WTW, with U.S. headquarters in Arlington, Virginia, appointed Alena Kharkavets as North American head of claims in its insurance consulting and technology (ICT) business. Kharkavets comes to WTW from Intact Financial Corporation, where she held progressively senior roles and spent …
https://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2025-07-08 12:20:122025-07-08 15:03:39People Moves: WTW Hires Kharkavets as North America Head of ICT Claims
White Mountains Insurance Group on Monday said it has a deal in place to acquire about 50% of Distinguished Programs for $230 million. With the buy of the outstanding equity shares, White Mountains will own 51% of Distinguished, an independent …
https://www.maddoxinsurememphis.com/wp-content/uploads/2025/07/handshake-580x387-1.jpg387580wpmaddoxinshttps://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2025-07-08 11:25:502025-07-08 15:03:39White Mountains Buys Majority Ownership of Distinguished Programs for $230M
The U.S. Securities and Exchange Commission and software company SolarWinds Corp. have reached a settlement, ending a federal lawsuit that alleged investor fraud and known cybersecurity vulnerabilities. Early this month the SEC and SolarWinds jointly filed to stay the case, …
https://www.maddoxinsurememphis.com/wp-content/uploads/2025/07/SolarWinds-bigstock-580x387-1.jpg387580wpmaddoxinshttps://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2025-07-08 10:37:132025-07-08 15:03:40SEC, SolarWinds Reach Settlement to End Lawsuit Related to 2020 Breach
US auto safety regulators are investigating whether earlier recalls of more than a million Ram pickups did enough to address a flaw that could lead to trucks rolling away unexpectedly. The US National Highway Traffic Safety Administration received 20 reports …
https://www.maddoxinsurememphis.com/wp-content/uploads/2025/07/bigstock-Chrysler-Automobile-Dealership-65523289-580x387-1.jpg387580wpmaddoxinshttps://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2025-07-08 01:29:392025-07-08 15:03:41Ram Pickup Recalls Investigated After Seven Injuries Reported
Blackouts in the US could double by 2030 amid an expected increase in power demand brought on by AI, according to a Trump administration report seen as a precursor to a broader intervention to help keep coal-fired power plants from …
https://www.maddoxinsurememphis.com/wp-content/uploads/2025/07/coal-plant-coal-industry-Bloomberg-580x387-1.jpg387580wpmaddoxinshttps://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2025-07-08 01:02:052025-07-08 15:03:42US Warns of Blackout Risk From Killing Coal as Trump Snubs Renewables
Erie Insurance reports that it has restored full business operations that have been affected by a month long network outage. The company also said there is “no evidence” of a breach of any sensitive personal information, financial records or legally …
https://www.maddoxinsurememphis.com/wp-content/uploads/2025/07/cyber-580x387-1.jpg387580wpmaddoxinshttps://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2025-07-07 20:55:052025-07-08 15:03:42Erie Insurance Restores All Operations After Month Outage; Says No Data Breached
When Trump’s huge tax bill was signed into law July 4, missing were changes to the taxes third-party litigation funders pay. Once included within the One Big Beautiful Bill (OBBB) was language to tax earnings by litigation funders at a …
https://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2025-07-07 11:59:362025-07-07 15:07:03Tax Increase on Litigation Funders Does Not Make Final Budget Bill
Flooding has caused an average of more than 125 deaths per year in the United States over the past few decades, according to the National Weather Service, and flash floods are the nation’s top storm-related killer. Here’s a look at …
https://www.maddoxinsurememphis.com/wp-content/uploads/2025/07/Texas-flood-Guadalupe-River-AP-580x352-1.jpg352580wpmaddoxinshttps://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2025-07-07 11:12:382025-07-07 15:07:03A Look at Some of the Deadliest Floods in the US in the Last 25 Years
According to the MarketScout Market Barometer, the composite rate for U.S. personal lines increased in the second quarter to 4.6%. U.S. personal lines rose an average 4.9% during the firth quarter. Dallas-based MarketScout, a division of Novatae Risk Group, said …
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Insurance broker Marsh USA is suing rival Alliant Insurance Services, this time for allegedly poaching key commercial surety employees and clients. New York-based Marsh is accusing California-based Alliant of inducing key commercial surety employees to breach their non-solicitation and confidentiality …
https://www.maddoxinsurememphis.com/wp-content/uploads/2025/07/employee-poaching-concept-Bigstock-580x377-1.jpg377580wpmaddoxinshttps://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2025-07-07 08:54:582025-07-07 15:07:05Marsh Suit Against Alliant Alleges Poaching of Commercial Surety Team, Accounts
The Independent Insurance Agents & Brokers of America (Big “I”) last Thursday celebrated the passage of the “One Big Beautiful Bill.” “The Big ‘I’ would like to thank the U.S. Congress and President Trump for their work to bring more …
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The budget reconciliation bill that passed in the U.S. House of Representatives in May 20251 includes provisions intended to make ICHRAs – Individual Coverage Health Reimbursement Arrangements – easier to use and more financially attractive for small businesses.
Three sections of the bill address these health reimbursement arrangements integrated with individual-market coverage, currently known as ICHRAs. The changes include providing a tax incentive for small businesses that start reimbursing employees for the cost of individual health insurance and relaxing some existing administrative rules. The budget bill also calls for ICHRAs to be rebranded as Custom Health Option and Individual Care Expense (CHOICE) Arrangements.
What are ICHRAs?
ICHRAs have been available for adoption by businesses since 2020,2 offering a way for employers of any size to reimburse employees for the cost of individual-market health insurance or Medicare, and other qualified medical expenses if the employer allows that. But ICHRAs have not yet been codified under any federal legislation.3 That will change if the budget reconciliation bill, also known as the “One Big Beautiful Bill,” is enacted.
Legislation to rebrand ICHRAs as CHOICE Arrangements passed in the House in 2023, although it did not advance in the Senate.4 But the specific provisions of the budget reconciliation bill that we’ll discuss in this article weren’t part of the 2023 legislation.
Here’s how the new budget legislation – if enacted – would affect ICHRAs:
New tax credit for small businesses that offer CHOICE Arrangement
Section 110203 of the House budget bill creates a nonrefundable tax credit that would be available to small employers (those with fewer than 50 full-time equivalent employees) during the first two years they offer a CHOICE Arrangement to their employees. The tax credit would be $100 per employee per month for the first year and $50 per employee per month in the second year. Both amounts would be adjusted for inflation in years after 2026.
Although ICHRA utilization has increased significantly in recent years,5 it still accounts for a very small segment of employer-sponsored health benefits.6 But the addition of a federal tax credit available to employers nationwide might incentivize more small employers to begin offering ICHRA benefits to their employees.
Indiana began offering a two-year tax credit in 2024, to small employers that offer ICHRAs to their employees.7 But while Indiana’s tax credit provides a maximum of $400 per employee in the first year, the federal tax credit in the House’s budget legislation would provide up to $1,200 per employee in the first year.
More widely available pre-tax premium contributions for employees
Under current rules, an ICHRA can be used to reimburse employees for individual-market coverage purchased through the ACA Marketplace / exchange or outside the exchange. If the employer’s ICHRA contribution is not enough to cover the full premium, the employee is responsible for covering the remaining premium.
Employers that utilize Section 125 cafeteria plans8 can allow employees the option to use a pre-tax salary reduction to pay the employee’s share of the premiums, but only if the plan is purchased outside the Marketplace9 (meaning the plan is purchased directly from an insurer, with or without the assistance of an agent or broker, without utilizing the health insurance Marketplace).
Section 110202 of the House budget bill would change that. It would allow employees to utilize pre-tax salary reductions (if offered by the employer) for the employee’s share of an individual-market plan, even if the plan is obtained in the Marketplace.
If implemented, this would help to create a “no wrong door” environment for taking advantage of an employer’s offer to reimburse premiums, in situations where the employer also offers a way for the employee’s share of the premium to be paid on a pre-tax basis.
Employers would be able to offer a choice between CHOICE or a traditional small-group plan
Under current rules, an employer can offer both an ICHRA and a traditional group plan, but only if they’re offered to different employee classes. In other words, no employee can be offered a choice between a traditional group plan and an ICHRA.10
Section 110201(a)(2)(C) of the House budget bill would relax this rule for small employers. If all of the employees in a class are offered a fully insured small-group health plan, those employees could also be offered the option to be reimbursed for individual-market coverage with a CHOICE Arrangement instead.
It’s unclear whether small employers would utilize this option however, as doing so would require the administrative burden of offering both a CHOICE Arrangement and a small-group health plan.
The future of CHOICE Arrangements
The House passed the One Big Beautiful Bill on May 22, 2025 and sent it to the Senate.1 Senate Majority Leader, John Thune, has said that his goal is for the Senate to vote on the bill by the 4th of July, but the Senate is also preparing to modify the bill in various ways.11
So it is unclear whether the bill will pass in the Senate, and if so, what provisions of the House bill will remain intact after the Senate’s revisions.11 But while many aspects of health policy are politically contentious, ICHRAs have enjoyed broad bipartisan support since their debut.12
It’s worth noting that the budget bill’s fairly brief sections dealing with CHOICE Arrangement contain far fewer regulatory details than the existing ICHRA rules, although it appears the House intends to keep the existing ICHRA rules unless otherwise specified in the legislation.3 But additional details could be included in the Senate’s version of the budget bill, or could be addressed in additional administrative rulemaking.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
https://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2025-05-30 12:39:122025-05-30 15:05:10Budget bill provisions could make ICHRAs more appealing to businesses
If you’re a small-business owner and you’d like to reimburse your employees, pre-tax, for the cost of health insurance that they buy on their own, you have two options: An ICHRA (Individual Coverage Health Reimbursement Arrangement) or a QSEHRA (Qualified Small Employer Health Reimbursement Arrangement).1
As long as you have fewer than 50 full-time equivalent (FTE) employees and don’t also offer a group health plan, you have your choice of either an ICHRA or a QSEHRA. Note that only employers with fewer than 50 FTE employees can select a QSHERA.
What are the differences between a QSEHRA and an ICHRA?
