A Primer on Using Medicaid for People Experiencing Chronic Homelessness and Tenants in Permanent Supportive Housing. 4.7. Alternative Benefit Plans

07/23/2014

For nonpregnant adults ages 19-64 with incomes at or below 133 percent of the FPL (the adult group) who are newly eligible for Medicaid thanks to the expansion authorized by the Affordable Care Act, the law requires states to offer Alternative Benefit Plans.62

States must select a coverage option from four benchmark options in Section 1937 of the Act:

  • The Standard Blue Cross/Blue Shield Preferred Provider Option offered through the Federal Employees Health Benefit program.

  • State employee coverage that is offered and generally available to state employees.

  • The commercial HMO with the largest insured commercial, nonMedicaid enrollment in the state.

  • Secretary-approved coverage, a benefit package the Secretary has determined to provide coverage appropriate to meet the needs of the population.

Alternative Benefit Plans must cover the ten Essential Health Benefits as described in Section 1302(b) of the Affordable Care Act.63 As Secretary-approved coverage, states may choose to offer the existing package of benefits covered in the state's Medicaid state plan (the Medicaid benefits available to other groups of individuals who meet categorical eligibility criteria) to people who are newly eligible as members of the adult group. Alternatively, states may elect to provide an Alternative Benefit Plan that covers a package of benefits that will differ in some ways from full plan Medicaid. In some states, an Alternative Benefit Plan may offer a package of benefits or a provider network that is different from the regular Medicaid program.

Alternative Benefit Plans are subject to the requirements of the Mental Health Parity and Addiction Equity Act of 2008. As a result, these plans may offer a package of benefits to address mental health and substance use disorders that is different, and potentially more generous, than the state's full plan Medicaid.64

States are not restricted to design only one Medicaid Alternative Benefit Plan. Alternative Benefit Plans include the ability for states to tailor plans to meet the needs of specific groups of individuals. For example, if a state wanted to provide different benefit packages to a group of individuals in the new adult group that have a specific chronic condition such as diabetes, or a benefit package that includes more comprehensive LTSS for people with complex and disabling health conditions, the state may do so. The state would still need to cover the rest of the adult group in an Alternative Benefit Plan that meets the minimum requirements described in federal rules.

In states that choose to establish an Alternative Benefit Plan that is different from the regular Medicaid program, enrollment in the Alternative Benefit Plan is voluntary for some groups of people, including some members of the newly eligible adult group. An individual who is medically frail or otherwise considered to have special medical needs must be offered the alternative to participating in an Alternative Benefit Plan by enrolling in the standard approved Medicaid state plan benefit package. Under federal law, individuals with disabling mental disorders, chronic substance use disorders, or serious and complex medical conditions are included among those who are considered to be medically frail.

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