Premiums return for Indiana’s HIP, CHIP Medicaid enrollees

INDIANAPOLIS — For the first time in years, certain Indiana Medicaid beneficiaries will start paying premiums again — a concern for advocates who say that enrollees are unprepared and point to federal concerns about the rule's effectiveness.

The state waived the cost-sharing requirement, otherwise known as POWER Accounts, in early 2020 during the COVID-19 pandemic. During that time, the state's Medicaid rolls swelled as the federal government incentivized states not to cut off coverage during an unprecedented public health emergency.

Medicaid beneficiaries checking their coverage and possible premium status should log-in at fssabenefits.in.gov.

But on July 1, Medicaid beneficiaries in the Healthy Indiana Plan (HIP), Children's Health Insurance Program (CHIP) and MedWorks will get a bill — many of them for the first time if they enrolled during or after the pandemic.

Adam Mueller, one such advocate, pointed to surveys finding beneficiaries didn't understand the premiums, which can fluctuate monthly and sometimes are rolled over to other months. Even those who tried to do everything right could fall short due to an external factor, he said.

"If you've ever put $1 in a vending machine, and you see the bag of chips and it comes in halfway and just stops. You're like, 'What do I do? That was the only dollar I had. How do I get my chips?' But in this case, it's health care. The whole system could trip up based on whether you paid $1 or not," said Mueller.

"It's really, really scary to me that people could lose access to coverage — life-saving coverage, life-sustaining coverage — over paperwork errors."

Lawsuit and FSSA response

Former Gov. Mitch Daniels first introduced the consumer-driven, cost-sharing approach in 2007 when the state expanded Medicaid to moderate income workers. Then Gov. Mike Pence developed the program even further.

Mueller is an attorney with the Indiana Justice Project, a nonprofit currently suing the federal government for approving several waivers that allowed the Family and Social Services Administration (FSSA) to tailor specific aspects of its Medicaid program.

In particular, the U.S. Department of Health and Human Services approved waivers to impose the work requirements, require premiums, strike retroactive coverage and bar payment for certain non-emergency medical transportation. Plaintiffs represented by Mueller's group revived the lawsuit in January after a pandemic pause, when premiums were suspended.

In June 2021, the federal government removed work requirements, which were dropped from the case, but left the other three waivers in place during a review published in December 2023.

The presiding judge is under no deadline to decide the case, though the state government filed to dismiss in April.

FSSA says that Indiana law requires the agency to implement cost-sharing across the three programs, which ranges from $1 to $187 for single enrollees depending on household income.

Instead, the agency pointed to its advertising campaign in multiple languages as evidence of its efforts to educate members about the premiums restart.

"FSSA has used a robust outreach plan to ensure that members, their families and friends, and stakeholders are aware of the cost-share restart and when, how, and where to pay," an agency spokesperson said in a statement.

"FSSA has equipped them with tools in multiple languages that are designed to raise overall awareness, help members easily transition into cost-share and help third parties that want to pay contributions on behalf of members," the agency continued. "This has included multiple stakeholder meetings, an advertising campaign, a 9-week social media toolkit designed for stakeholder use and guides for how to pay."

Notably, Hoosiers who make enough money to purchase an insurance plan on the federal marketplace don't pay any premiums.

Details about cost-sharing

For a new enrollees first month, qualifying beneficiaries will have conditional coverage, meaning their coverage will be "active" once they make their first payment, FSSA's Nonis Spinner shared in an April meeting detailing the reintroduction of premiums.

Paying immediately or when you apply is the surest way to maintain coverage, Spinner said, but each plan offers additional options.

"If they don't make the payment within 60 days … those with over 100% (of the Federal Poverty Level income, or $31,200 for a family of four) will be disenrolled and they won't have coverage. However, there is no lockout — they can reapply at any time," Spinner said.

For those making under that threshold, they'll be put on a "basic" coverage plan with the option to choose a different plan during their renewal period.

"The main difference between basic and plus is that in basic coverage, you pay co-payments at the time of service for most of your services. And in the plus coverage, you pay a monthly contribution instead," Spinner summarized.

The state has some exceptions for someone who is determined to be medically frail or pregnant. Additionally, tobacco users are subject to a premium surcharge starting in 2026.

The General Assembly approved continuous eligibility for children in 2023, meaning that even if parents don't make the payment, Hoosiers under 19 will still be covered for a full year.

After a full year without payments, those children can be locked out for up to three months until coverage can be reactivated — potentially disrupting crucial health care for the state's youngest Hoosiers.

Meanwhile, someone with a disability covered by the MedWorks plan can be locked out for two years due to nonpayment if they make 150% of the federal poverty level, or $46,800 for a family of four.

But Mueller pointed to some evidence, first heard from enrollees, about the ineffectiveness of premiums and documentation about the added programming expenses.

"… we started to see a lot of people lose coverage for what I would describe as … paperwork reasons. They were still eligible (and) they thought they had paid their power account. Some people didn't know they had a power account," Mueller said.

These anecdotes were later confirmed by reports documenting the confusion of enrollees and administrative burden on the private entities overseeing HIP, further complicated because third-party nonprofits or churches often paid part or all of the premiums on behalf of beneficiaries.

FSSA reported that third parties paid for 11,000 members in 2019 alone but Mueller and others noted that the network of aid has dissolved during the COVID-19 pandemic pause.

The Centers for Medicare and Medicaid Services (CMS) has their own concerns about the cost-sharing tool, as detailed in a December letter allowing the state to continue to practice.

"Evidence on the effects of premiums in Medicaid … suggest that premiums beyond those authorized under Medicaid statute may reduce access to coverage and care among the population that Medicaid is designed to serve," read the letter from CMS to FSSA's Medicaid Director Cora Steinmetz. "Beneficiaries who are subject to premiums appear to experience greater disruptions in Medicaid coverage and exhibit lower initial rates of enrollment."

Ultimately, the agency allowed the state to continue with POWER Accounts over these concerns, noting that disenrollment issues disproportionately impact Black Hoosiers, in order to minimize disruptions to FSSA's other projects.

Mueller additionally added that FSSA and the private entities administering the programs ultimately reported saving money during the COVID-19 pandemic, even as enrollment swelled and the state paused premiums collections.

"So many people that are on HIP right now have never had to pay POWER Accounts, that's going to be a foreign process to them," Mueller said. "And then a lot of the workers — both at some of the managed care organizations and also at FSSA — have not have to administer this as well. We already know that they're overworked and their caseloads are high and there's a lot of turnover there as well."

As for the argument that enrollees need "skin in the game" to incentivize them to make healthier choices, Mueller pointed to their participation as evidence of their conviction.

"People are on this program because they care about their health care. So, clearly, they already have 'skin in the game,' " Mueller said. "I don't know what else you need from somebody other than that."