Here’s a summary of how these two types of health reimbursement arrangements compare, to help you determine which one will be a better fit for your business:
Yes. In 2025, reimbursements are capped at $6,350 for a single employee, or $12,800 for an employee with family coverage.5 (Employers can set lower limits.)
Can employees use the benefit in addition to a Marketplace subsidy?
Any minimum essential coverage.7 (If it’s a group plan through their spouse’s employer, pre-tax QSEHRA reimbursement is likely not available, because group premiums are typically already paid with pre-tax dollars.)8
Can different benefits be offered to different employees?
Yes, if you divide your employees into aauthorized classes and offer different benefits to different classes. (If any classes are being offered a traditional group plan instead of an ICHRA, each class must have at least 10 employees.)4
No, the QSEHRA must be offered on the same terms to all eligible employees. (Employees might receive different reimbursement amounts, depending on the receipts they submit for reimbursement.)10
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
https://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2025-05-28 14:43:202025-05-28 15:14:25ICHRA vs QSEHRA: Which is right for your small business?
Insurer provides options for customers to file claims and offers tips to assist with recovery
https://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2025-05-20 14:34:002025-05-20 15:06:40Farmers Insurance® Deploys Catastrophe Response Team Across Midwest to Assist Customers Impacted by Tornadoes and Severe Weather
In the United States, the percentage of adults seeking mental health treatment or counseling has been steadily rising.12
In this article, we’ll take a look at some of the top mental health insurance considerations that consumers should understand.
Let’s start with an obvious and frequently asked question:
How is mental health treatment covered by health insurance?
Whether or not your health plan is required to cover mental health care will depend on the type of coverage you have. Here are some basic rules to keep in mind:
Individual and small-group plans must cover mental health and substance use disorders (SUD) treatment, but with specific coverage requirements that vary by state.3 These rules do not apply to plans that are grandfathered or grandmothered under the ACA.
Total out-of-pocket costs and how those costs are distributed vary greatly from one plan to another. For example, some plans might cover various services with copays from the outset, while other plans might require you to meet your deductible (which could be thousands of dollars) before the plan starts to pay for any care. And as is the case for any type of care, total out-of-pocket exposure varies by plan.
Fully-insured large-group plans are plans an employer purchases from an insurance company4 either directly, or through a sales agency. In most states, “large-group” means the employer has 51 or more employees, but there are some states where the threshold is 101 employees.5 (Under the ACA, this threshold was intended to be 101 employees, but the PACE Act reduced it to 51. States had the option to use the 101 threshold instead, and a few do so.)6
This type of plan must cover mental health and SUD treatment only if state regulations require it. These requirements vary from one state to another.7
For plans that provide coverage for mental health and SUD treatment, out-of-pocket costs vary by plan, but there cannot be any dollar limits on how much the plan will pay for these services.8
Mental health parity rules apply to these plans.
Self-insured plans, under which an employer uses its own money to pay employees’ claims, rather than purchasing coverage from an insurer, are not required by federal regulations to cover mental health care or SUD care, and states cannot set coverage mandates for self-insured plans. If a self-insured plan covers mental health or SUD treatment, the plan cannot limit how much the plan will pay for those services.8
Mental health parity rules apply if the employer sponsoring the self-insured plan has more than 50 employees.
Medicare Advantage plans must cover at least the same services that Original Medicare covers, although out-of-pocket costs can be different. Medicare Advantage plans can also limit coverage to a specific network of providers, and can require prior authorization.10
Federal parity rules do not apply to Medicare, but a separate law passed in 2008 reduced Medicare cost-sharing for outpatient mental health care to align it with cost-sharing for other kinds of outpatient medical care.11
Medicaid is the largest payer for mental health services in the United States,12 and various types of behavioral health care are encompassed under Medicaid’s mandatory benefits that all states must provide.13
As with other aspects of Medicaid coverage, specific benefits for mental health and SUD treatment vary from one state to another. But many states have federal Medicaid waivers that include various services to assist people with SUDs14 Medicaid waivers are an option provided for in federal law that gives states flexibility to test innovative approaches to providing care.
Mental health parity rules apply to Medicaid managed care plans, Medicaid alternative benefit plans (including the ACA’s expansion of Medicaid),11 and the Children’s Health Insurance Program (CHIP).15
Short-term health insurance and coverage that is considered an “excepted benefit” do not have to cover mental health and SUD treatment.
Short-term health insurance policies are not considered individual health insurance,16 are not regulated by the ACA, and are limited to total durations of no more than four months, including renewals. “Excepted benefits” include coverage such as workers’ compensation, fixed-indemnity plans, accident insurance, and critical illness plans.17
Mental health parity rules do not apply to short-term plans or excepted benefits coverage.11
While many plans – including Marketplace plans and most employer-sponsored plans – cover mental health and SUD treatment,18 short-term plans and excepted benefit plans typically do not provide these benefits.1920
How did the Affordable Care Act expand coverage of mental health care?
The Affordable Care Act significantly expanded coverage of mental health treatment in several key ways.
Prior to the ACA, mental health conditions and substance use disorders (SUD) were an obstacle to obtaining health insurance and often resulted in declined applications in the individual health insurance market.21 But that is no longer the case, because of the ACA. The ACA banned the use of medical underwriting in the individual market (where it was used extensively before 2014),22 and eliminated pre-existing condition waiting periods for employer-sponsored health insurance.23
The ACA also allowed states to expand Medicaid to cover adults with income up to 138% of the federal poverty level, which 40 states and DC have done.24 As of June 2024, nearly 21 million people are enrolled in Medicaid due to this expansion,25 resulting in better access to mental health and SUD treatment.26
The ACA also requires all non-grandfathered major medical health plans to cover various preventive care at no cost to the patient. Among the benefits included are depression screening and alcohol misuse screening for adults and adolescents, as well as autism screening and behavioral assessments for children.27
Do ACA mental health coverage requirements apply to all health insurance?
The ACA requires individual and small-group health plans (with effective dates of Jan. 2014 or later) to cover essential health benefits (EHBs), with no annual or lifetime dollar limits. One of the categories that must be covered on all of these plans is “mental health and substance use disorder services, including behavioral health treatment.”3
For perspective on the significance of this requirement, more than a third of non-group health plans didn’t provide any mental health benefits in 2013, and almost half did not cover SUD treatment.28 (Pre-ACA coverage was better among employer-sponsored plans.)29
Within the ACA’s basic EHB framework, it’s up to each state to determine exactly what services must be covered. Each state has selected an EHB benchmark plan that details minimum coverage requirements for each EHB category.30 So the specific mental health and SUD care that must be covered will vary from one state to another, depending on the state’s EHB benchmark plan’s coverage.
Prescription drugs are also an EHB under the ACA. So all individual and small-group plans with effective dates in 2014 or later are required to cover prescriptions, including medications to treat behavioral health problems. But health plans set their own formularies – covered drug lists – within certain guidelines.31 (Those guidelines include a requirement that the plan must cover at least as many drugs in each category and class of drugs as the state’s EHB benchmark plan – not necessarily the same drugs that the benchmark plan covers – or one drug in each category and class, whichever is greater.)32
Large-group and self-insured plans are not required to cover the ACA’s EHBs. But if they do, they must cover them without any annual or lifetime dollar limits on how much the plan will pay for an enrollee’s care.8
Does mental health parity mean health plans must cover mental health?
As a result of the ACA, some health plans are required to provide coverage for mental health and SUD treatment.33 And states can impose coverage mandates on plans that aren’t self-insured.
Self-insured plans are subject to federal rules, but they are not subject to state insurance rules. There is no federal requirement that self-insured plans cover mental health or SUD treatment.34 For plans that aren’t required to provide those benefits, mental health parity rules only apply if the plan opts to provide mental health and/or SUD benefits. And for self-insured plans, mental health parity rules only apply if the employer has more than 50 employees35
Does most health insurance cover therapy and medication?
As noted above, coverage requirements vary depending on the type of plan a person has. And as is the case for coverage of any type of healthcare, out-of-pocket costs and benefit specifics will vary from one health plan to another.
But most major medical health plans in the U.S. do cover mental health therapy36 and mental health medications.37 Many plans will also cover telehealth therapy, although this varies by plan.38
A recent AHIP survey found that the majority of insured Americans who sought mental health care were able to obtain it without difficulty, and 90% were satisfied with the care they received. In addition, 60% reported that their mental health care was fully covered by insurance, and 33% reported that their mental health care was partially covered by insurance, while only 3% said that it wasn’t covered.39 (Note that “covered” doesn’t mean the health plan pays the full bill, since enrollees have cost-sharing for covered services, in the form of deductibles, copays, and coinsurance.)
But on the other hand, the American Psychological Association (APA) points to an analysis done by KFF and CNN, which found that a third of survey respondents were not able to access the mental health care they needed. Cost was the primary obstacle, as well as stigma and a shortage of mental health providers.40
Compounding the shortage of providers is the fact that many mental health professionals do not accept insurance,41 and psychiatrists are much more likely than other medical specialists to not accept new patients with either private health insurance or Medicare.42
So, if you already have a relationship with a mental health provider, you may have to switch to a different provider to utilize your health plan’s benefits, as your preferred provider might not accept your insurance. You can check with your plan to see if any out-of-network benefits are available. If so, you may be able to seek reimbursement from your plan for some of the cost of seeing a mental health professional who doesn’t accept insurance.
Do major medical plans cover substance use disorder treatment?
Although most major medical health plans will cover substance use disorder (SUD) treatment, the specifics vary by plan.43 As noted above, the only plans that are required to cover SUD treatment are individual and small-group plans (under the ACA), or fully-insured large-group plans in states that require the coverage. Parity rules apply to far more plans, but again, that’s only applicable if the plan includes coverage for SUD treatment.
Treatment needs vary depending on the patient, but can range from outpatient therapy to partial hospitalization to inpatient rehabilitation that can last anywhere from just a couple of weeks to more than three months.44
Despite state and federal efforts to improve access to affordable SUD treatment, barriers remain. For example, some people may find that their policy doesn’t cover the type of inpatient care they need, or doesn’t cover medication-assisted addiction recovery.45
And for Medicaid, which plays a significant role in covering SUD treatment in the U.S., there is significant state-to-state variation in the coverage provided and the care that enrollees receive.46
As with other behavioral health care, it can sometimes be challenging for patients to find SUD practitioners who are in-network with their health plan.45
If you need SUD treatment, you or a caregiver should check with your health plan to see what’s covered, whether prior authorization is needed, and what SUD treatment programs are in-network with your plan.
