State also may not require the individual or parent, as a condition of becoming or remaining eligible for medical assistance under this subchapter, to apply for enrollment in qualified employer-sponsored coverage under this section.

(3) Opting out for any month. The State must create a process that lets an individual receiving a premium assistance subsidy, or the individual’s parent, disenroll the individual from the qualified employer-sponsored coverage.

(e) Paying premiums and cost-sharing^* and providing supplemental coverage. When an individual or the individual’s parent participates in a premium assistance subsidy for qualified employer-sponsored coverage, the State must pay all enrollee premiums for that coverage. The State must also pay all deductibles, coinsurance, and other cost-sharing amounts for items and services that the State plan otherwise covers under this subchapter, even when those amounts are more than section 1396o, or, when applicable, section 1396o–1, of this title would otherwise allow. Choosing to enroll in the qualified employer-sponsored coverage does not change the individual’s or parent’s eligibility for medical assistance under the State plan. The only exception is that, under section 1396a(a)(25) of this title, payments for that assistance must first be made under the employer coverage. This section does not define “enrollee,” “deductible,” “coinsurance,” or “cost-sharing.”