§1396u–8 Health Opportunity Accounts

Summary

Starts a test program that lets states offer a different kind of Medicaid benefit that uses a health savings–type account. The program must begin on January 1, 2007. For the first 5 years, no more than 10 States may run these demonstrations in one or more chosen areas. Within 3 months after those 5 years, the Government Accountability Office must report to Congress about how the tests went, and $550,000 is set aside for that report for fiscal years 2007–2010. Each state plan must teach patients about health costs, encourage prevention, cut waste, help patients take responsibility, offer enrollment help and education, let account transactions be electronic and cash-free, and give access to set provider payment rates. States do not have to run the program statewide. States must name who can join, but during the first 5 years the program may not include people age 65 or older, people who are disabled, people who are eligible only because they are (or were in the last 60 days) pregnant, or people who have had Medicaid for less than 3 months. Participation must be voluntary and lasts 12 months unless a person agrees to stay longer. If someone is dropped, they cannot rejoin for 1 year. For people in Medicaid managed care, no more than 5 percent of any plan’s enrollees may join, and the share must be fair across plans. The alternative benefit gives coverage for medical costs after an annual deductible and includes a deposit into a health opportunity account. The deductible must be at least 100 percent and no more than 110 percent of the state’s yearly account contribution amount. Fee-for-service enrollees can use participating providers at normal Medicaid rates or other providers up to 125 percent of those rates. Only the State and certain allowed others may put money into the accounts, and the State sets the yearly deposit. The State may cap deposits and account balances. Federal matching funds do not apply to deposits above yearly limits of $2,500 per adult and $1,000 per child (these amounts rise each year by the medical care CPI-U). No federal match is given for private donations. Account money may be used for medical care as the State allows, must be withdrawn electronically (no cash), and is not counted as income or assets for Medicaid eligibility. If a person loses Medicaid because their income or assets go up, no more state deposits are made, the balance is cut by 25 percent (not touching private donations), and the remaining funds can be used like before for 3 years; those funds can buy health insurance and, with approval, may pay for certain other items. States may use third parties to run accounts and may set penalties for improper withdrawals.