Do health plans cover eating disorder therapy?
Eating disorders are among the most serious behavioral health issues,47 and a multifaceted treatment approach is often necessary.48
But while many health plans cover at least some aspects of eating disorder treatment, patients still face challenges in obtaining the care they need. For example, it can be difficult for a patient and their care team to prove to the patient’s health plan that a certain level of care – such as a residential program or inpatient treatment – is medically necessary, and health plans generally deny coverage if the care isn’t deemed medically necessary.48
And some health plans will deny coverage based on metrics such as how much weight the patient has lost, without considering the full picture of the patient’s medical needs.49
There are also gaps in the type of care covered by various plans, and some patients have difficulty finding in-network providers who can treat their eating disorder (as is the case for other types of behavioral health care).48
Is marriage counseling typically covered by health insurance?
Most health insurance policies will not cover marriage counseling, as it’s not considered medically necessary treatment.50
If one or both partners are diagnosed with a mental illness, such as depression or anxiety, health insurance will generally cover therapy to treat that condition. Depending on the circumstances, that might involve therapy where both partners are present, and it might include discussions about the marriage.51
But if the purpose of the therapy is marriage counseling without a medical diagnosis, it’s unlikely that health insurance will cover the cost.
If your employer offers an employee assistance program, it may include access to a limited number of basic couples counseling sessions.52
How can I find out if my health plan covers mental health treatment?
To find out whether your health insurance covers mental health treatment, you’ll need to confirm coverage details with your plan.
To see exactly what’s covered, you can read the summary plan description (SPD) that came with your policy,53 or the policy documents you received if your policy doesn’t have an SPD. If you have questions about your benefits, you can contact the plan’s customer service department.
Here are examples of questions you may want to ask your plan administrator before you seek non-emergency mental or SUD health care:
How high will my out-of-pocket costs be for a primary care visit, specialist visits, other outpatient care, or inpatient care? Which services, if any, are covered with copays rather than a deductible?
Where can I see a list of mental health providers in my area who are in-network with the plan?
Does the plan provide any out-of-network benefits?
Where can I see the plan’s formulary (covered drug list)?
Does the plan require step therapy for any covered behavioral health medications?
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
“Plan Information” U.S. Department of Labor. Accessed Apr. 30, 2025
https://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2025-05-16 15:28:042025-05-17 15:32:189 mental health insurance questions consumers should ask
There’s been a lot of buzz in the media in early 2025 about the likelihood of Medicaid cuts to significantly reduce federal spending on the program. With almost 72 million people covered by Medicaid,1 there is widespread concern about what sort of cuts are likely.
This article examines what could be cut – and who the cuts would likely affect.
Why we think Medicaid cuts are likely
Medicaid cuts are making the news due to a Congressional budget proposal that calls for reducing federal spending by hundreds of billions of dollars to pay for various tax cuts.2 Both chambers of Congress have agreed on a framework for the budget.3 They ultimately have to agree on details of a budget change, and we don’t yet know how that will unfold.
But the budget framework passed by both the House and Senate directs the Committee on Energy and Commerce, which is the House committee with jurisdiction over Medicaid, Medicare, and the Children’s Health Insurance Program, to reduce the federal deficit by $880 billion over 10 years.45 According to the Congressional Budget Office, cuts of that magnitude would have to primarily target Medicaid.6
What Medicaid cuts are being considered?
So what Medicaid cuts could Congress make, and how would they affect enrollees? While we don’t yet know what will be in the final budget bill, we do have information from the House Ways & Means (W&M) and Budget Committees, outlining various cuts, along with potential savings. 789
Here’s a look at five likely focus areas for Medicaid cuts:
1. Medicaid work requirements
Potential funding cut: About $100 billion over a decade
Medicaid work requirements are not a new idea. Several states received federal approval for work requirements under the first Trump administration, although most were never implemented. Georgia, which has had a work requirement in place since mid-2023 for certain adults,10 is currently the only state that requires some enrollees to be working to qualify for Medicaid.11
If a federal Medicaid work requirement were implemented, the impact would depend on several factors, including:
How widely the work requirement would apply (for example, only to the Medicaid expansion population, or to all adults under a certain age).
What populations would be exempt.
The degree to which compliance could be determined automatically versus requiring enrollees to report their work hours.
The Robert Wood Johnson Foundation estimates applying a federal work requirement just to the Medicaid expansion population could result in 4.6 to 5.2 million people losing Medicaid eligibility.12
2. Remove the floor on the federal Medicaid matching rate
Potential funding cut: $387 billion over a decade May impact: 10 states and Washington, DC
Medicaid is jointly funded by the federal and state governments. In states with lower per-capita incomes, the federal government pays a larger share of total Medicaid costs. But there’s a minimum 50% matching rate, so the federal government always pays at least 50% of total Medicaid costs.13
The W&M Committee projects that federal Medicaid funding could be reduced by $387 billion over the coming decade9 if the 50% minimum was eliminated, allowing higher-per capita income states to receive less federal funding for Medicaid. (If the 50% floor is removed and some states end up with lower federal matching rates as a result, the federal government would spend less to fund those states’ Medicaid programs, resulting in savings for the federal government.)
This change would impact 10 states:14 California, Colorado, Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Washington, and Wyoming. Their total Medicaid enrollment accounts for about 26.4 million of the 71.8 million people enrolled in Medicaid nationwide.1
If the federal matching rate were reduced under this proposal, states would have to determine how to account for the funding shortfall, potentially leading to benefit cuts or changes in eligibility rules.
In Washington, DC, federal Medicaid funding is statutorily set at 70%. The W&M list and the Budget Committee call for this to be changed so that the funding percentage would be set the same way it is in the rest of the country, which would reduce it to 50%.89 If the 50% minimum were to be eliminated as well, the District of Columbia could potentially be subject to additional federal Medicaid funding cuts.
3. Reduce the federal matching rate for Medicaid expansion
Potential funding cut: $561 billion over a decade
Population potentially affected: 20 million people who have gained coverage due to Medicaid expansion
Under the Affordable Care Act (ACA), the federal government pays 90% of the cost of covering the Medicaid expansion population. This is much larger than the federal government’s share of the cost of covering the rest of the Medicaid population, which ranges from 50% to nearly 77%, depending on the state.14
The House Committees8 want to reduce the federal funding percentage for the Medicaid expansion population so that it matches the funding percentage that applies to the rest of each state’s Medicaid population. This change could save the federal government up to $561 billion over the coming decade.9
In nine states, this would result in an automatic termination of Medicaid expansion, and in three others, it would result in an automatic review process that would likely lead to coverage losses. The rest of the states would have to consider whether Medicaid expansion would continue to be financially feasible with the reduced federal funding.
Depending on how the rest of the states would handle the reduction in funding, up to 20 million people could lose Medicaid due to a reduction in federal funding for Medicaid expansion.15
4. Implement per-enrollee caps on federal funding
Potential funding cut: Up to $900 billion over a decade
Population potentially affected: 72 million Medicaid enrollees
The W&M Committee estimates that a per-capita cap on federal Medicaid funding could save the federal government up to $900 billion over the next ten years.9
Under current rules, federal Medicaid funding is based on the federal government matching the amount that states spend at least dollar-for-dollar, and in some states, up to $3 in federal funding is provided for every dollar the state spends. This is an open-ended match, with no limit on how much federal funding a state can receive.
If Congress switched federal Medicaid funding to a per-capita (per-enrollee) cap, the federal government would give a certain amount of money to each state based on a preset formula, independent of states’ actual costs.9
A recent Urban Institute analysis found that states would see significant reductions in federal Medicaid funding under per-capita caps and “would have to consider a range of policy options, including increasing taxes, shifting state spending away from education and other priorities, cutting Medicaid provider payment rates, and reducing benefits for Medicaid beneficiaries.” The analysis also clarifies that “if states cannot find additional revenues or sufficient savings… inevitably, there would be enrollment cuts.”16
If a per-capita cap were to be implemented nationwide, it could potentially affect eligibility and benefits for all 72 million Medicaid enrollees. The specifics would vary from one state to another, depending on the approach each state takes.
5. Rescind Biden administration rules
Projected funding cut: $285 billion over a decade
All of the proposals discussed above would require Congressional action. But the W&M Committee also noted that federal Medicaid funding could be reduced by up to $285 billion over the coming decade by rescinding some Biden administration rules.9 This could be done by federal agencies and would not require Congressional action.
The first Biden administration rule is one that expands access to Medicaid Home and Community Based Services (HCBS).1718
The other Biden administration rule is a two-part rule that makes it easier for people who are eligible for Medicaid to enroll in the program and renew their coverage.19
Medicaid cuts would result in reduced benefits and enrollment
According to the Economic Policy Institute, extending tax cuts would primarily benefit those with the highest incomes,20 while Medicaid cuts would result in people with the lowest incomes losing benefits and coverage. And the impact of Medicaid cuts would apply disproportionately to people of color and children.21
Amid pushback on the idea of Medicaid cuts, Republican lawmakers have noted that their intent is to improve efficiency and administration in the Medicaid program, but not to cut benefits or eligibility.22 However, the scale of federal funding cuts called for in the Congressional budget resolution would require changes like the ones detailed above, which experts agree would result in reduced benefits, fewer enrollees, or both.23
Based on historical experience, when people are disenrolled from Medicaid, the majority end up being uninsured for at least some time after losing Medicaid.24
So if any Medicaid cuts are implemented, it will be important to devise a strategy that minimizes the number of people who become uninsured.
The views and opinions expressed in this blog post are those of the author and do not necessarily reflect those of HealthInsurance.org, LLC or its affiliates.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
https://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2025-05-06 11:10:332025-05-06 15:12:03The most likely targets for Medicaid cuts
Medicaid for children plays a vital role in covering kids in the United States. As of late 2024, more than 37 million children – almost half the nation’s children1 – were enrolled in Medicaid or the Children’s Health Insurance Program (CHIP).2
But many families may not be aware of the state and federal guidelines that make their children eligible for coverage. Here are six facts about eligibility that might help if you need Medicaid for your children.
