Provisions of the House budget bill that will for the first time allow states to design their own Medicaid plans, including Medicaid HSAs, were approved by a House-Senate conference committee, and then okayed by the full House and sent to the Senate. A big fight in the Senate is expected over non-health issues as well as Medicaid 'cuts,' but passage is likely and this could be as big an HSA program as the private sector.
As reported in Consumer Driven Market Report, the Health Opportunity Accounts (HOA) section is tightly-restricted and only 10 states can do the new Medicaid HSAs in the first five years. After than every state can do a Medicaid HSA unless existing plans are failing by objective standards.
Medicaid can pay 'third-party administrators' such as banks and insurers to handle accounts, and pay fees out of state funds.
The deductible cannot be more than 110% of the state HOA contribution, compared with an HSA average of 150% or more in private markets. In other words, if the state contributes $1,000 per individual, the deductible cannot exceed $1,100, making the "doughnut hole" exposure very small in all cases.
The account belongs to the recipient, but states can and will set ceilings on how much can accumulate, and after a recipient leaves Medicaid, 25% of the balance goes back to the state. The rest can be used for health benefits until it's used up.
The state contribution to the fund will vary by family income, but there are dollar limits on how much the federal government will kick in -- $2,500 per adult and $1,000 per child. Outside groups such as charities could add to the funds. Also, employers could even contribute above the deductible.
Prevention coverage is carved-out. The Medicaid recipients in an HOA are allowed to go to any doctor and use their HOA to pay any fee, up to 125% of the Medicaid fee.
States are required to provide debit cards for the program. These new Medicaid HOA cards could be kept by recipients if they lose eligibility for Medicaid at a reduced balance, and states could then allow funds to be used for specific purposes such as job training or buying non-Medicaid coverage.
