Title 42 › CHAPTER 7 — SOCIAL SECURITY › SUBCHAPTER XIX — GRANTS TO STATES FOR MEDICAL ASSISTANCE PROGRAMS › § 1396o–1
Allows a State to choose, by changing its Medicaid plan, to charge premiums and copays for groups of people or for types of services, with limits and some exceptions. People with family income at or below 100 percent of the poverty line cannot be put under these State-chosen premiums or new cost sharing rules. “Premium” means an enrollment fee or similar charge. “Cost sharing” means copays, deductibles, or similar charges. For people with family income between 100 and 150 percent of the poverty line, no premiums are allowed; any cost sharing for a single item can be no more than 10 percent of that item’s cost, and the family’s total cost sharing cannot exceed 5 percent of family income (measured monthly or quarterly as the State chooses). For people with income above 150 percent of the poverty line, the family’s total premiums plus cost sharing cannot exceed 5 percent of family income (monthly or quarterly), and any single-item cost sharing cannot exceed 20 percent of the item’s cost. Certain groups may never be charged premiums or cost sharing, including children entitled to Medicaid, pregnant women, people in hospice, inpatients who must spend nearly all income on care, some groups of women and disabled children covered under special rules, and American Indians getting services from Indian Health Service or tribal providers. States can exempt more people or services if they want. States may use higher or lower copays for prescription drugs to push people toward “preferred” drugs, subject to limits: for people at or below 150 percent of poverty, copays for non-preferred drugs cannot exceed the nominal amount; for people above 150 percent of poverty, they cannot exceed 20 percent of the drug’s cost; exempt groups face only nominal copays for non-preferred drugs. A doctor can override this if the preferred drug would not work or would cause harm. A State may require prepayment of a premium and may end Medicaid eligibility for failure to pay after at least 60 days, though the State can waive payment for hardship. Providers may require cost sharing at the time of service, but they may also reduce or waive it case-by-case. A State may let hospitals charge cost sharing for non-emergency care given in an emergency department only if a non-emergency provider is actually available and the hospital, after a medical screening shows no emergency, tells the patient about the cost, the alternate provider, and offers a referral. For people with income between 100 and 150 percent of poverty, that ER cost sharing cannot be more than twice the nominal amount and still must meet the 5 percent family cap; exempt groups may face only a nominal ER charge if an alternate outpatient option in the area is available without cost sharing. All cost sharing remains subject to the family aggregate caps. Family income is counted in the way the State sets, and the term “poverty line” means the official federal poverty line. The law lets States be stricter or seek waivers to change these limits. Some COVID-related items are also protected: certain in vitro diagnostic products administered on or after March 18, 2020, and COVID vaccines, testing, and treatments from March 11, 2021 through the last day of the first calendar quarter that begins one year after the end of the federal COVID-19 emergency period are exempt from cost sharing as described above.
Full Legal Text
The Public Health and Welfare, Source: USLM XML via OLRC
Legislative History
Reference
Citation
42 U.S.C. § 1396o–1
Title 42, The Public Health and Welfare
Last Updated
Sep 23, 2026
Release point: 119-110