1. Your kids might be eligible for Medicaid even if you’re not.
When parents are looking for affordable children’s health insurance, they may be pleasantly surprised to learn that Medicaid income limits for children can be much higher than the limits that apply to adults.3
Depending on the state, the coverage might be provided by Medicaid, a separate CHIP, or a combination of the two.4 But in all states except Idaho and North Dakota, Medicaid or CHIP is available to kids in households with income up to at least 200% of the federal poverty level (FPL), and in many states the income limits are much higher than that.3 In almost all cases, Medicaid eligibility for children is based on modified adjusted gross income alone, without considering their household’s asset levels.5
The income eligibility limits for adults – especially those who are not pregnant – tend to be quite a bit lower than the limits to determine a child’s eligibility for Medicaid.3 So even if the adults in a household are not eligible for Medicaid, the children might be. In that scenario, the kids can be enrolled in Medicaid and the parents will need to enroll in other coverage – possibly through an employer’s plan or a policy obtained in the health insurance Marketplace.
In nine states, there’s a “coverage gap” for some low-income adults who aren’t eligible for Medicaid and whose income is too low to be eligible for Marketplace subsidies. (Income generally must be at least 100% of the federal poverty level to qualify for Marketplace subsidies).6 But there is no coverage gap for children, because Medicaid income limits for kids extend well above the federal poverty level in all states.
Are my children eligible for Medicaid? You can use our federal poverty level calculator to get an idea of whether your kids might be eligible for Medicaid or CHIP.
2. Your children can enroll in Medicaid at any time.
Unlike private health insurance through the Marketplace, off-exchange from an insurer, or from an employer, there is no annual enrollment window for Medicaid.7 An eligible person can enroll anytime. So if your kids are uninsured and you think they might be eligible for Medicaid or CHIP, you can apply for coverage on their behalf right away. You can select your state on this page to see details about eligibility and the enrollment process.
And Medicaid can be retroactive by up to three months in most states, meaning that medical expenses your kids incurred recently might be covered after they enroll.8
3. Medicaid might help pay for employer-sponsored coverage for your children.
If your employer offers family health benefits but you can’t afford the premiums, you might find that you can get help with the cost. The majority of the states have programs that use Medicaid or CHIP funds to help Medicaid-eligible and CHIP-eligible families pay for employer-sponsored health insurance (in addition to Medicaid or CHIP) if it’s available to them.9
The specifics of these programs – including whether they’re voluntary or mandatory10 – vary from one state to another, so you’ll need to contact your state Medicaid office for details.
If your child has Medicaid in addition to other coverage, Medicaid is always the secondary payer. This means the other insurance will be primary, and Medicaid will only start to pay benefits after the claim has been processed by the primary insurance.11
With limited exceptions, CHIP is not available to children who are eligible for coverage under a state health benefits plan. So if a parent works for the state and has access to family coverage under the state health benefits program, their children will generally not be eligible for CHIP.12
And states can impose more restrictive limits on CHIP. For example, Utah does not allow a child to enroll in CHIP if the child could enroll in an employer-sponsored plan for less than 5% of the household’s income.13
4. A child’s disability may make them eligible for Medicaid.
If your child is disabled14 or has certain special healthcare needs, they may qualify for Medicaid – even if your household’s income isn’t within the standard eligibility limits. And depending on the state and the child’s medical needs, they may qualify for Medicaid coverage for in-home care as an alternative to institutional care, without being disqualified due to their parents’ income and assets.15 (In other words, these kids can potentially be in households that would not otherwise qualify for income-based Medicaid, or for disability-based Medicaid — which uses both income and assets to determine eligibility.16)
As is always the case with Medicaid and CHIP, the details vary by state. But if your child is disabled or has costly ongoing medical needs, you may find that they can qualify for Medicaid even if your household wouldn’t otherwise qualify based on income alone. You can reach out to the Medicaid office in your state to get more information.
5. In most states, you’ll need to renew your kids’ coverage each year.
If your kids are enrolled in Medicaid or CHIP, it’s important to pay attention to any paperwork you get from the state regarding their coverage. Most state Medicaid programs recheck enrollees’ eligibility each year.17
Your state may be able to confirm your child’s ongoing eligibility automatically.18 But if not, they will send you a request for updated information, and your children can be disenrolled if you don’t respond.
Some states have changed their rules to ensure continuous Medicaid and CHIP coverage for kids up to a certain age. This means that a child’s coverage will continue regardless of changes to the family’s circumstances, and without the need for annual eligibility redeterminations. Continuous coverage extends through different ages, depending on the state:
California.23 and Ohio.24 are working to gain federal approval for continuous Medicaid coverage for children until they turn four.
There are several states with legislation pending in 2025 that would direct the state to seek federal approval for various terms of continuous Medicaid coverage for kids. They include Alaska,25 Montana,26 Rhode Island,27 and Texas.28
6. If your baby’s birth is covered by Medicaid, they will remain covered for at least a full year.
Medicaid covers more than 40% of births in the U.S.29 Those infants are automatically covered by Medicaid or CHIP as soon as they’re born, and will remain eligible at least until their first birthday.30 As noted above, eligibility is redetermined annually in most states, so ongoing eligibility will depend on the household’s financial circumstances.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org
https://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2025-04-23 16:30:062025-04-24 15:20:08Medicaid for children: 6 facts every parent should know
All Marketplace plans have free preventive benefits to help keep you healthy and avoid more serious illnesses. Talk with your doctor to figure out which services are right for you. Remember, services are only free if you get them from a provider in your plan’s network.
https://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsurememphis.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2025-03-17 11:00:002025-03-17 15:03:12Farmers Insurance® Names Ankur Chaturvedi Regional President of the East Territory
A proposed federal rule issued this week would, if finalized, bring wide-ranging changes for the Affordable Care Act’s health insurance Marketplace, including a shorter open enrollment period in all states.
The Centers for Medicare & Medicaid Services (CMS) issued the proposed rule on March 10. A final rule would modify numerous regulations affecting consumers’ access to Marketplace coverage and financial assistance.
CMS projects that the proposed rule changes will result in between 750,000 and 2 million fewer Marketplace enrollees in 2026, compared to enrollment projections under existing Marketplace rules.1 This is separate from the reduced enrollment that was already expected in 2026 due to the expiration of the American Rescue Plan’s subsidy enhancements at the end of 2025.
Let’s take a look at some of the rule changes that could affect consumers’ costs and access to Marketplace coverage.
Open enrollment period would be shortened in all states
CMS has proposed that open enrollment should run from Nov. 1 through Dec. 15. in all states. The dates of open enrollment have varied over the years, but have most recently been set at Nov. 1 through Jan. 15 in most states.
In the past, HHS has given state-run exchanges the option to offer longer open enrollment periods. But the new proposal calls for the December 15 end date to apply to all exchanges.2
As is already the case, the open enrollment period would apply both on-exchange and off-exchange.
In the 31 states that use HealthCare.gov, more than 17.1 million people enrolled in Marketplace coverage during the open enrollment period for 2025 coverage.3 Of those, 16.6 million had completed their enrollments by Dec. 15.4 So the majority of enrollees do sign up by mid-December, in time to get full-year coverage for the coming year. Only about 529,000 people enrolled via HealthCare.gov between Dec. 16, 2024 and Jan. 15, 2025, accounting for about 3% of total enrollment.
But if open enrollment ends on Dec. 15, absent a special enrollment period, an applicant or enrollee will no longer have an opportunity to pick a different plan after the start of the calendar year. This will make it particularly important for enrollees to pay close attention to communications they get from their plan and the Marketplace before and during open enrollment, to ensure that there are no unwelcome surprises regarding their coverage or premiums in January.
Rule would eliminate the low-income special enrollment period
For the last few years, there has been a year-round enrollment opportunity in most states in the form of a special enrollment period for people who are subsidy-eligible and have a household income that isn’t more than 150% of the federal poverty level (FPL). For a single adult in the continental United States, that’s an income of $22,590 in 2025.5
The proposed rule would end this year-round enrollment opportunity. This change would apply nationwide, including in states that run their own exchanges.
Many other provisions of the proposed rule are slated to take effect for the 2026 or 2027 plan year. But the proposed rule calls for the low-income SEP to end almost immediately, on the effective date of the final rule.6
In justifying the proposed rule, CMS noted that the year-round SEP for low-income enrollees was “one of the primary mechanisms” that contributed to the unauthorized enrollments that made headlines in 2024.
Rule would eliminate enrollees’ ability to auto-renew $0-premium coverage
Under current rules, if a Marketplace enrollee lets their plan auto-renew and is eligible for a subsidy that covers their entire premium, their after-subsidy premium can continue to be $0 in the coming year. (This isn’t always the case, as it also depends on how subsidy amounts change based on the cost of the second-lowest-cost Silver plan.)
Under the proposed rules, the Marketplace would have to reduce the person’s subsidy amount by $5/month, resulting in a $5/month after-subsidy premium for the enrollee. This premium would be imposed until the enrollee updates their information with the Marketplace so that an updated eligibility determination can be made.7
This proposed rule would apply starting with the 2026 plan year in states that use HealthCare.gov, and starting with the 2027 plan year in states that run their own Marketplace platforms.
As a result of this proposed rule, people with fully subsidized plans who rely on auto-renewal and don’t update their Marketplace account by Dec. 15 would continue to have coverage as of January, but with an after-subsidy premium of $5/month.
(If and when the enrollee updates their eligibility with the Marketplace, they would qualify for the full amount of the subsidy based on their updated information. And if they would have qualified for a full subsidy, the $5/month could be recouped when they reconcile their premium tax credit on their tax return – as is always the case when an enrollee is owed additional premium tax credits).
CMS is also soliciting comments on whether the amount should be higher than $5, as well as whether auto-renewal should even continue to be possible for fully subsidized enrollees.
