Title 42, The Public Health and WelfareRelease 119-110
§1396e–1 Premium Assistance
Title 42 › CHAPTER 7 — SOCIAL SECURITY › SUBCHAPTER XIX — GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS › § 1396e–1
Summary
A State can choose to pay part of an employee’s share of employer health insurance for people who get Medicaid (and for parents of children under 19) if the State follows the rules and the help is cost-effective under section 1397ee(c)(3)(A). “Qualified employer-sponsored coverage” means an employer’s group health plan that meets the creditable coverage rules in section 2701(c)(1) of the Public Health Service Act, where the employer pays at least 40 percent of the premium and the plan is offered without discriminatory eligibility. It does not include health flexible spending accounts or high-deductible health plans. The State must treat that employer coverage as a third-party payer under section 1396a(a)(25). A “premium assistance subsidy” is the amount the worker or family would pay as their share of the premium, and the subsidy counts as a medical assistance payment under section 1396b(a). Employers and people must join voluntarily; an employer may opt out of direct payment, and a person (or the person’s parent) must choose the subsidy and can drop coverage any month. If the State pays the subsidy, it must also pay all enrollee premiums and all deductibles, coinsurance, and other cost-sharing for services covered by the State plan, even if those amounts exceed limits in sections 1396o or 1396o–1. Enrollment in employer coverage does not change Medicaid eligibility, except that payments are first made under the employer coverage as provided in section 1396a(a)(25).
Full Legal Text
Title 42, §1396e–1
The Public Health and Welfare, Source: USLM XML via OLRC
(a)In general
A State may elect to offer a premium assistance subsidy (as defined in subsection (c)) for qualified employer-sponsored coverage (as defined in subsection (b)) to all individuals who are entitled to medical assistance under this subchapter (and, in the case of an individual under age 19, to the parent of such an individual) who have access to such coverage if the State meets the requirements of this section and the offering of such a subsidy is cost-effective, as defined for purposes of section 1397ee(c)(3)(A) of this title.
(b)Qualified employer-sponsored coverage
(1)In general
Subject to paragraph (2)), in this paragraph, the term “qualified employer-sponsored coverage” means a group health plan or health insurance coverage offered through an employer—
(A)that qualifies as creditable coverage as a group health plan under section 2701(c)(1) of the Public Health Service Act;
(B)for which the employer contribution toward any premium for such coverage is at least 40 percent; and
(C)that is offered to all individuals in a manner that would be considered a nondiscriminatory eligibility classification for purposes of paragraph (3)(A)(ii) of section 105(h) of the Internal Revenue Code of 1986 (but determined without regard to clause (i) of subparagraph (B) of such paragraph).
(2)Exception
Such term does not include coverage consisting of— (A)
(B)a high deductible health plan (as defined in section 223(c)(2) of such Code), without regard to whether the plan is purchased in conjunction with a health savings account (as defined under section 223(d) of such Code).
(3)Treatment as third party liability
The State shall treat the 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, the term “premium assistance subsidy” means the amount of the employee contribution for enrollment in the qualified employer-sponsored coverage by the individual or by the individual’s family. Premium assistance subsidies under this section shall be considered, for purposes of section 1396b(a) of this title, to be a payment for medical assistance.
(d)Voluntary participation
(1)Employers
Participation by an employer in a premium assistance subsidy offered by a State under this section shall be voluntary. An employer may notify a State that it elects to opt-out of being directly paid a premium assistance subsidy on behalf of an employee.
(2)Beneficiaries
No subsidy shall be provided to an individual under this section unless the individual (or the individual’s parent) voluntarily elects to receive such a subsidy. A State may not require such an election as a condition of receipt of medical assistance. A State may not require, as a condition of an individual (or the individual’s parent) being or remaining eligible for medical assistance under this subchapter, that the individual (or the individual’s parent) apply for enrollment in qualified employer-sponsored coverage under this section.
(3)Opt-out permitted for any month
A State shall establish a process for permitting an individual (or the parent of an individual) receiving a premium assistance subsidy to disenroll the individual from the qualified employer-sponsored coverage.
