Medicaid premiums have a checkered history. Federal law generally dictates strict limits on the ability of states to charge premiums or cost-sharing to Medicaid enrollees. Yet, some states have introduced them with mixed results.
Here’s a look at a brief history of Medicaid premiums and why they may make a comeback – even though the One Big Beautiful Bill Act disallows them after Oct. 1 of 2028.
A Brief History of Medicaid Premiums
The Centers for Medicare and Medicaid Services (CMS) intends Medicaid for low-income populations. The federal government has traditionally limited cost-sharing in the program. Generally, states may not charge premiums to Medicaid enrollees whose incomes fall below 150% of the Federal Poverty Level (FPL). Additionally, the federal government has capped total family out-of-pocket costs at no more than 5% of family income. These costs encompass both premiums and cost-sharing,
Prior to the ACA, some states successfully used Section 1115 waivers to extend Medicaid to childless adults, often implementing premiums and higher cost-sharing than otherwise permitted in Medicaid for this non-categorical group. Post-ACA, eight states received approval via Section 1115 demonstration waivers to implement premium requirements for enrollees below the 150% FPL threshold. Most of those states scrapped Medicaid premiums during the Biden administration, largely because CMS withdrew the states’ ability to charge Medicaid premiums.
What’s the OBBBA Have to Say?
The One Big Beautiful Bill Act (OBBBA) prohibits states from charging monthly premiums to Medicaid expansion adults (those with incomes between 100% and 138% of the Federal Poverty Level) starting October 1, 2028.
The OBBBA shifts the Medicaid cost model from a “subscription” model (premiums) to a “utilization” model (co-pays). Starting October 1, 2028, states can no longer charge a monthly premium solely to maintain Medicaid coverage for the expansion population. The OBBBA effectively supersedes any existing state waivers that allowed for these premiums. As a result, states must terminate those waivers by this date.
While premiums go away, the law requires states to begin charging co-pays for almost all non-exempt services for expansion adults with incomes above 100% FPL. These co-pays can be as high as $35 per service.
The law maintains the federal requirement that a household’s total out-of-pocket costs (now mostly co-pays) cannot exceed 5% of their monthly or quarterly income. Once a beneficiary hits that 5% limit, states cannot charge further co-pays for the remainder of that period.
Despite the coming prohibition against Medicaid premiums, two states appear poised to implement Medicaid premiums:
New Hampshire
In the summer of 2025, Gov. Kelly Ayotte signed into law the state’s new budget. The budget bill introduces changes to New Hampshire’s Medicaid program. It specifically mandates new monthly premiums for certain enrollees, effective in July 2026.
Populations Subject to Premiums
- Individuals: Those making 100% of the federal poverty line (FPL) or more will begin paying monthly premiums.
- Families with Children: Households making at least 255% of the federal poverty line will begin paying monthly premiums.
Premium Amounts
The law sets monthly premium amounts to vary based on household size and income category.
Legislative Mechanism
House Bill 2 enacted the new premium requirements as part of the state budget bill. This legislation directs the Department of Health and Human Services (DHHS) to file a Medicaid waiver and state plan amendment that creates income-based premiums for individuals in the Granite Advantage Health Care Program and for households with children participating in the Medicaid program.
The bill implements the premiums for the Granite Advantage Health Care Program (individuals with income at or above 100% FPL) through a Medicaid waiver and state plan amendment, if necessary, on or before July 1, 2026.
Montana
The Montana Health and Economic Livelihood Partnership (HELP) Demonstration program is Montana’s proposed approach to require specific Medicaid expansion enrollees to participate in cost-sharing and community engagement activities. It aligns with both state law (MCA) and new federal requirements. Montana is seeking a five-year waiver approval to implement these changes as soon as practicable.
Here is a summary of the key features of Montana’s proposed HELP Demonstration waiver:
Populations Subject to Premiums and Requirements
The Demonstration applies to working-age, able-bodied adult Medicaid expansion enrollees aged 19–64 with incomes up to 138 percent of the Federal Poverty Level (FPL) who are not otherwise exempt.
Premium Amounts and Structure
Montana proposes a system of graduated monthly premiums. The state based the premiums on the length of time an individual is enrolled in the Demonstration.
The Initial Premium (Years 1 and 2): Enrollees who are not otherwise exempt must pay monthly premiums equal to 2 percent of their modified adjusted gross income for the first two years of participation. For non-exempt individuals, the premium will increase by 0.5 percent in each subsequent year of Medicaid enrollment under the Demonstration. The state capped the premium at a maximum of 4 percent of the enrollee’s aggregate household income.
The consequences for failing to pay overdue premiums depend on the enrollee’s income level. For those with income 100% FPL or less, the state will notify the Department of Revenue to collect the overdue amount by assessing it against the enrollee’s annual income tax. The state will not disenroll the enrollee from the program. For those with income greater than 100% FPL (up to 138% FPL), the state initiates the same tax collection procedure. Additionally, the state considers the failure to pay overdue premiums within 90 days of notification a voluntary disenrollment. Failure to pay means beneficiaries will lose coverage.
Timeline
Montana acknowledges that federal law (HR 1) requires the phase-in of copayments and prohibits the use of Medicaid premiums starting October 1, 2028. However, state law currently prohibits copayments for the Medicaid expansion population. Montana plans to implement and maintain its premium schedule until September 30, 2028. The state seeks a waiver of the new federal prohibition to continue charging premiums beyond that date. It aims to demonstrate the effectiveness of premiums in preparing enrollees for commercial health coverage.
Despite Prohibitions, Will State Bring Back Medicaid Premiums?
As New Hampshire and Montana show, states have shown interest in charging premiums for access to Medicaid. Should Montana’s HELP waiver be approved, it’s possible other states may seek similar approval.
Why? The OBBBA includes onerous administrative requirements, including employment verification, that may increase administrative costs for state Medicaid departments. As a result, they may consider ways to recoup that expense, with monthly premiums being an option to offset costs. Though the OBBBA requires increased copayments for services, it’s often administratively easier to collect monthly premiums than it is service copayments.
As the October 2028 deadline approaches, we’ll learn whether Medicaid premiums are here to stay or if they’ll be a thing of the past. Whether premiums are viewed as a barrier to care or a necessary tool for sustainability will likely be decided not by the legislative text of the OBBBA but by the upcoming waiver approvals. The era of Medicaid premiums may be scheduled to end. However, if states like New Hampshire and Montana institute them, they could be far from dead.
Certifi helps states with Section 1115 Medicaid waivers or Medicaid buy-in programs bill and collect payments thanks to a premium billing and collections module that is R3 certified for Medicaid.