Previous analyses have found that when net premiums increase from zero to even a dollar or two per month, the result is a drop in enrollment.8
Maximum out-of-pocket limits would increase for 2026 plans
Under current rules, 2026 Marketplace health plans would have maximum out-of-pocket (MOOP) limits as high as $10,150 for a single individual, and $20,300 for a family. Under the proposed rule, those limits would increase to $10,600 and $21,200, respectively.9
This would also result in higher MOOPs for Silver plans with integrated cost-sharing reductions, as those values are based on reducing the standard MOOP by a set percentage.
The change would stem from a new methodology for indexing these amounts, reverting to a methodology that was briefly used under the first Trump administration.
If finalized, the MOOP for a single individual will rise from $9,200 in 2025 to $10,600 in 2026 – a 15% increase.
Rule would require additional documentation for enrollment and subsidy eligibility
HHS has proposed several rule changes that would require more documentation and verification to enroll in Marketplace coverage and qualify for financial assistance. They include:
Verification of SEP eligibility
Since 2023, the federally run Marketplace has only required pre-enrollment proof of SEP eligibility if the qualifying life event is the loss of other coverage.10 The proposed rule would remove that limitation and allow pre-enrollment eligibility verification for any SEP.11
Further, it calls for all exchanges – including HealthCare.gov and state-run exchanges – to verify eligibility for at least 75% of new enrollees utilizing SEPs. The proposed rule notes that most exchanges would only need to require eligibility verification for their two most-used SEPs to meet this target.12
Additional income verification
The new proposed rule would require more documentation to verify that some enrollees are eligible for Marketplace subsidies. If the Marketplace’s trusted data sources (IRS data, for example) indicate that an applicant’s household income is below the FPL but the person attests to an income of at least the FPL, the new proposed rule would require the Marketplace to generate a data matching inconsistency. These must be resolved13 for the person to qualify for Marketplace subsidies.
CMS has also proposed that if the Marketplace requests income data from the IRS and is told that it’s not available, the Marketplace cannot just rely on the applicant’s attested income. Instead, the Marketplace will need to use other trusted data sources to verify the applicant’s income, or the applicant will need to submit proof of income.14
Shorter window to provide income documentation
The ACA provides applicants with a 90-day window to provide requested income verification documentation, and subsequent rules added an automatic 60-day extension, without the enrollee needing to request it. HHS has proposed removing that automatic extension.15
Additional rule changes
The proposed rule calls for various other provisions, including:
Allowing insurers to require people to pay past-due premiums before they can re-enroll in new coverage. This was previously required under rules that were finalized in 2017,16 but a rule finalized in 2022 prohibited insurers from doing this.17
Prohibiting DACA recipients from enrolling in Marketplace coverage nationwide, or receiving federal premium subsidies or cost-sharing reductions. (DACA recipients are already blocked from enrolling in Marketplace coverage in 19 states.)18
Cutting off an enrollee’s eligibility for advance premium tax credit (APTC) if they fail to reconcile the prior year’s APTC on their tax return. Current rules cut off APTC only after the person has failed to reconcile APTC for two consecutive years.
Repealing the current auto-renewal protocol that allows the exchange to move an enrollee (who is eligible for cost-sharing reductions) from a Bronze plan to a Silver plan if one is available with the same provider network and product type, and with equal or lesser premiums after the premium subsidy is applied.
Prohibiting individual and small group plans from covering “sex-trait modification” (gender-affirming care) as an essential health benefit (EHB). If a state mandates coverage of gender-affirming care, the state would have to defray the cost of that coverage. And if an insurer were to voluntarily cover gender-affirming care, it could not be as part of an EHB. This would ensure federal premium subsidies could not be used to offset the cost of that portion of the coverage.
Once the proposed rule is published in the Federal Register, there will be a 30-day window during which the public can submit comments, which will be taken into consideration before the rule is finalized.19
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
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Budget bill provisions could make ICHRAs more appealing to businesses
In this article
The budget reconciliation bill that passed in the U.S. House of Representatives in May 20251 includes provisions intended to make ICHRAs – Individual Coverage Health Reimbursement Arrangements – easier to use and more financially attractive for small businesses.
Three sections of the bill address these health reimbursement arrangements integrated with individual-market coverage, currently known as ICHRAs. The changes include providing a tax incentive for small businesses that start reimbursing employees for the cost of individual health insurance and relaxing some existing administrative rules. The budget bill also calls for ICHRAs to be rebranded as Custom Health Option and Individual Care Expense (CHOICE) Arrangements.
What are ICHRAs?
ICHRAs have been available for adoption by businesses since 2020,2 offering a way for employers of any size to reimburse employees for the cost of individual-market health insurance or Medicare, and other qualified medical expenses if the employer allows that. But ICHRAs have not yet been codified under any federal legislation.3 That will change if the budget reconciliation bill, also known as the “One Big Beautiful Bill,” is enacted.
Legislation to rebrand ICHRAs as CHOICE Arrangements passed in the House in 2023, although it did not advance in the Senate.4 But the specific provisions of the budget reconciliation bill that we’ll discuss in this article weren’t part of the 2023 legislation.
Here’s how the new budget legislation – if enacted – would affect ICHRAs:
New tax credit for small businesses that offer CHOICE Arrangement
Section 110203 of the House budget bill creates a nonrefundable tax credit that would be available to small employers (those with fewer than 50 full-time equivalent employees) during the first two years they offer a CHOICE Arrangement to their employees. The tax credit would be $100 per employee per month for the first year and $50 per employee per month in the second year. Both amounts would be adjusted for inflation in years after 2026.
Although ICHRA utilization has increased significantly in recent years,5 it still accounts for a very small segment of employer-sponsored health benefits.6 But the addition of a federal tax credit available to employers nationwide might incentivize more small employers to begin offering ICHRA benefits to their employees.
Indiana began offering a two-year tax credit in 2024, to small employers that offer ICHRAs to their employees.7 But while Indiana’s tax credit provides a maximum of $400 per employee in the first year, the federal tax credit in the House’s budget legislation would provide up to $1,200 per employee in the first year.
More widely available pre-tax premium contributions for employees
Under current rules, an ICHRA can be used to reimburse employees for individual-market coverage purchased through the ACA Marketplace / exchange or outside the exchange. If the employer’s ICHRA contribution is not enough to cover the full premium, the employee is responsible for covering the remaining premium.
Employers that utilize Section 125 cafeteria plans8 can allow employees the option to use a pre-tax salary reduction to pay the employee’s share of the premiums, but only if the plan is purchased outside the Marketplace9 (meaning the plan is purchased directly from an insurer, with or without the assistance of an agent or broker, without utilizing the health insurance Marketplace).
Section 110202 of the House budget bill would change that. It would allow employees to utilize pre-tax salary reductions (if offered by the employer) for the employee’s share of an individual-market plan, even if the plan is obtained in the Marketplace.
If implemented, this would help to create a “no wrong door” environment for taking advantage of an employer’s offer to reimburse premiums, in situations where the employer also offers a way for the employee’s share of the premium to be paid on a pre-tax basis.
Employers would be able to offer a choice between CHOICE or a traditional small-group plan
Under current rules, an employer can offer both an ICHRA and a traditional group plan, but only if they’re offered to different employee classes. In other words, no employee can be offered a choice between a traditional group plan and an ICHRA.10
Section 110201(a)(2)(C) of the House budget bill would relax this rule for small employers. If all of the employees in a class are offered a fully insured small-group health plan, those employees could also be offered the option to be reimbursed for individual-market coverage with a CHOICE Arrangement instead.
It’s unclear whether small employers would utilize this option however, as doing so would require the administrative burden of offering both a CHOICE Arrangement and a small-group health plan.
The future of CHOICE Arrangements
The House passed the One Big Beautiful Bill on May 22, 2025 and sent it to the Senate.1 Senate Majority Leader, John Thune, has said that his goal is for the Senate to vote on the bill by the 4th of July, but the Senate is also preparing to modify the bill in various ways.11
So it is unclear whether the bill will pass in the Senate, and if so, what provisions of the House bill will remain intact after the Senate’s revisions.11 But while many aspects of health policy are politically contentious, ICHRAs have enjoyed broad bipartisan support since their debut.12
It’s worth noting that the budget bill’s fairly brief sections dealing with CHOICE Arrangement contain far fewer regulatory details than the existing ICHRA rules, although it appears the House intends to keep the existing ICHRA rules unless otherwise specified in the legislation.3 But additional details could be included in the Senate’s version of the budget bill, or could be addressed in additional administrative rulemaking.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
Footnotes
ICHRA vs QSEHRA: Which is right for your small business?
If you’re a small-business owner and you’d like to reimburse your employees, pre-tax, for the cost of health insurance that they buy on their own, you have two options: An ICHRA (Individual Coverage Health Reimbursement Arrangement) or a QSEHRA (Qualified Small Employer Health Reimbursement Arrangement).1
As long as you have fewer than 50 full-time equivalent (FTE) employees and don’t also offer a group health plan, you have your choice of either an ICHRA or a QSEHRA. Note that only employers with fewer than 50 FTE employees can select a QSHERA.
Read our overviews of ICHRAs and QSEHRAs.
What are the differences between a QSEHRA and an ICHRA?
Here’s a summary of how these two types of health reimbursement arrangements compare, to help you determine which one will be a better fit for your business:
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Key differences between ICHRA and QSEHRA
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
Footnotes
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9 mental health insurance questions consumers should ask
In this article
In the United States, the percentage of adults seeking mental health treatment or counseling has been steadily rising.12
In this article, we’ll take a look at some of the top mental health insurance considerations that consumers should understand.
Let’s start with an obvious and frequently asked question:
How is mental health treatment covered by health insurance?
Whether or not your health plan is required to cover mental health care will depend on the type of coverage you have. Here are some basic rules to keep in mind:
Individual and small-group plans must cover mental health and substance use disorders (SUD) treatment, but with specific coverage requirements that vary by state.3 These rules do not apply to plans that are grandfathered or grandmothered under the ACA.
Total out-of-pocket costs and how those costs are distributed vary greatly from one plan to another. For example, some plans might cover various services with copays from the outset, while other plans might require you to meet your deductible (which could be thousands of dollars) before the plan starts to pay for any care. And as is the case for any type of care, total out-of-pocket exposure varies by plan.
