Kentucky Medicaid Waiver 1115 goes live on April 1st. Are you ready?

Part 1 of 3 in a series about how hospital leaders can prepare for the impact of Kentucky Medicaid Waiver 1115 (4 minute read).


It’s here. Kentucky officials changed the landscape of Medicaid for citizens of its state.

In January, the Centers for Medicare and Medicaid Services (CMS) approved a Section 1115 demonstration waiver in Kentucky, titled “Kentucky Helping to Engage and Achieve Long Term Health” aka “Kentucky HEALTH”. 

April 1st, the waiver goes live for accrual of incentive account dollars. It’s in full effect July 1st.

While the demonstration waiver includes 2 major components (Kentucky HEALTH and Substance Use Disorder), we’ll focus on Kentucky HEALTH... the part that modifies the current Medicaid expansion population (and most other adults covered by Medicaid). Below is a summary of the 7 key provisions, all of which have a direct impact on hospital eligibility efforts and the financial viability of Kentucky hospitals.

1. Work Requirement

  • 80 hours per month
  • Eligibility suspended for non-compliance until they can prove compliance or complete a state-approved health or financial literary course.

2. Coverage Lockout

Enrollees can be locked out of coverage for up to 6 months if:

  • Over 100% FPL (Federal Poverty Level) and do not pay premiums with 60 days.
  • Fail to provide documentation for eligibility renewal.
  • Fail to timely report a change in circumstances affecting eligibility.

People locked out can re-enroll inside 6 months by paying all past due amounts and current month’s premium + complete a state-approved health or financial literacy course.

3. Premiums

  • Most enrollees responsible for a monthly premium of up to 4% of household income or at least $1, instead of copays.
  • First payment is required before coverage is effective for enrollees @ 100-138% FPL.
  • Coverage is effective post 60-day premium period for enrollees below 100% FPL who do not pay a premium.

4. Exemptions

  • People who qualify as medically-frail and former foster are you are exempt from premiums, unless they want to access incentive accounts without paying premiums.
  • Pregnant women are both exempt from premiums and can have an incentive account without paying premiums.
  • Evicted and homeless people qualify for exemption from coverage lock-out for failing to pay premiums, and/or not timely renew eligibility, and/or report a change in circumstances, but cannot be exempt from the work requirement.

5. Incentive Accounts

Enrollees can access both a deductible and an incentive account to use in the purchase of additional benefits. This effectively transfers the vision, dental, and OTC drug benefits from the standard benefit package to the incentive account for expansion adults.

Enrollees also:

  • Can access some reimbursement for gym memberships.
  • Must pay premiums and can accrue funds by completing qualified activities.
  • Are subject to penalties for rules infractions.

6. 90-day Retro Period

  • Elimination of the retroactive eligibility for most adults including people who are classified as medically-frail.
  • Elimination of the 90-day period to change health plans without cause after initial enrollment once the first premium is paid or the 60-day payment.
  • Retroactive coverage will still be available to pregnant women and children. For everyone else, benefits will start the same month the beneficiary makes his or her first premium payment.

7. Non-Emergency Medical Transportation (NEMT)

Now waived for all services for most expansion adults.

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What is a Section 1115 Medicaid demonstration waiver?

Section 1115 of the Social Security Act gives the Secretary of Health and Human Services authority to waive provisions of major health and welfare programs authorized under the Act, including certain Medicaid requirements, and to allow a state to use federal Medicaid funds in ways that are not otherwise allowed under federal rules. The authority is provided at the Secretary’s discretion for demonstration projects that the Secretary determines promote Medicaid program objectives.

There are comprehensive Section 1115 Medicaid waivers that allow broad changes in eligibility, benefits, cost sharing, and provider payments. There also are more narrowly drawn Section 1115 waivers as well as Section 1915 Medicaid waivers that focus on specific services and populations.

All of these provisions create complexity and challenges that make eligibility and enrollment more difficult to manage. From educating your team to gap-testing your current process and technologies, there are multiple questions requiring answers to make your organization ready.

Stay tuned for part 2 of 3 in this series as we look into those questions with answers for preparing your team and protecting your bottom line.

Credit to Henry J Kaiser Family Foundation for information used in this post. For a complete look at the details regarding the Waiver, click here.

Disclaimer: this document is a summary perspective on key provisions of the Kentucky Waiver 1115 as understood by the author. It does not represent a formal legal interpretation by the author or MedAssist.



Randy Shafer is Division President for MedAssist, a company healthcare leaders rely on to help simplify the financial experience for patients and members of their hospital teams. He has more than 30 years experience in healthcare, specifically in eligibility services.

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