(e)Requirement to pay premiums and cost-sharing and provide supplemental coverage
In the case of the participation of an individual (or the individual’s parent) in a premium assistance subsidy under this section for qualified employer-sponsored coverage, the State shall provide for payment of all enrollee premiums for enrollment in such coverage and all deductibles, coinsurance, and other cost-sharing obligations for items and services otherwise covered under the State plan under this subchapter (exceeding the amount otherwise permitted under section 1396o of this title or, if applicable, section 1396o–1 of this title). The fact that an individual (or a parent) elects to enroll in qualified employer-sponsored coverage under this section shall not change the individual’s (or parent’s) eligibility for medical assistance under the State plan, except insofar as section 1396a(a)(25) of this title provides that payments for such assistance shall first be made under such coverage.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
section 2701 of the Public Health Service Act, referred to in subsec. (b)(1)(A), is section 2701 of act
July 1, 1944, which was classified to section 300gg of this title, was renumbered section 2704, effective for plan years beginning on or after Jan. 1, 2014, with certain exceptions, and amended, by Pub. L. 111–148, title I, §§ 1201(2), 1563(c)(1), formerly § 1562(c)(1), title X, § 10107(b)(1), Mar. 23, 2010, 124 Stat. 154, 264, 911, and was transferred to section 300gg–3 of this title. A new section 2701 of act
July 1, 1944, related to fair health insurance premiums, was added, effective for plan years beginning on or after Jan. 1, 2014, and amended, by Pub. L. 111–148, title I, § 1201(4), title X, § 10103(a), Mar. 23, 2010, 124 Stat. 155, 892, and is classified to section 300gg of this title. The Internal Revenue Code of 1986, referred to in subsec. (b)(1)(C), (2), is classified generally to Title 26, Internal Revenue Code.
Amendments
2010—Pub. L. 111–148, § 2003(b), struck out “option for children” after “assistance” in section catchline. Subsec. (a). Pub. L. 111–148, § 10203(b)(2)(A), inserted “and the offering of such a subsidy is cost-effective, as defined for purposes of section 1397ee(c)(3)(A) of this title” before period at end. Pub. L. 111–148, § 2003(a)(1)(B), (C), struck out “under age 19” after “all individuals” and inserted “, in the case of an individual under age 19,” after “(and”. Pub. L. 111–148, § 2003(a)(1)(A), which directed substitution of “shall” for “may elect to”, was not executed because of Pub. L. 111–148, § 10203(b)(2)(B), set out as a note under this section. Subsec. (c). Pub. L. 111–148, § 2003(a)(2), struck out “under age 19” after “by the individual”. Subsec. (d)(2). Pub. L. 111–148, § 2003(a)(3)(A), struck out “under age 19” after “to an individual” and substituted “A State may not require, as a condition of an individual (or the individual’s parent) being or remaining eligible for medical assistance under this subchapter, that the individual (or the individual’s parent) apply for enrollment in qualified employer-sponsored coverage under this section.” for “State may not require, as a condition of an individual under age 19 (or the individual’s parent) being or remaining eligible for medical assistance under this subchapter, apply for enrollment in qualified employer-sponsored coverage under this section.” Subsec. (d)(3). Pub. L. 111–148, § 2003(a)(3)(B), substituted “an individual (or the parent of an individual)” for “the parent of an individual under age 19”. Subsec. (e). Pub. L. 111–148, § 2003(a)(4), struck out “under age 19” after “an individual” in two places.
Statutory Notes and Related Subsidiaries
Effective Date
of 2010 Amendment Pub. L. 111–148, title II, § 2003(c), Mar. 23, 2010, 124 Stat. 283, provided that: “The
Amendments
made by this section [amending this section] take effect on January 1, 2014.” Pub. L. 111–148, title X, § 10203(b), Mar. 23, 2010, 124 Stat. 927, provided that the amendment made by section 10203(b)(2)(A) of Pub. L. 111–148 is effective as if included in the enactment of the Children’s Health Insurance Program Reauthorization Act of 2009 (Pub. L. 111–3).
Effective Date
Section effective Apr. 1, 2009, and applicable to child health assistance and medical assistance provided on or after that date, with certain exceptions, see section 3 of Pub. L. 111–3, set out as a note under section 1396 of this title. Effect of Certain Amendment by Pub. L. 111–148 Pub. L. 111–148, title X, § 10203(b)(2)(B), Mar. 23, 2010, 124 Stat. 927, provided that: “This Act shall be applied without regard to subparagraph (A) of section 2003(a)(1) of this Act [amending this section] and that subparagraph and the amendment made by that subparagraph are hereby deemed null, void, and of no effect.”
Reference
Citations & Metadata
Citation
42 U.S.C. § 1396e–1
Title 42, The Public Health and Welfare
Last Updated
Sep 23, 2026
Release point: 119-110