Mental health parity rules apply to these types of plans.
Fully-insured large-group plans are plans an employer purchases from an insurance company4 either directly, or through a sales agency. In most states, “large-group” means the employer has 51 or more employees, but there are some states where the threshold is 101 employees.5 (Under the ACA, this threshold was intended to be 101 employees, but the PACE Act reduced it to 51. States had the option to use the 101 threshold instead, and a few do so.)6
This type of plan must cover mental health and SUD treatment only if state regulations require it. These requirements vary from one state to another.7
For plans that provide coverage for mental health and SUD treatment, out-of-pocket costs vary by plan, but there cannot be any dollar limits on how much the plan will pay for these services.8
Mental health parity rules apply to these plans.
Self-insured plans, under which an employer uses its own money to pay employees’ claims, rather than purchasing coverage from an insurer, are not required by federal regulations to cover mental health care or SUD care, and states cannot set coverage mandates for self-insured plans. If a self-insured plan covers mental health or SUD treatment, the plan cannot limit how much the plan will pay for those services.8
Mental health parity rules apply if the employer sponsoring the self-insured plan has more than 50 employees.
Medicare covers a wide range of mental health and SUD care, including both inpatient and outpatient care.9
Medicare Advantage plans must cover at least the same services that Original Medicare covers, although out-of-pocket costs can be different. Medicare Advantage plans can also limit coverage to a specific network of providers, and can require prior authorization.10
Federal parity rules do not apply to Medicare, but a separate law passed in 2008 reduced Medicare cost-sharing for outpatient mental health care to align it with cost-sharing for other kinds of outpatient medical care.11
Medicaid is the largest payer for mental health services in the United States,12 and various types of behavioral health care are encompassed under Medicaid’s mandatory benefits that all states must provide.13
As with other aspects of Medicaid coverage, specific benefits for mental health and SUD treatment vary from one state to another. But many states have federal Medicaid waivers that include various services to assist people with SUDs14 Medicaid waivers are an option provided for in federal law that gives states flexibility to test innovative approaches to providing care.
Mental health parity rules apply to Medicaid managed care plans, Medicaid alternative benefit plans (including the ACA’s expansion of Medicaid),11 and the Children’s Health Insurance Program (CHIP).15
Short-term health insurance and coverage that is considered an “excepted benefit” do not have to cover mental health and SUD treatment.
Short-term health insurance policies are not considered individual health insurance,16 are not regulated by the ACA, and are limited to total durations of no more than four months, including renewals. “Excepted benefits” include coverage such as workers’ compensation, fixed-indemnity plans, accident insurance, and critical illness plans.17
Mental health parity rules do not apply to short-term plans or excepted benefits coverage.11
While many plans – including Marketplace plans and most employer-sponsored plans – cover mental health and SUD treatment,18 short-term plans and excepted benefit plans typically do not provide these benefits.1920
How did the Affordable Care Act expand coverage of mental health care?
The Affordable Care Act significantly expanded coverage of mental health treatment in several key ways.
Prior to the ACA, mental health conditions and substance use disorders (SUD) were an obstacle to obtaining health insurance and often resulted in declined applications in the individual health insurance market.21 But that is no longer the case, because of the ACA. The ACA banned the use of medical underwriting in the individual market (where it was used extensively before 2014),22 and eliminated pre-existing condition waiting periods for employer-sponsored health insurance.23
The ACA also allowed states to expand Medicaid to cover adults with income up to 138% of the federal poverty level, which 40 states and DC have done.24 As of June 2024, nearly 21 million people are enrolled in Medicaid due to this expansion,25 resulting in better access to mental health and SUD treatment.26
The ACA also requires all non-grandfathered major medical health plans to cover various preventive care at no cost to the patient. Among the benefits included are depression screening and alcohol misuse screening for adults and adolescents, as well as autism screening and behavioral assessments for children.27
Do ACA mental health coverage requirements apply to all health insurance?
The ACA requires individual and small-group health plans (with effective dates of Jan. 2014 or later) to cover essential health benefits (EHBs), with no annual or lifetime dollar limits. One of the categories that must be covered on all of these plans is “mental health and substance use disorder services, including behavioral health treatment.”3
For perspective on the significance of this requirement, more than a third of non-group health plans didn’t provide any mental health benefits in 2013, and almost half did not cover SUD treatment.28 (Pre-ACA coverage was better among employer-sponsored plans.)29
Within the ACA’s basic EHB framework, it’s up to each state to determine exactly what services must be covered. Each state has selected an EHB benchmark plan that details minimum coverage requirements for each EHB category.30 So the specific mental health and SUD care that must be covered will vary from one state to another, depending on the state’s EHB benchmark plan’s coverage.
Prescription drugs are also an EHB under the ACA. So all individual and small-group plans with effective dates in 2014 or later are required to cover prescriptions, including medications to treat behavioral health problems. But health plans set their own formularies – covered drug lists – within certain guidelines.31 (Those guidelines include a requirement that the plan must cover at least as many drugs in each category and class of drugs as the state’s EHB benchmark plan – not necessarily the same drugs that the benchmark plan covers – or one drug in each category and class, whichever is greater.)32
Large-group and self-insured plans are not required to cover the ACA’s EHBs. But if they do, they must cover them without any annual or lifetime dollar limits on how much the plan will pay for an enrollee’s care.8
Does mental health parity mean health plans must cover mental health?
No, mental health parity rules do not require health plans to cover mental health care. Learn more about mental health parity requirements.
As a result of the ACA, some health plans are required to provide coverage for mental health and SUD treatment.33 And states can impose coverage mandates on plans that aren’t self-insured.
Self-insured plans are subject to federal rules, but they are not subject to state insurance rules. There is no federal requirement that self-insured plans cover mental health or SUD treatment.34 For plans that aren’t required to provide those benefits, mental health parity rules only apply if the plan opts to provide mental health and/or SUD benefits. And for self-insured plans, mental health parity rules only apply if the employer has more than 50 employees35
Does most health insurance cover therapy and medication?
As noted above, coverage requirements vary depending on the type of plan a person has. And as is the case for coverage of any type of healthcare, out-of-pocket costs and benefit specifics will vary from one health plan to another.
But most major medical health plans in the U.S. do cover mental health therapy36 and mental health medications.37 Many plans will also cover telehealth therapy, although this varies by plan.38
A recent AHIP survey found that the majority of insured Americans who sought mental health care were able to obtain it without difficulty, and 90% were satisfied with the care they received. In addition, 60% reported that their mental health care was fully covered by insurance, and 33% reported that their mental health care was partially covered by insurance, while only 3% said that it wasn’t covered.39 (Note that “covered” doesn’t mean the health plan pays the full bill, since enrollees have cost-sharing for covered services, in the form of deductibles, copays, and coinsurance.)
But on the other hand, the American Psychological Association (APA) points to an analysis done by KFF and CNN, which found that a third of survey respondents were not able to access the mental health care they needed. Cost was the primary obstacle, as well as stigma and a shortage of mental health providers.40
Compounding the shortage of providers is the fact that many mental health professionals do not accept insurance,41 and psychiatrists are much more likely than other medical specialists to not accept new patients with either private health insurance or Medicare.42
So, if you already have a relationship with a mental health provider, you may have to switch to a different provider to utilize your health plan’s benefits, as your preferred provider might not accept your insurance. You can check with your plan to see if any out-of-network benefits are available. If so, you may be able to seek reimbursement from your plan for some of the cost of seeing a mental health professional who doesn’t accept insurance.
Do major medical plans cover substance use disorder treatment?
Although most major medical health plans will cover substance use disorder (SUD) treatment, the specifics vary by plan.43 As noted above, the only plans that are required to cover SUD treatment are individual and small-group plans (under the ACA), or fully-insured large-group plans in states that require the coverage. Parity rules apply to far more plans, but again, that’s only applicable if the plan includes coverage for SUD treatment.
Treatment needs vary depending on the patient, but can range from outpatient therapy to partial hospitalization to inpatient rehabilitation that can last anywhere from just a couple of weeks to more than three months.44
Despite state and federal efforts to improve access to affordable SUD treatment, barriers remain. For example, some people may find that their policy doesn’t cover the type of inpatient care they need, or doesn’t cover medication-assisted addiction recovery.45
And for Medicaid, which plays a significant role in covering SUD treatment in the U.S., there is significant state-to-state variation in the coverage provided and the care that enrollees receive.46
As with other behavioral health care, it can sometimes be challenging for patients to find SUD practitioners who are in-network with their health plan.45
If you need SUD treatment, you or a caregiver should check with your health plan to see what’s covered, whether prior authorization is needed, and what SUD treatment programs are in-network with your plan.
Do health plans cover eating disorder therapy?
Eating disorders are among the most serious behavioral health issues,47 and a multifaceted treatment approach is often necessary.48
But while many health plans cover at least some aspects of eating disorder treatment, patients still face challenges in obtaining the care they need. For example, it can be difficult for a patient and their care team to prove to the patient’s health plan that a certain level of care – such as a residential program or inpatient treatment – is medically necessary, and health plans generally deny coverage if the care isn’t deemed medically necessary.48
And some health plans will deny coverage based on metrics such as how much weight the patient has lost, without considering the full picture of the patient’s medical needs.49
There are also gaps in the type of care covered by various plans, and some patients have difficulty finding in-network providers who can treat their eating disorder (as is the case for other types of behavioral health care).48
Is marriage counseling typically covered by health insurance?
Most health insurance policies will not cover marriage counseling, as it’s not considered medically necessary treatment.50
If one or both partners are diagnosed with a mental illness, such as depression or anxiety, health insurance will generally cover therapy to treat that condition. Depending on the circumstances, that might involve therapy where both partners are present, and it might include discussions about the marriage.51
But if the purpose of the therapy is marriage counseling without a medical diagnosis, it’s unlikely that health insurance will cover the cost.
If your employer offers an employee assistance program, it may include access to a limited number of basic couples counseling sessions.52
How can I find out if my health plan covers mental health treatment?
To find out whether your health insurance covers mental health treatment, you’ll need to confirm coverage details with your plan.
To see exactly what’s covered, you can read the summary plan description (SPD) that came with your policy,53 or the policy documents you received if your policy doesn’t have an SPD. If you have questions about your benefits, you can contact the plan’s customer service department.
