Expanding Medicaid Using Premium Assistance, or the “Private Option,” to Buy Health Insurance

This brief explains the option of using federal funds to expand Medicaid by purchasing health insurance for Medicaid enrollees in the state marketplaces.

The practice is called “premium assistance.” Some states have used premium assistance for years, but under the Affordable Care Act, states can now buy private plans for Medicaid beneficiaries through the health insurance marketplaces.

If you live in a state that is considering implementing premium assistance to expand Medicaid, use this brief as a guide to creating a premium assistance program in your state and understanding what the Centers for Medicare and Medicaid Services (CMS) requires of state programs.

States that want to use premium assistance to expand Medicaid can do so by using a state plan amendment or a waiver. Either way, the private plans that states buy must meet the minimum coverage requirements that CMS has dictated for people with Medicaid.

This guide delves into the two approaches to implementing premium assistance and explains all the requirements for each. It also highlights what advocates should be looking for when evaluating premium assistance programs.