In health insurance, beneficiaries may face two types of out-of-pocket payments: (1) participation-related cost-sharing, typically in the form of monthly premiums, regardless of whether services are utilized, and (2) service-related cost-sharing, which consists of payments made directly to providers at the time of service delivery. Finally, some groups covered by Medicaid through certain waivers can be charged premiums that exceed nominal amounts. For persons with income above 150% FPL, DRA places no limits on the amount of premiums that may be charged. Under the DRA option, certain groups and services are also exempt from the service-related cost-sharing provisions. Consequences for Failure to Pay Cost-Sharing

The rules governing consequences for failure to pay premiums differ somewhat under traditional Medicaid and DRA. States can apply this DRA provision to some or all applicable groups. P.L. Comparison of Service-Related Cost-Sharing Rules—Traditional Medicaid, DRA Options, and SCHIP
Under traditional Medicaid, states may require certain beneficiaries to share in the cost of Medicaid services, although there are limits on the amounts that states can impose, the beneficiary groups that can be required to pay, and the services for which cost-sharing can be charged. Prior to DRA, changes to these rules required a waiver. DRA provides states with new options for benefit packages and cost-sharing that may be implemented through Medicaid state plan amendments (SPAs) rather than waiver authority. These rules vary by beneficiary income level and for some types of service. The recently enacted P.L. 109-432 (Tax Relief and Health Care Act of 2006) modified the DRA cost-sharing rules. This report describes the new cost-sharing options and recent state actions to implement these provisions, and will be updated as additional activity warrants.