Here are examples of questions you may want to ask your plan administrator before you seek non-emergency mental or SUD health care:
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
Footnotes
The most likely targets for Medicaid cuts
In this article
There’s been a lot of buzz in the media in early 2025 about the likelihood of Medicaid cuts to significantly reduce federal spending on the program. With almost 72 million people covered by Medicaid,1 there is widespread concern about what sort of cuts are likely.
This article examines what could be cut – and who the cuts would likely affect.
Why we think Medicaid cuts are likely
Medicaid cuts are making the news due to a Congressional budget proposal that calls for reducing federal spending by hundreds of billions of dollars to pay for various tax cuts.2 Both chambers of Congress have agreed on a framework for the budget.3 They ultimately have to agree on details of a budget change, and we don’t yet know how that will unfold.
But the budget framework passed by both the House and Senate directs the Committee on Energy and Commerce, which is the House committee with jurisdiction over Medicaid, Medicare, and the Children’s Health Insurance Program, to reduce the federal deficit by $880 billion over 10 years.4 5 According to the Congressional Budget Office, cuts of that magnitude would have to primarily target Medicaid.6
What Medicaid cuts are being considered?
So what Medicaid cuts could Congress make, and how would they affect enrollees? While we don’t yet know what will be in the final budget bill, we do have information from the House Ways & Means (W&M) and Budget Committees, outlining various cuts, along with potential savings. 7 8 9
Here’s a look at five likely focus areas for Medicaid cuts:
1. Medicaid work requirements
Potential funding cut: About $100 billion over a decade
Medicaid work requirements are not a new idea. Several states received federal approval for work requirements under the first Trump administration, although most were never implemented. Georgia, which has had a work requirement in place since mid-2023 for certain adults,10 is currently the only state that requires some enrollees to be working to qualify for Medicaid.11
If a federal Medicaid work requirement were implemented, the impact would depend on several factors, including:
The Robert Wood Johnson Foundation estimates applying a federal work requirement just to the Medicaid expansion population could result in 4.6 to 5.2 million people losing Medicaid eligibility.12
2. Remove the floor on the federal Medicaid matching rate
Potential funding cut: $387 billion over a decade
May impact: 10 states and Washington, DC
Medicaid is jointly funded by the federal and state governments. In states with lower per-capita incomes, the federal government pays a larger share of total Medicaid costs. But there’s a minimum 50% matching rate, so the federal government always pays at least 50% of total Medicaid costs.13
The W&M Committee projects that federal Medicaid funding could be reduced by $387 billion over the coming decade9 if the 50% minimum was eliminated, allowing higher-per capita income states to receive less federal funding for Medicaid. (If the 50% floor is removed and some states end up with lower federal matching rates as a result, the federal government would spend less to fund those states’ Medicaid programs, resulting in savings for the federal government.)
This change would impact 10 states:14 California, Colorado, Connecticut, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Washington, and Wyoming. Their total Medicaid enrollment accounts for about 26.4 million of the 71.8 million people enrolled in Medicaid nationwide.1
If the federal matching rate were reduced under this proposal, states would have to determine how to account for the funding shortfall, potentially leading to benefit cuts or changes in eligibility rules.
In Washington, DC, federal Medicaid funding is statutorily set at 70%. The W&M list and the Budget Committee call for this to be changed so that the funding percentage would be set the same way it is in the rest of the country, which would reduce it to 50%.8 9 If the 50% minimum were to be eliminated as well, the District of Columbia could potentially be subject to additional federal Medicaid funding cuts.
3. Reduce the federal matching rate for Medicaid expansion
Potential funding cut: $561 billion over a decade
Population potentially affected: 20 million people who have gained coverage due to Medicaid expansion
Under the Affordable Care Act (ACA), the federal government pays 90% of the cost of covering the Medicaid expansion population. This is much larger than the federal government’s share of the cost of covering the rest of the Medicaid population, which ranges from 50% to nearly 77%, depending on the state.14
The House Committees8 want to reduce the federal funding percentage for the Medicaid expansion population so that it matches the funding percentage that applies to the rest of each state’s Medicaid population. This change could save the federal government up to $561 billion over the coming decade.9
In nine states, this would result in an automatic termination of Medicaid expansion, and in three others, it would result in an automatic review process that would likely lead to coverage losses. The rest of the states would have to consider whether Medicaid expansion would continue to be financially feasible with the reduced federal funding.
Depending on how the rest of the states would handle the reduction in funding, up to 20 million people could lose Medicaid due to a reduction in federal funding for Medicaid expansion.15
4. Implement per-enrollee caps on federal funding
Potential funding cut: Up to $900 billion over a decade
Population potentially affected: 72 million Medicaid enrollees
The W&M Committee estimates that a per-capita cap on federal Medicaid funding could save the federal government up to $900 billion over the next ten years.9
Under current rules, federal Medicaid funding is based on the federal government matching the amount that states spend at least dollar-for-dollar, and in some states, up to $3 in federal funding is provided for every dollar the state spends. This is an open-ended match, with no limit on how much federal funding a state can receive.
If Congress switched federal Medicaid funding to a per-capita (per-enrollee) cap, the federal government would give a certain amount of money to each state based on a preset formula, independent of states’ actual costs.9
A recent Urban Institute analysis found that states would see significant reductions in federal Medicaid funding under per-capita caps and “would have to consider a range of policy options, including increasing taxes, shifting state spending away from education and other priorities, cutting Medicaid provider payment rates, and reducing benefits for Medicaid beneficiaries.” The analysis also clarifies that “if states cannot find additional revenues or sufficient savings… inevitably, there would be enrollment cuts.”16
If a per-capita cap were to be implemented nationwide, it could potentially affect eligibility and benefits for all 72 million Medicaid enrollees. The specifics would vary from one state to another, depending on the approach each state takes.
5. Rescind Biden administration rules
Projected funding cut: $285 billion over a decade
All of the proposals discussed above would require Congressional action. But the W&M Committee also noted that federal Medicaid funding could be reduced by up to $285 billion over the coming decade by rescinding some Biden administration rules.9 This could be done by federal agencies and would not require Congressional action.
The first Biden administration rule is one that expands access to Medicaid Home and Community Based Services (HCBS).17 18
The other Biden administration rule is a two-part rule that makes it easier for people who are eligible for Medicaid to enroll in the program and renew their coverage.19
Medicaid cuts would result in reduced benefits and enrollment
According to the Economic Policy Institute, extending tax cuts would primarily benefit those with the highest incomes,20 while Medicaid cuts would result in people with the lowest incomes losing benefits and coverage. And the impact of Medicaid cuts would apply disproportionately to people of color and children.21
Amid pushback on the idea of Medicaid cuts, Republican lawmakers have noted that their intent is to improve efficiency and administration in the Medicaid program, but not to cut benefits or eligibility.22 However, the scale of federal funding cuts called for in the Congressional budget resolution would require changes like the ones detailed above, which experts agree would result in reduced benefits, fewer enrollees, or both.23
Based on historical experience, when people are disenrolled from Medicaid, the majority end up being uninsured for at least some time after losing Medicaid.24
So if any Medicaid cuts are implemented, it will be important to devise a strategy that minimizes the number of people who become uninsured.
The views and opinions expressed in this blog post are those of the author and do not necessarily reflect those of HealthInsurance.org, LLC or its affiliates.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written hundreds of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
Footnotes
Medicaid for children: 6 facts every parent should know
In this article
Medicaid for children plays a vital role in covering kids in the United States. As of late 2024, more than 37 million children – almost half the nation’s children1 – were enrolled in Medicaid or the Children’s Health Insurance Program (CHIP).2
But many families may not be aware of the state and federal guidelines that make their children eligible for coverage. Here are six facts about eligibility that might help if you need Medicaid for your children.
1. Your kids might be eligible for Medicaid even if you’re not.
When parents are looking for affordable children’s health insurance, they may be pleasantly surprised to learn that Medicaid income limits for children can be much higher than the limits that apply to adults.3
Depending on the state, the coverage might be provided by Medicaid, a separate CHIP, or a combination of the two.4 But in all states except Idaho and North Dakota, Medicaid or CHIP is available to kids in households with income up to at least 200% of the federal poverty level (FPL), and in many states the income limits are much higher than that.3 In almost all cases, Medicaid eligibility for children is based on modified adjusted gross income alone, without considering their household’s asset levels.5
The income eligibility limits for adults – especially those who are not pregnant – tend to be quite a bit lower than the limits to determine a child’s eligibility for Medicaid.3 So even if the adults in a household are not eligible for Medicaid, the children might be. In that scenario, the kids can be enrolled in Medicaid and the parents will need to enroll in other coverage – possibly through an employer’s plan or a policy obtained in the health insurance Marketplace.
In nine states, there’s a “coverage gap” for some low-income adults who aren’t eligible for Medicaid and whose income is too low to be eligible for Marketplace subsidies. (Income generally must be at least 100% of the federal poverty level to qualify for Marketplace subsidies).6 But there is no coverage gap for children, because Medicaid income limits for kids extend well above the federal poverty level in all states.
Are my children eligible for Medicaid? You can use our federal poverty level calculator to get an idea of whether your kids might be eligible for Medicaid or CHIP.
2. Your children can enroll in Medicaid at any time.
Unlike private health insurance through the Marketplace, off-exchange from an insurer, or from an employer, there is no annual enrollment window for Medicaid.7 An eligible person can enroll anytime. So if your kids are uninsured and you think they might be eligible for Medicaid or CHIP, you can apply for coverage on their behalf right away. You can select your state on this page to see details about eligibility and the enrollment process.
And Medicaid can be retroactive by up to three months in most states, meaning that medical expenses your kids incurred recently might be covered after they enroll.8
3. Medicaid might help pay for employer-sponsored coverage for your children.
If your employer offers family health benefits but you can’t afford the premiums, you might find that you can get help with the cost. The majority of the states have programs that use Medicaid or CHIP funds to help Medicaid-eligible and CHIP-eligible families pay for employer-sponsored health insurance (in addition to Medicaid or CHIP) if it’s available to them.9
The specifics of these programs – including whether they’re voluntary or mandatory10 – vary from one state to another, so you’ll need to contact your state Medicaid office for details.
If your child has Medicaid in addition to other coverage, Medicaid is always the secondary payer. This means the other insurance will be primary, and Medicaid will only start to pay benefits after the claim has been processed by the primary insurance.11
With limited exceptions, CHIP is not available to children who are eligible for coverage under a state health benefits plan. So if a parent works for the state and has access to family coverage under the state health benefits program, their children will generally not be eligible for CHIP.12
And states can impose more restrictive limits on CHIP. For example, Utah does not allow a child to enroll in CHIP if the child could enroll in an employer-sponsored plan for less than 5% of the household’s income.13
4. A child’s disability may make them eligible for Medicaid.
If your child is disabled14 or has certain special healthcare needs, they may qualify for Medicaid – even if your household’s income isn’t within the standard eligibility limits. And depending on the state and the child’s medical needs, they may qualify for Medicaid coverage for in-home care as an alternative to institutional care, without being disqualified due to their parents’ income and assets.15 (In other words, these kids can potentially be in households that would not otherwise qualify for income-based Medicaid, or for disability-based Medicaid — which uses both income and assets to determine eligibility.16)
As is always the case with Medicaid and CHIP, the details vary by state. But if your child is disabled or has costly ongoing medical needs, you may find that they can qualify for Medicaid even if your household wouldn’t otherwise qualify based on income alone. You can reach out to the Medicaid office in your state to get more information.
5. In most states, you’ll need to renew your kids’ coverage each year.
If your kids are enrolled in Medicaid or CHIP, it’s important to pay attention to any paperwork you get from the state regarding their coverage. Most state Medicaid programs recheck enrollees’ eligibility each year.17
Your state may be able to confirm your child’s ongoing eligibility automatically.18 But if not, they will send you a request for updated information, and your children can be disenrolled if you don’t respond.
Some states have changed their rules to ensure continuous Medicaid and CHIP coverage for kids up to a certain age. This means that a child’s coverage will continue regardless of changes to the family’s circumstances, and without the need for annual eligibility redeterminations. Continuous coverage extends through different ages, depending on the state:
California.23 and Ohio.24 are working to gain federal approval for continuous Medicaid coverage for children until they turn four.
There are several states with legislation pending in 2025 that would direct the state to seek federal approval for various terms of continuous Medicaid coverage for kids. They include Alaska,25 Montana,26 Rhode Island,27 and Texas.28
6. If your baby’s birth is covered by Medicaid, they will remain covered for at least a full year.
Medicaid covers more than 40% of births in the U.S.29 Those infants are automatically covered by Medicaid or CHIP as soon as they’re born, and will remain eligible at least until their first birthday.30 As noted above, eligibility is redetermined annually in most states, so ongoing eligibility will depend on the household’s financial circumstances.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org
Footnotes
Stay healthy—use your free preventive benefits
All Marketplace plans have free preventive benefits to help keep you healthy and avoid more serious illnesses. Talk with your doctor to figure out which services are right for you. Remember, services are only free if you get them from a provider in your plan’s network.
What preventive services could I get?
Some common services include:
Check all the free preventive services available to you and your family.
How can I find a provider in my plan’s network?
Learn more about how to use your coverage to stay healthy.
Farmers Insurance® Names Ankur Chaturvedi Regional President of the East Territory
Proposed rule would bring sweeping changes to Marketplace enrollment, eligibility
In this article
A proposed federal rule issued this week would, if finalized, bring wide-ranging changes for the Affordable Care Act’s health insurance Marketplace, including a shorter open enrollment period in all states.
The Centers for Medicare & Medicaid Services (CMS) issued the proposed rule on March 10. A final rule would modify numerous regulations affecting consumers’ access to Marketplace coverage and financial assistance.
CMS projects that the proposed rule changes will result in between 750,000 and 2 million fewer Marketplace enrollees in 2026, compared to enrollment projections under existing Marketplace rules.1 This is separate from the reduced enrollment that was already expected in 2026 due to the expiration of the American Rescue Plan’s subsidy enhancements at the end of 2025.
Let’s take a look at some of the rule changes that could affect consumers’ costs and access to Marketplace coverage.
Open enrollment period would be shortened in all states
CMS has proposed that open enrollment should run from Nov. 1 through Dec. 15. in all states. The dates of open enrollment have varied over the years, but have most recently been set at Nov. 1 through Jan. 15 in most states.
In the past, HHS has given state-run exchanges the option to offer longer open enrollment periods. But the new proposal calls for the December 15 end date to apply to all exchanges.2
As is already the case, the open enrollment period would apply both on-exchange and off-exchange.
In the 31 states that use HealthCare.gov, more than 17.1 million people enrolled in Marketplace coverage during the open enrollment period for 2025 coverage.3 Of those, 16.6 million had completed their enrollments by Dec. 15.4 So the majority of enrollees do sign up by mid-December, in time to get full-year coverage for the coming year. Only about 529,000 people enrolled via HealthCare.gov between Dec. 16, 2024 and Jan. 15, 2025, accounting for about 3% of total enrollment.
But if open enrollment ends on Dec. 15, absent a special enrollment period, an applicant or enrollee will no longer have an opportunity to pick a different plan after the start of the calendar year. This will make it particularly important for enrollees to pay close attention to communications they get from their plan and the Marketplace before and during open enrollment, to ensure that there are no unwelcome surprises regarding their coverage or premiums in January.
Rule would eliminate the low-income special enrollment period
For the last few years, there has been a year-round enrollment opportunity in most states in the form of a special enrollment period for people who are subsidy-eligible and have a household income that isn’t more than 150% of the federal poverty level (FPL). For a single adult in the continental United States, that’s an income of $22,590 in 2025.5
The proposed rule would end this year-round enrollment opportunity. This change would apply nationwide, including in states that run their own exchanges.
Many other provisions of the proposed rule are slated to take effect for the 2026 or 2027 plan year. But the proposed rule calls for the low-income SEP to end almost immediately, on the effective date of the final rule.6
In justifying the proposed rule, CMS noted that the year-round SEP for low-income enrollees was “one of the primary mechanisms” that contributed to the unauthorized enrollments that made headlines in 2024.
Rule would eliminate enrollees’ ability to auto-renew $0-premium coverage
Under current rules, if a Marketplace enrollee lets their plan auto-renew and is eligible for a subsidy that covers their entire premium, their after-subsidy premium can continue to be $0 in the coming year. (This isn’t always the case, as it also depends on how subsidy amounts change based on the cost of the second-lowest-cost Silver plan.)
Under the proposed rules, the Marketplace would have to reduce the person’s subsidy amount by $5/month, resulting in a $5/month after-subsidy premium for the enrollee. This premium would be imposed until the enrollee updates their information with the Marketplace so that an updated eligibility determination can be made.7
This proposed rule would apply starting with the 2026 plan year in states that use HealthCare.gov, and starting with the 2027 plan year in states that run their own Marketplace platforms.
As a result of this proposed rule, people with fully subsidized plans who rely on auto-renewal and don’t update their Marketplace account by Dec. 15 would continue to have coverage as of January, but with an after-subsidy premium of $5/month.
(If and when the enrollee updates their eligibility with the Marketplace, they would qualify for the full amount of the subsidy based on their updated information. And if they would have qualified for a full subsidy, the $5/month could be recouped when they reconcile their premium tax credit on their tax return – as is always the case when an enrollee is owed additional premium tax credits).
CMS is also soliciting comments on whether the amount should be higher than $5, as well as whether auto-renewal should even continue to be possible for fully subsidized enrollees.
Previous analyses have found that when net premiums increase from zero to even a dollar or two per month, the result is a drop in enrollment.8
Maximum out-of-pocket limits would increase for 2026 plans
Under current rules, 2026 Marketplace health plans would have maximum out-of-pocket (MOOP) limits as high as $10,150 for a single individual, and $20,300 for a family. Under the proposed rule, those limits would increase to $10,600 and $21,200, respectively.9
This would also result in higher MOOPs for Silver plans with integrated cost-sharing reductions, as those values are based on reducing the standard MOOP by a set percentage.
The change would stem from a new methodology for indexing these amounts, reverting to a methodology that was briefly used under the first Trump administration.
If finalized, the MOOP for a single individual will rise from $9,200 in 2025 to $10,600 in 2026 – a 15% increase.
Rule would require additional documentation for enrollment and subsidy eligibility
HHS has proposed several rule changes that would require more documentation and verification to enroll in Marketplace coverage and qualify for financial assistance. They include:
Verification of SEP eligibility
Since 2023, the federally run Marketplace has only required pre-enrollment proof of SEP eligibility if the qualifying life event is the loss of other coverage.10 The proposed rule would remove that limitation and allow pre-enrollment eligibility verification for any SEP.11
Further, it calls for all exchanges – including HealthCare.gov and state-run exchanges – to verify eligibility for at least 75% of new enrollees utilizing SEPs. The proposed rule notes that most exchanges would only need to require eligibility verification for their two most-used SEPs to meet this target.12
Additional income verification
The new proposed rule would require more documentation to verify that some enrollees are eligible for Marketplace subsidies. If the Marketplace’s trusted data sources (IRS data, for example) indicate that an applicant’s household income is below the FPL but the person attests to an income of at least the FPL, the new proposed rule would require the Marketplace to generate a data matching inconsistency. These must be resolved13 for the person to qualify for Marketplace subsidies.
CMS has also proposed that if the Marketplace requests income data from the IRS and is told that it’s not available, the Marketplace cannot just rely on the applicant’s attested income. Instead, the Marketplace will need to use other trusted data sources to verify the applicant’s income, or the applicant will need to submit proof of income.14
Shorter window to provide income documentation
The ACA provides applicants with a 90-day window to provide requested income verification documentation, and subsequent rules added an automatic 60-day extension, without the enrollee needing to request it. HHS has proposed removing that automatic extension.15
Additional rule changes
The proposed rule calls for various other provisions, including:
Once the proposed rule is published in the Federal Register, there will be a 30-day window during which the public can submit comments, which will be taken into consideration before the rule is finalized.19
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org.
Footnotes